Benefits of Pay As You Go (PAYG) for UK Rail

24 January 22

Benefits of Pay As You Go (PAYG) for UK Rail - For the Customer

“Pay As You Go journeys will be expanded outside London to make millions more trips straightforward.” Williams-Shapps Plan for Rail.

A known area of dissatisfaction is the rail industry’s approach to fares and ticketing, and therefore a coherent approach to planning and buying helps to restore trust and promotes value that is long overdue. A lack of trust in value for money for the rail product has been eroded significantly which in turn has depressed journey growth and associated revenues.

Any response needs to accommodate the change to commuting and recreational travel patterns since the pandemic and will need to be future proofed to embrace the demand for integrated travel solutions to help customers plan and buy end to end journeys, (i.e. Mobility as a Service). Furthermore, the solution needs to be a catalyst to reduce costs further, as proven by Transport for London (TfL) who have demonstrated positive year on year savings for fare collection with a target cost of 6% of revenue (Mastercard LEK TfL study 2016).

PAYG can work within the current constraints of rail ticketing but can evolve with new technology and fares simplification. This retail channel can support customer preferences, for example, more customers are now paying for goods using bank card contactless methods, and now that contactless limits have increased to £100 this will become even more attractive for buying tickets. However, not everyone has a bank account, for example parents may prefer their children use an alternative Smart card to track their activity and other customers may prefer barcode tickets.

The advantage of PAYG is that it can support a wide range of purchasing tokens to suit customer preferences, alongside traditional retailing such as Ticket Vending Machines.

Finally, PAYG technology can also incentivise use of public transport through such mechanisms as “green credits” which organisations can use to subsidise employees transport costs, thus providing them with a direct benefit and contributing to their Carbon Reduction commitments.

Benefits of Pay As You Go (PAYG) - For the Operator

PAYG ticketing is already established and proven on parts of our rail network and is showing how it can help contribute to demand recovery.

PAYG ticketing can help to increase revenue and reduce both directly and indirectly. For example:

  1. TfL established that PAYG resulted in a significant increase in ridership which can be replicated on UK Rail.

  2. PAYG as a cost of sale is less than the cost of sale at Ticket Offices or On Train and thus will allow key staff to support other activities thus delivering operational efficiencies.

  3. Retail channel shift and move of key staff away from the Ticket Office into other modes of support will justify the closure of some Ticket Offices. This will in some areas release prime retail space.

  4. PAYG has the potential to reduce ticketless travel, i.e. it is more difficult to justify not tapping in or out compared to buying a point to point ticket.

  5. The straightforward nature of PAYG and automation of charging and Delay-Repay should reduce the number of customer enquiries and thus enable a reduction in the cost of those call centre functions.

In summary, PAYG offers significant benefits to customer and Treasury and no downside as long as we are careful to ensure social inclusion in the proposition deployed.

Tracsis Group is a software and technology company based in the UK and Ireland that has a strong presence across all areas of the transportation sector. The company is focussed on providing its customers with innovative and market leading solutions that enable them to optimise operational fulfilment, asset performance, safety and customer experience. To better compliment these objectives, Tracsis has invested in iBlocks, the UK’s first and only accredited provider of rail PAYG smart ticketing solutions. Together, we strive to provide high performing solutions and enhance passenger experience across UK rail networks.

– Chris Barnes, Chief Executive Officer at Tracsis