Startup-Spotlight: Littlepay

Front runners in the evolution of transit payments

How can we make transit payments simple? That was the question that sparked Littlepay. We founded our company in 2016 when the migration to a cashless economy was well underway in many countries. Transit, the largest micropayments vertical, was shifting away from cash toward contact-free payment methods, and we saw an opportunity to be instrumental to that movement.

Transport for London’s contactless payment system was the success story everyone was talking about. Passengers had been quick to switch to using contactless bank cards to pay for travel instead of paper tickets or Oyster cards. They found it easy to reach for their card and enjoyed spending less time queuing for tickets or top-ups. Driven by convenience, the habit of tapping to pay, not just across the capital’s transport network, but also in shops and cafes, was taking root.

We set out to create a platform that offers the same seamless payment experience as Transport for London’s system without the need for hefty investment. Our solution is a cloud-based payment gateway that handles the intricacies of payment processing in a secure environment, connecting to a range of card reading devices to offer transit agencies flexible options. The modular architecture makes Littlepay cost-effective and faster to deploy than bespoke alternatives.

We knew we had a great product, but it has still been satisfying and humbling to receive such a positive response from transit agencies and ticketing technology providers. In 2017, working with our partner Ticketer to provide tap-to-pay solutions, we onboarded our first Littlepay merchants. In our first two years, we rolled out contactless across nearly 10,000 buses in the UK. We now provide contactless payment processing to almost 200 agencies and operators in Europe, and we have multiple international projects launching in the coming months.

Keeping it simple

When you tap-to-pay for travel, it feels effortless. You wave your card and board a vehicle, and later you see a payment taken from your account. In the cloud, our payment gateway manages a complex process, which might include verification and authorisation, price calculation with an external fare engine, deny list management, aggregation, capping adjustment and settlement. The only aspect our customers have to handle themselves is settingup fare structures using Littlepay Control, our merchant portal. We’ve made sure that it’s simple to configure and test product rules and monitor transaction data. Many operators use fare aggregation and capping as a way to reduce their card scheme fees for payment processing. Passengers benefit from this, too, paying a single fare for travel within the capping period, often saving money.

This year, we added a feature called ‘multi-operator capping’ to our platform, which allows fare caps to be applied over several agencies’ fare structures. This means that passengers using cooperating services can tap on and off as they board and exit vehicles, automatically paying the best price for the journeys they take. The technology can be used to create ticketing schemes involving a range of transit modes, including bus, metro, light rail and ferry.

Startup in transit

Although we are a young business, we’re entering our adolescent phase. We still have the startup drive to develop and grow apace, but we are also setting our sights on long-term goals and strategic alliances that will move us towards them.

We have a growing network of partners across the payments and ticketing ecosystem, including ticketing technology hardware and software providers, financial institutions and major Card Schemes. With new integrations added regularly, our solution is increasingly customisable and can be tailored to meet customers’ needs. If a transit operator wants to work with a specific ticketing technology provider, for instance, there’s a strong chance we already have an API connection. If we don’t, our development team can respond quickly to build one.

With Littlepay Contactless now established and gaining momentum, we are almost ready to launch our next big thing: Littlepay Checkout. This is an e-commerce payment gateway that processes transit payments made using an operator’s app or website.

Data-led ticketing

Transit agencies using Littlepay to process both cEMV and e-commerce payments will have an ace up their sleeve: a unified view of passenger transactions through our merchant portal. They can compare sales, refunds, declines and debts made through both channels side-by-side.

Data analysis and reporting tools are available via the portal, and we also offer an opt-in data feeds service to deliver more in-depth insights. Harvesting and organising transaction data in this way will be a game-changer for operators looking to optimise customeroriented services.

Looking to the future

It’s an understatement to say this year has been challenging for the transit sector. Governments’ advice at the start of the pandemic to avoid public transport caused ridership to plummet by as much as 95% in some cases. Operators could not contract their workforces, as key workers needed services. Revenue took a hit and is only beginning to recover - six months later. Our business relies on fare payments being processed, so the dip in passengers had an immediate impact. However, on the flipside, we’ve seen demand for contactless payments sharply increase. The provision of tap-to-pay has become an essential part of the effort to make public transport ‘covid secure’, alongside stringent sanitisation practises and compulsory face masks. As a result, our team has been working hard to onboard 40 operators since March.

Things will only get better, with research by Visa showing that public transit ridership increased globally by 200% in the second quarter of 2020. In tandem, the escalated use of contactless and digital wallets is unlikely to abate, with payments behaviour permanently changed. This is indeed the case in the US, which was previously slow to adopt contactless. A combination of germaphobia and widespread contactless card issuance is driving many more consumers to experience the primary benefits of tap-to-pay: convenience and speed.

Staying focused on our goals

We started with a mission to simplify transit payments, and that is still what motivates us every day. The next stop on our product roadmap, becoming an omni-channel payment gateway, opens up the potential for us to support a variety of mobility-as-a-service experiences. We’re excited by the prospect of venturing into new transit and mobility-related verticals.

Cities around the world are reeling from the impact of the pandemic, rethinking the way people live, work and move around. Our partnerships will be our strength as we make the most of this fertile ground for innovation. Working together, we can get closer to the ideal of seamless travel.

Amin Shayan

Amin was part of Littlepay’s founding team, becoming CEO in 2017. Before joining Littlepay, he worked in investment banking in New York and London. He describes his move from the financial sector to a fintech startup as “leaving the dark side to join the rebellion”

Littlepay specialises in payment processing for the transit and mobility industries. Around 200 transit operators use Littlepay to take payments made using a contactless EMV bank card or a digital wallet, and the gateway has processed over 120 million transactions. Littlepay will soon be launching an e-commerce payment gateway for web and mobile checkouts.