The Total Addressable Market (TAM) for automatic fare collection system was valued at USD 8.39 billion in 2022. It is projected to reach USD 21.81 billion by 2031, growing at a CAGR of 11.20% during the forecast period (2023-2031).
Population explosion and the burgeoning number of commuters are driving the global transportation sector. This scenario has paved the way for a trailblazing automated technology that streamlines the fare collection process. Automated Fare Collection (AFC) systems are used in several urban public transport systems, which are shifting from paper tickets printed via a small machine with a keypad to digital tickets (smart cards). Although paper tickets and passes still occupy a significant share in urban and rural rail transit systems and commuter rail, over the past few years, these ticketing methods have moved to magnetic stripe cards and contactless smart cards – inexpensive technologies that render additional data collection options and security. Additionally, with the concept of smart cities growing around the globe, the proclivity toward AFC systems is evident. Cities are integrating advanced technologies into municipal operations, starting from transportation to infrastructure repair.
Smartphones have evolved into a necessary tool for online ticketing, which has accelerated the market for automated fare collection systems. With the development of standalone smartphone applications for traveling by bus and train, smartphones make ticket purchasing simpler and more convenient, which supports market expansion. Customers may buy any ticket type and use cashless payment methods. Another benefit of mobile application-based ticketing is that it speeds up boarding and streamlines cash-handling procedures. Customers today value the convenience of using preloaded cards for purchases to improve the transportation experience of travelers. In India, the UPI mode of payment has also contributed heavily to the automatic fare collection system. With new advancements in UPI and eWallet technology, the automatic fare collection system is anticipated to grow further throughout the forecast period.
The automated fare collection system eliminates the need for cash payments and worries about communication difficulties between drivers and passengers, enabling hassle-free payment with smart cards. With every swipe of the card, useful information is gathered and instantly added to a database to enable effective payment handling, quicker transactions, and shorter processing times. Additionally, it gives retailers the ability to efficiently manage records and handle a high volume of transactions. Additionally, AFC systems offer quick service and self-service options, guaranteeing little to no wait time for customers and cutting down on overall operational time, and increasing process efficiency. Additionally, quicker transaction validation enables the staff to quickly produce fare tokens and tickets. The Automatic Fare Collection (AFC) system has increased the effectiveness of fare box collection, made travel convenient for commuters, and consequently fuels market expansion.
Cyber security is among the top concerns, along with data protection and privacy. Increasing ransomware attacks and phishing through email can impact the use of online payments, ultimately affecting the Automatic Fare Collection System market. Server downtime due to maintenance, overload, or possible cyber threat can create inconvenience for the customers, which can reduce the use of an automatic fare collection system.
Future transit infrastructure projects in developing and developed economies could present business opportunities for companies that provide automated fare collection solutions. Additionally, as more transit companies adopt the technology, opportunities will arise for offering support services both during and after system installation. The 100 Smart Cities Project in India intends to use a variety of modes of transportation, including driverless Metrino pods, LRT, BRT, Monorail, and Metro projects. Because many commuters are anticipated to use these services, these projects are anticipated to include installed automated fare systems. In February 2022, Delhi Metro contracted with a consortium to upgrade the entire ecosystem, including the Automatic Fare Collection (AFC) system, in order to implement the locally developed National Common Mobility Card (NCMC) throughout the entire Delhi Metro network. This upgrade will also enable travel via QR Tickets, Account Based Tickets, and Near Field Communications (NFC) Media. In addition to facilitating retail shopping and purchases, the implementation of NCMC & QR tickets will allow for seamless travel on metro rails and other public transportation systems throughout the nation. Passengers will also be able to enter or exit a metro station on its corridors using a mobile phone with Mobile QR and NFC-based tickets.
The global automatic fare collection system market is segmented by component, application, and technology.
Based on components, the global market is bifurcated into hardware and software.
The hardware segment is the highest contributor to the market and is expected to grow at a healthy CAGR during the forecast period. The hardware segment includes ticket vending machines and fare gates, among others. Ticket vending machines and fare gates play a crucial role in the retailing of tickets and are complex systems interconnected with other systems and back-office software.
The software segment is expected to witness a higher CAGR. Software and hardware are both essential for the automatic fare collection system. With the increasing adoption of automated ticketing in developing countries, the demand for software will increase. Increasing cyber threats require regularly updated software with fixed bugs and create several complications for hackers. With advanced hackers, the need for up-to-date software is also increasing, driving the growth of the automatic fare collection system market throughout the forecast period.
Based on the application, the global market is bifurcated into parking, transportation and logistics, and entertainment.
