Powering the mass-transit opportunity in SE Asia and PH
Across Southeast Asia, booming cities are struggling to contain the gridlock that comes with urbanization and rapid economic growth. As the region’s economies evolve and gross domestic product growth rises rapidly, people are crowding into cities where existing transit infrastructure simply can’t meet demand.
This year, preholiday traffic in Vietnam’s biggest urban centers soared, doubling drive times in Hanoi and Ho Chi Minh City. In Indonesia, transportation managers have estimated that Jakarta’s infamous gridlock costs the city $4.38 billion per year. Meanwhile, Bangkok is now considering congestion pricing as it seeks to manage increasingly heavy traffic, despite a modern light-rail system.
In the Philippines, the government is actively working to fast-track the completion of mass transit projects, while also promoting greater public-private partnerships, which will enhance operational efficiency and better serve the public.
Beyond daily congestion, mega-events—such as the Southeast Asian Games or potential new Formula 1 races in the region—can also overwhelm cities. With mass transit still underserved in many Southeast Asian urban centers, even routine travel across them becomes daunting.
Cities—from Jakarta and Kuala Lumpur to Ho Chi Minh City and Bangkok—are therefore racing to add public transit capacity. But fast-growing cities must do more than just add transit capacity: To meet the demands of rapid urbanization, cities must modernize transit networks for long-term resilience.
Future-proofing transit networks
The relative underdevelopment of many of Southeast Asia’s urban transit systems presents a large-scale opportunity for cities to adopt integrated payment systems en masse, allowing commuters to pay at the turnstile using contactless credit or debit cards, mobile wallets or wearable devices.
Such integrated systems, known as open-loop systems (as opposed to closed-loop systems that require a proprietary card or ticket), offer a cost-efficient way to reduce user friction in transit networks. They eliminate the barrier to entry for visitors and enable all users to capture the benefits of transit equally.
Open-loop systems allow transit operators to focus on core services instead of managing complex payment systems. They help operators phase out outdated ticketing infrastructure that’s costly to maintain, while also streamlining fare collection and reducing revenue leakages, such as when payment cards expire or are lost. The convenience of using existing bank cards or mobile devices can also drive higher ridership, potentially increasing revenue.
Meanwhile, upgrading payment systems also allow city authorities to track commuter travel patterns to optimize resources and help with future urban planning.
Since 2022, Southeast Asia has seen a compound annual growth rate of 12 percent in contactless payment acceptance. The Philippines has outpaced this, with a remarkable 27 percent over the same period across all types of contactless transactions. This expansion is already reshaping commerce across the region, and as contactless payments become integrated into mass transit, a similar positive impact can be expected.
An emerging standard
While not yet universal, open-loop payment systems aren’t entirely new to public transit. Transport for London was one of the first major transit agencies to accept contactless payment using bank cards when it introduced the service on buses in 2012 and throughout its system in 2014.
In 2019, Singapore’s Land Transport Authority launched SimplyGo, Asia’s first open-loop payment system, after a three-year pilot program.
In the Philippines, Mastercard continues to drive the future of urban mobility through payment systems that enable faster, safer and more convenient transactions. Last year, the country’s first contactless payment system for buses went live in Bonifacio Global City.
Starting July 25, 2025, commuters will be able to Tap & Go using their Mastercard debit, credit and prepaid cards in Metro Rail Transit Line 3 stations. Additionally, Mastercard cardholders using compatible e-wallets on NFC-enabled Android smartphones can also make contactless fare payments. This development in open-loop systems is a significant milestone as it not only brings unmatched convenience to commuters, but also drives the usage of contactless payments for everyday expenses across the Philippines.
Short-term investment, long-term payoff
Despite the clear benefits, transitioning to open-loop payment systems presents challenges. Upgrading fare collection infrastructure requires significant upfront investment, and transit authorities must balance this with competing budget priorities such as fleet expansion, station upgrades and operational costs.
There’s also the challenge of integrating open-loop technology into existing transport networks, many of which still rely on legacy systems not designed to handle digital payments. Upgrades require not just new hardware—like contactless readers at train turnstiles and bus entrances—but also secure, real-time processing networks that can handle millions of transactions daily.
The introduction of new networks also introduces potential cybersecurity risks. Globally, the transportation sector was the target of about 11 percent of all cyberattacks in the year ending June 2024. To counter this, transit agencies will need to implement advanced security measures, such as end-to-end encryption and artificial intelligence-driven threat detection, to reduce vulnerabilities and ensure safer transactions.
Shaping the future of transit in Southeast Asia
Looking ahead, the future of Southeast Asia’s urban transit systems is not just about easing congestion: It’s about transforming how people experience mobility in the region. In five to 10 years, we envision a transit ecosystem that’s truly smart, dynamic and adaptable to the ever-evolving needs of its citizens and tourists alike.
Imagine a day when commuters seamlessly transition from buses to trains to ride-sharing services, all with a single, secure payment method—whether through a contactless card, mobile wallet or even facial recognition.
All of this is not just a possibility; it’s a future within reach. As Southeast Asia’s urban populations continue to grow, these intelligent transport systems will help cities scale not just in capacity but in connectivity. Given the region’s commitment to modernizing transit systems by 2030, we could see vast multimodal networks that extend beyond city limits, linking rural and urban areas, reducing travel time and opening up new economic opportunities. With strategic investment in technology, public-private collaboration and a commitment to innovation, Southeast Asia can become a global leader in smart urban mobility.
Safdar Khan is division president of Mastercard in Southeast Asia.
