Instead of having to slow down to pay at toll booths, drivers now register their vehicles in advance, receive a unique electronic tag and then have payments automatically deducted from their designated bank account, credit card, or stored value account every time they use one of the tunnels.

Implementation went smoothly, and the new system has proved a hit, accelerating traffic flows, changing thinking, and paving the way for the wider acceptance of numerous forms of digital payment by other transport operators using an open-loop payment system.

This follows the introduction of a credit or debit card payment method by all Hong Kong bus operators, in addition to the government’s fixed toll scheme for private vehicles using road harbour crossings implemented to help ease traffic congestion.

The open-loop concept relies on international EMV (Europay, Mastercard and Visa) industry-set standards and universal technology. It allows payment with a bank-issued credit or debit card, or associated smart device, on any transport network signed up to the system.

Commuters can tap their international contactless card, mobile or wearable device that is linked to the card to access a public transport service, while minimising the risk of fraud or theft – all of which could have far-reaching benefits.

The most immediate is that transport companies can aggregate and analyse all kinds of big data about passenger numbers, flows and trends. This information can then be used not only to meet day-to-day operational demand, but also to adjust routes, plan additional stops or stations, create new services, optimise revenue and mitigate financial risk.

On one level, the data will make it possible to meet changing user expectations about choice and value. On another, businesses and governments, urban planners and entrepreneurs will be in a position to make better-informed decisions as they assess policy changes and investment priorities.

Paulina Leong, general manager of Visa Hong Kong and Macau, says the company is committed to delivering world-class, safe and consistent payment experiences for both local commuters and tourists.

“Our goal is to build a truly ‘open-loop’ system that enables seamless travel. We believe that a consistent payment experience can provide travellers with confidence, convenience and peace of mind anywhere in the world.”

According to Visa, a more holistic view of how and when people travel enabled by a robust digital payment infrastructure will open up a world of innovative possibilities for building smart cities.

Data will provide insights into passenger movement patterns, behaviour and spending, which can be securely accessed by different parties. Over time, cities will benefit from stronger collaboration and shared information between multiple transport operators in the same area or region.

By adopting digital payment terminals that are standardised globally, it will be easier for operators to integrate and government administrators to run systems efficiently as people travel between cities, regions and countries.

Such moves towards an open-loop system in Hong Kong reflect similar advances happening in major global cities including New York, Singapore and London.

Importantly, they have the full backing of leading international payment companies, which help to administer the systems with solutions that can bring in the potential benefits – ranging from lower costs, improved services and an enhanced urban environment.

The open-loop concept offers several advantages – for example, there is no need for regular top-ups to add value to cards or smartphones.

Transport operators could face fewer costs for fare collection and cash management and related maintenance. The interoperable features also give users greater flexibility, security and overall ease of mobility.

Significantly, key sectors of the local economy, most notably tourism, can also expect to experience a boost from the wider adoption of open-loop payment systems.

A YouGov survey in June shows that 89 per cent of Hong Kong respondents believe that the availability of different payment modes on public transport will give Hong Kong tourism a competitive advantage.

People questioned for the online poll said the three main pain points they face when using public transport are forgetting to bring their stored-value payment cards, when these cards run out of value, or they are unable to pay by phone when it runs out of battery.

This helps to explain why Visa has been involved in the launch of more than 650 contactless public transit projects worldwide, and why it is now accelerating efforts in collaborating with public transport providers in Hong Kong.

With transformation into a smart railway in mind, Hong Kong’s MTR Corporation is upgrading its ticketing network to introduce EMV payments later this year at the earliest, which will be available alongside the existing prepaid Octopus card, QR code payment and single journey tickets.

Jeny Yeung, the MTR’s Hong Kong transport services director, says this renewal of its automatic fare collection system marks a new era in customer experience.

“Smart ticketing is a key facet as it offers more options for our Hong Kong customers and greater convenience for tourists visiting the city,” she says. “As we add more digital payment options, our vision is to provide a seamless travelling experience for our passengers.

“We believe open-loop systems can help the MTR achieve this vision and facilitate us to provide a truly smart railway to our customers.”

Similarly, Hong Kong Tramways recently began to accept digital fare payments and Visa is encouraging its use through its partnership with the company.

Paul Tirvaudey, Hong Kong Tramways’ managing director, says that moving towards a digital transport network will improve choice, efficiency and convenience.

“Hong Kong has been very innovative with the Octopus [contactless, stored-value] card, but you need to have other payment solutions,” he says.

“For us, introducing electronic credit-card payment was a must-do to enhance the customer experience and make sure we are not lagging behind. There was a strong conviction that we had to do this to get back to world standards of public transport.”

Leong is positive about the benefits of an open-loop system across transport models and the future possibilities. She says collaboration will bring more innovation, and help Hong Kong achieve a truly smart transport network as it continues to roll out initiatives to become a world-class smart city.

“Our recent collaboration demonstrates our commitment to accelerating the development of a smart city in Hong Kong,” she says. “That will benefit residents and visitors from around the world, as well as local shops and businesses that see increased traffic thanks to an enhanced travel experience.”