"We're on a road to nowhere
Come on inside
Taking that ride to nowhere
We'll take that ride."
- David Byrne for the Talking Heads' hit 1985 album Little Creatures
A weekend drive to "nowhere" is every city rat’s fantasy — till it comes to a jarring halt at the long queues of highway toll booths.
The government wants to come to the rescue.
India’s slow progress to the fast lane
In April 2016, seven months before demonetisation, the government rolled out FASTags, or electronic toll-collection tags, enabling cashless toll payments at a few major national-highway routes.
Since then, the project has seen slow but steady progress.
According to a Ministry of Transport press release, in May 2016, only 3,133 FASTags were sold, and toll collection through these tags amounted to only around INR71 lakh for April-May. By December that year, the number of FASTags sold had risen to 180,000, and toll collection had shot up to INR47 crore.
In the past one and a half years, e-tolling has shown signs of really coming of age. In February, the ministry said the number of FASTags issued had touched 1,160,000, with toll collections clocking around INR11 crore every day.
But India still has a long way to go to catch up with European and North American countries or Asian pioneer Japan, where the levels of technology adoption for radio-frequency identification (RFID) tags are really high.
In Japan, for instance, e-tolling started in 2001 and has attained a usage ratio of 90%, with approximately 7,000,000-8,000,000 daily transactions, according to a PwC report from April. But technology alone can’t win the game. There has to be a business proposition. The government seems to have understood this rather well.
Goodies to push faster adoption
India, two years after e-tolling implementation, gets around 20% of total toll revenues from the electronic toll collection (ETC) mechanism. The government wants to hit the 50% mark in a couple of years and is offering heavy incentives such as 5%-10% cashback. In addition to this, the government has made it mandatory for all vehicles sold after December 1, 2017, to have a pre-fixed RFID tag.
Around 20 banks and a few wallet companies are currently in the fray to capture the FASTag market. The excitement is driven by the sops offered by the transport ministry.
The bank that acquires a toll plaza and instals its payments system gets 1.25% of every transaction. While the bank that issues the FASTag and backs the payment infrastructure gets a commission of 1.5%.
“In a typical card business, we make 0.2%-0.3%, while in this we make 1.5% as the issuer bank,” says Abhijeet Sehgal, co-founder and chief executive officer of 1Pay, which owns 1Move, a dedicated payments solution for ETC that connects vehicles with toll plazas and banks.
1Move’s platform is aimed at commercial vehicles or fleet owners. The startup, whose Mumbai office lies in the vicinity of the headquarters of highway concessionaires, is working with five banks of the 20 that are participating in the ETC sector. For some banks it is providing just the software-enabling issuer payments infrastructure, while for others, including HDFC Bank, it is providing software as well as managing FASTag sales.
“Big transporters need more balance in the wallet in order to pay for tolls,” Sehgal says, highlighting the INR1 lakh limit for wallets. Multiple wallets for multiple vehicles will become a complex proposition for a fleet owner, Sehgal, who has a background in the logistics and transport business, says.
Backed by the banks, 1Move offers commercial fleet owners an option of having a bank account-linked FASTag. For personal vehicles, it has wallet-linked FASTags.
E-tolling makes sense for trucks
The ETC business is expected grow around 30% year on year thanks to various awareness campaigns, mandatory prefixing of RFID tags, and increase in automobile production, according to PwC.
A major chunk of this growth will come from commercial vehicles.
The commercial-vehicle count in the country is around 14 million at present, up from 9 million two years ago, according to Sehgal. And given that only 1 million or so FASTags have been sold so far, there is huge headroom for growth. E-tolling helps vehicle users reduce fuel cost and cut average waiting time by around 10 minutes at toll plazas, according to the PwC report cited earlier. The report says a pan-India electronic toll collection system on national highways may help vehicle users save around INR87,000 crore every year.
“Even if we assume an average ticket size of INR250 for a truck and multiply it by four swipes a day, the daily toll per vehicle is INR1,000 per day. For a fleet owner with 4,000 trucks, it means INR40 lakh worth of toll every day,” Sehgal says.
At this scale, the impact of government incentives such as 5% cashback also magnify. Add to that the fuel and time saved from swift passage through toll plazas and fleet owners’ ability to track their vehicles.
