One tap-and-go payment system in the works for South African taxis, buses, and trains

The Department of Transport plans to develop an integrated smart ticketing system for single tap-and-go payments for public transport, including trains, buses, and taxis.

To execute this goal, the department has approached the private sector for assistance, formally issuing requests for information and inviting ideas and investment from the private sector into state-owned infrastructure.

This new system is intended to eliminate queues and paper-based tickets, ease public transport, and make daily life for commuters easier.

“The private sector has an important role to play to make this a reality,” said Barbara Creecy, Transport Minister.

It should be noted that many first-world countries already employ similar systems with all-in-one smart ticket accounts or passes integrated with most public transport.

These countries are mostly in Europe, including France with its Navigo Pass, Switzerland with its Swiss Travel Pass, and Germany with the Deutschland-Ticket.

The Swiss Travel Pass is the most comparable to the department’s intended goals, which covers travel across trains, buses, and boats, and discounts on trams, mountain railways, and cable cars.

Most of the systems allow users to buy tickets or load pay-as-you-go credits in a special public transport wallet or account.

This credit can then be used to pay for public transport by tapping a phone with a suitable mobile app or a physical card against an RFID or NFC reader on entry and exit points.

However, while these systems are effective and efficient in European countries, the same could likely not be said for South Africa.

South Africa’s public transport infrastructure is highly fragmented, with most commuters needing to engage with multiple parties when travelling.

This includes paying cash to use taxis, but needing separate tickets for buses and trains.

Since many who use the train get there via a bus or taxi, commuters pay several disparate parties.

Additionally, the overall stability and regulation for much of South Africa’s public transport sector are lacking, which could present problems for introducing and managing a unified digital system.

Solving the taxi cash problem

Should this new system become a reality, it could help solve one of the main issues with the taxi industry.

Organisation Undoing Tax Abuse (Outa) recently highlighted that the taxi industry pays no taxes, despite boasting a R90 to R100 billion annual revenue.

Outa CEO Wayne Duvenage, earlier this year, also called for the taxi industry to be formalised to solve this problem.

The taxi industry can avoid taxes mainly because almost all minibuses work exclusively with cash, making it difficult for the South African Revenue Service to detect and trace.

However, the South African National Taxi Council has decried Outa’s stance as “misguided and shallow” and noted that taxis do contribute to taxes in the form of personal income tax.

The informal nature of the taxi industry not only presents issues for taxation but also raises the need for a new system.

Notably, there have been around 14 prior efforts by private companies to roll out a cashless payment system with taxis.

All have failed thus far, with the main reasons being the internal politics of the taxi associations that fragment the industry and the need for taxi drivers to have immediate access to cash to cover daily running costs.

Should the taxi industry be formalised and a cashless payment system implemented, it could make life easier for taxi drivers who can prove their income and access more financial services.