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 GDP growth rises rapidly, people are crowding into cities where existing transit infrastructure simply can’t meet demand.
This year, pre-holiday 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 US$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.
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 centres, even routine travel across them becomes daunting.
Cities are therefore racing to add public transit capacity. Jakarta last year began construction of a new MRT line, Ho Chi Minh City opened its first metro line in December, and both Kuala Lumpur and Bangkok are expanding their MRT systems. But fast-growing cities must do more than just add transit capacity: To meet the demands of rapid urbanisation, cities must modernise 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 They help operators phase out outdated ticketing infrastructure that’s costly to maintain, while also streamlining fare collection and reducing revenue leakages, such as when payment cards expire or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 allows city authorities to track commuter travel patterns to optimise resources and help with future urban planning.
An emerging standard
While not yet universal, open-loop payment systems aren’t entirely new to public transit. Transport for London (TfL) 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.
Ten years into the program, some 70% of TfL bus journeys were being made using contactless payment cards or mobile devices. The number of new cards used throughout the system has grown steadily since contactless payment was introduced. According to TfL, contactless payment significantly contributed to reducing costs spent on revenue collection by nearly half.
In 2019, Singapore’s Land Transport Authority (LTA) launched SimplyGo, Asia’s first open-loop payment system, after a three-year pilot program. By the end of that year, SimplyGo had been widely adopted, with over 250,000 daily trips paid through the system. The convenience of tapping a payment card for transit also encouraged broader digital payment adoption in retail, reinforcing Singapore’s push toward a cashless society.
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% 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 AI-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.
These future transit networks will leverage cutting-edge technologies like AI-driven demand forecasting and real-time data analytics to predict passenger traffic, optimise routes, and minimise delays by adjusting services in real time.
At the same time, the integration of biometric payments will enable a frictionless, cashless experience, where a simple face scan or fingerprint grants access to multiple modes of transport, from subways and taxis to autonomous vehicles. This technology will also enhance security, providing a safer and more personalised travel experience for all users.
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 modernising 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. The region’s transportation future will be defined by its ability to scale not just in size, but in intelligence — transforming cities into flexible, smart hubs capable of managing fluctuating travel patterns while providing reliable and sustainable mobility options for both local commuters and international visitors.
