Kochi Metrorail Corporation and Delhi Metro Corp had earlier introduced card-based payments, but they are still “closed-loop” payment instruments

Bengaluru: As public commute services such as buses and local trains restart gradually, fintech startups are turning their attention to mass transit payment products.

Post the covid-19 outbreak, consumers have largely shifted to online platforms to purchase everything from groceries, electronics to clothing. However, when it comes to using mass transit or public commute (buses, trains and metro rail), cash still remains the primary medium of payment, and tech startups are looking to change that.

Also, with Reserve Bank of India’s recent regulatory notification on allowing offline payments, especially in areas with erratic Internet connection, mass transit payment startups can experiment with new models that were earlier not recognized.

Startups, including CityCash and Chalo, have begun selling near-field communication or NFC-enabled and “open loop” prepaid cards for transit ticketing and are in talks with state bus corporations and state-owned waterways for mass adoption. The biggest market for these startups comes from state bus corporations, used by over 68 million commuters on a daily basis, according to industry estimates.


Vineet Toshniwal, founder, CityCash, said large cities like London, Dubai, Hong Kong, have developed their own nations “mobility payment cards” that run on an open-loop payment model which has been operational for over a decade.


“Unfortunately, not even a single Indian city has an open-loop mobility card. Delhi Metro card has the capability to become an open-loop card, but the city has chosen to go with a closed-loop payment model. It basically just fulfills the need of travelling in the train and they don’t even allow you to buy a cup of coffee on their premises,” Toshniwal added.

There is a large market opportunity for open-loop payment cards in the bus ticketing space. Toshniwal said public transit is used by almost 20 crore Indians annually, of which, around 7-8 crore people use it daily. But most of these payments are transacted using cash. Till date, CityCash has issued around 3 million cards to consumers since it went live in September 2019, and is accepted in 20,000 buses in Maharashtra.

Mass transit payment startup Chalo approaches the mobility payment problem in a “full-stack” manner. It offers both the payment hardware such as NFC enabled point of sale (PoS) device, a mobile application that helps track buses and routes in real-time, and an NFC-enabled prepaid card to make offline transactions.

“We start with deploying GPS hardware in the buses (for live tracking), and a QR code-based payment solution using a mobile app along with the prepaid card option… We are looking at a full-stack approach because even today, 50% of the people who travel on buses are not digitally savvy, they do not pay via UPI or do not own a smartphone,” Vinayak Bhavnani, co-founder and chief technology officer, Chalo said in an interview.

Chalo also offers an electronic bus-pass product that can be availed using the Chalo mobile app. It is currently operational in cities such as Indore, Bhopal, Patna, Guwahati, Kolkata, Thiruvanthpuram Madurai, Vijayawada, and Udupi. The startup is also currently looking to onboard card-based payments for e-rickshaw owners. It is also in talks with the Kochi water transport authorities to install GPS in their water ferries, and to accept Chalo cards on ferries as well.

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