The transportation & logistics segment is the highest contributor to the market and is expected to grow at a healthy CAGR during the forecast period. In both developing as well as developed countries, cities are on a staggering pace of progression, thereby relying on automated systems, which hastens the process of collection and verifying transport fees. The fidelity of AFC systems sustains factors such as efficiency, accessibility, and affordability that AFC systems serve to transport planners, operators, local governments, and consumers. Additionally, these systems are becoming compatible with an increasing number of payment methods beyond debit and credit cards, smart cards integrated with Near-Field Communication devices, and e-commerce platforms such as PayPal, PhonePe, AmazonPay, and others.
The parking segment is expected to grow at a significant rate. The segment is growing with increasing infrastructure for leisure time, such as shopping malls, movie theaters, zoos, and others. With the growing population and increasing population density in developing countries, the need for convenient parking has increased. Thus, increasing the demand for automatic fare collection systems in parking lots for convenient, efficient management.
Based on technology, the global market is bifurcated into near-field communication, magnetic strips & tokens, and smartcards.
The smartcard segment is the highest contributor to the market and is expected to grow at a healthy CAGR during the forecast period because it has greater operational flexibility and processes data more quickly than magnetic stripe cards. Smart cards make it possible to integrate fares across various modes of transportation and give service providers the ability to handle various time- and distance-based fare structures.
The near-field communication (NFC) segment is expected to grow at a significant rate because more people are choosing to use cashless fare collection for different forms of public transportation. Additionally, the segment growth is likely to be aided by the promising development of rail and road transportation infrastructure in developing regions like the Asia Pacific.
The global automatic fare collection system market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
North America region is the highest contributor to the market and is expected to grow at a healthy CAGR during the forecast period. Public transportation in North America has been witnessing a drastic change in the wake of investments by federal and local bodies aiming to revamp the transit modality in the region. Numerous upgradation programs by noteworthy companies have been implemented in urban areas such as Baltimore, New York, Boston, Washington D.C., Chicago, Atlanta, Los Angeles, Houston, and others, as their respective transit systems are acquiring new rolling stock, thereby expanding and modernizing the existing infrastructure to comply with the state of the art AFC system. For instance, in 2018, Masabi, the company introducing Software-as-a-Service ticketing and payments to public transport, joined forces with the Regional Transit Service (RTS) in Rochester (New York) to deliver its next-generation AFC system by utilizing Justride – an innovative account-based automated fare collection system. This system would enable commuters without smartphones and bank accounts to purchase fares expeditiously with the help of Ticket Vending Machines (TVMs) supplying smartcards or printed barcodes.
Europe is expected to witness dynamic growth in the Automatic Fare Collection System market during the forecast period. The automatic fare collection system and ticketing market are on an upward trajectory in Europe as the latest technology is focused more on reduced maintenance costs, reliable equipment, faster transactions, and security. Transit agencies now view contactless payments as an urgent matter due to rising health and safety concerns in public transportation, as cash poses a higher risk of COVID-19 and other disease transmissions. 35% of Americans and Germans who survived the pandemic reported using less cash as a result. In the United Kingdom, this figure rises to 65%. In addition, 55% of consumers said they planned to use contactless payments more after the pandemic, suggesting that health concerns may have had a lasting impact on their behavior. In 2019–20, two-thirds of noncash transactions in London were contactless, with the remaining one-third being made with an Oyster smart card. Such trends of adapting technologies encourage innovation, and developments in automatic fare collection systems would offer an array of opportunities for the AFC system market.
Asia-Pacific is expected to witness significant growth in the Automatic Fare Collection System market during the forecast period. The growing trend of digitization is pushing several sectors across developing countries, such as India and China, have led to an increasing scope of development for the AFC system market in the Asia-Pacific region. Additionally, countries such as Japan which is technologically up front, have the potential of adapting innovations and upgradation in the AFC systems offering growth prospects for the market. The Singapore Land Transport Authority (LTA) awarded the Thales Group a contract in October 2021 for the seven-year modernization and standardization of 1,350 AFC gates on Singapore's MRT. The upgraded AFC gates, which use contactless technologies, will make it possible for everyone to commute without experiencing any delays, improving the efficiency and inclusivity of the public transportation system.
The LAMEA region is expected to witness moderate growth in the global automatic fare collection system market during the forecast period. Rapid urbanization and evolving technology around mobility, ticketing, automated fare collection, and integration of several multiple-mode transit providers in the African region prove to be an imperative factor of growth for the AFC system market. New opportunities for transport operators are continuously developing as a result of initiatives to build smart cities and the growing adoption of technology in the Middle Eastern region. The pandemic has sped up the process of service digitization within the transportation industry and increased demand for contactless payments, convenient travel, and smart city technologies being integrated into commuters' daily routines. Governments, municipalities, public and private bus operators, transportation authorities, and numerous NGOs in the Middle East and Africa favor automatic fare collection with an open-loop ecosystem.
The global automatic fare collection system market's major key players are
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