The British Mobility Market: Trends and Opportunities in payments

In December 2023, Worldline announced that it had obtained payment institution approval from the Financial Conduct Authority. Obtaining this licence underlines Worldline's ambitions to strengthen our presence in the United Kingdom and improve our offering for local and international merchants established in the country.

We are therefore grouping all our activities for merchant customers under a single entity in the United Kingdom and investing significantly in our offering dedicated to its local customers.

This important milestone is critical to our ability to support our customers in the UK regulatory environment. This new licence also paves the way for national processing capabilities to meet evolving market needs. Our approach is to operate the acquiring entirely in-house, to promote transparency and reliability.

We have built a significant and recognised presence in the mobility sector, and particularly in rail, as a digital services player for several decades, thanks to our Mobility and eTransaction Services (MeTS) entity. Going forward, we can address all of our existing customers and all players in the sector with a complete range of payment solutions. We are one of the only players in Europe to have this capacity. This offer brings together our payment solution: terminals (for POS and TVMs), gateway, and acquiring, as well as online payment with acquiring.

Traits and trends of the public transport market in the United Kingdom

The UK public transport market is undergoing significant change, influenced by the legacy of the pandemic, political intentions, continuing evolution in technology, customer expectations  and changing regulatory frameworks. Mobility trends in the larger British city-regions are in some ways, similar to those of their European counterparts. However, in the UK, public funding for mobility platforms (commonly referred to as “Mobility a s a Service”) has not been provided at the scale seen in Europe. Further, rail usage remains stubbornly around 90% of pre-pandemic levels, largely as a result of remote working.

Despite the decline in rural bus services, bus travel remains the pre-dominant mode of public transport – principally because it covers far more routes than the train network. Of a total of 6.41 billion passenger journeys on all forms of public transport in 2022, 3.7 billion (or nearly 58%) were made by bus, compared with 2.5 billion (39%) made by train.

The UK’s railways have a history stretching back almost 200 years, and were instrumental in the development of the nation’s industries and cities. But in recent years, the privatisation of operator services has led to an obscure and complex experience for customers. Customer sentiment repeatedly focuses on confusing ticketing and fare options as a disincentive to travel by train, as well as pricing often meaning that private cars are a more economic choice – particularly when several people are travelling together.

Successive governments have recognised that the situation is sub-optimal at best, culminating in the newly-elected Labour government under Prime Minister Sir Keir Starmer pushing legislation through the UK Parliament to bring a new governing body into being (Great British Railways) and to allow the Secretary of State to bring train operating companies into public ownership as their franchises lapse. The objective is to make governance simpler, achieve economies of scale, make procurement simpler and to rid the railways of the complexities caused by fragmentation.  Although rail revenues continue to rise (£10.3 billion in the year to March 2024, a rise of 13% on the previous 12 months), they still lag behind pre-COVID levels – leaving both government and the industry looking for solutions to attract more customers to use the service.

Now, let’s consider the sale and distribution of tickets along with the associated payments. In the bus sector, but to a lesser extent, the rail  sector, contactless payment acceptance has led to the rise of the Pay-As-You-Go (PAYG) model. The pandemic further accelerated this trend, as the need for flexibility grew, something that  fixed monthly/annual season tickets did not provide, particularly with the rise of remote working. However, this flexibility comes with its challenges. Since PAYG is operator-specific, it can create “islands” of interoperability within the same city, making it inconvenient for users. It is specifically to address this issue that Worldline has invested in its Mobility Market Place, to provide a seamless, multi-modal travel experience, simplifying the customer experience, and maximising the attractiveness of public transport as a real alternative to private car usage in a city region. The soon to be launched app for the West of England Mayoral Combined Authority, created and delivered by Worldline in partnership with Mentz, is a perfect example of how this can be done effectively.

E-commerce is experiencing a significant growth, and with the digitalisation of tickets on smartphones and the dramatic rise in contactless payments, as well as the falling popularity of closed-loop transport cards by some operators, this shift is helping to reduce costs while offering services more closely aligned with consumer needs.

The industry is increasingly adopting Open Payment gateways and is dominated by a few key players in both distribution and payments, giving them considerable power and driving demand for more competitive alternatives. We believe that this situation is ready for disruption which will bring increasing benefits for customers and the travelling public.