IRB Infrastructure, the owner and operator of India’s first expressway — the Mumbai-Pune highway — and many others, got 20% of its total toll revenue from ETC in FY18, compared with only 2% in FY17, Sudhir Hoshing, joint managing director of the company, tells ET Prime.
FASTag revenues have grown significantly backed by heavy commercial-vehicle traffic, Hoshing says.The road ahead: Can RFID be the Aadhaar for vehicles?
India’s road network transports more than 60% of all goods in the country and takes care of 85% of its total passenger traffic. National highways, which only make up for 2% of roads in the country, carry 40% of the overall traffic. With a steady rise in vehicular population, both commercial and personal, only technologies such as FASTag can save the day.
With the government working towards starting FASTag services on city and state toll roads as well, 2,000 more toll plazas are likely to be added.
“Toll is one part of the story. There are other periphery ancillary services such as parking that these RFID tags can provide. That’s the next stage of business. We are putting up an RFID-based solution in malls and parking lots. Toll will be a major business for RFID, followed by parking, fuel, and then challan,” Sehgal says.
Then there’s an array of cross-selling opportunities.
“As an additional benefit, the existing FASTags can be linked to the insurance policies of the commuters. Not only will the FASTags help the commuters do away with the need of carrying policy documents, but also facilitate a seamless, hassle-free journey,” the PwC report mentioned earlier says.
Another use for RFID tags is the linking of FASTags with GST e-way bills. The move is expected to prevent chances of vehicles transporting goods to places other than those declared in the e-way bill challan.
Clearly, RFID tags have the potential to become a single-point access window for any information on vehicles.
1 CONTRIBUTOR COMMENT
• 60 days ago
Madhav Samant
Managing Partner , NAP Financial Wellness LLP
I have been using a Fastag for the past few months and the experience has largely been positive. However, besides monetary incentives other measures such as clearly marking the Fastag lanes - there are usually more than one, and dis- incentivising non-Fastag users need to be taken. This will further increase adoption
Like 1 like
o
Priyanka Salve
Senior Staff Writer , ET Prime
True. Adoption and awareness of the product are the two main issues right now. The government soon wants to make all lanes hybrid, accepting both cash and tags, however I think that might be counter productive as people with tags will have to wait with others paying via cash.
Like 3 likes 55 days ago
Come on inside
Taking that ride to nowhere
We'll take that ride."
- David Byrne for the Talking Heads' hit 1985 album Little Creatures
A weekend drive to "nowhere" is every city rat’s fantasy — till it comes to a jarring halt at the long queues of highway toll booths.
The government wants to come to the rescue.
India’s slow progress to the fast lane
In April 2016, seven months before demonetisation, the government rolled out FASTags, or electronic toll-collection tags, enabling cashless toll payments at a few major national-highway routes.
Since then, the project has seen slow but steady progress.
According to a Ministry of Transport press release, in May 2016, only 3,133 FASTags were sold, and toll collection through these tags amounted to only around INR71 lakh for April-May. By December that year, the number of FASTags sold had risen to 180,000, and toll collection had shot up to INR47 crore.
In the past one and a half years, e-tolling has shown signs of really coming of age. In February, the ministry said the number of FASTags issued had touched 1,160,000, with toll collections clocking around INR11 crore every day.
But India still has a long way to go to catch up with European and North American countries or Asian pioneer Japan, where the levels of technology adoption for radio-frequency identification (RFID) tags are really high.
In Japan, for instance, e-tolling started in 2001 and has attained a usage ratio of 90%, with approximately 7,000,000-8,000,000 daily transactions, according to a PwC report from April. But technology alone can’t win the game. There has to be a business proposition. The government seems to have understood this rather well.
Goodies to push faster adoption
India, two years after e-tolling implementation, gets around 20% of total toll revenues from the electronic toll collection (ETC) mechanism. The government wants to hit the 50% mark in a couple of years and is offering heavy incentives such as 5%-10% cashback. In addition to this, the government has made it mandatory for all vehicles sold after December 1, 2017, to have a pre-fixed RFID tag.
Around 20 banks and a few wallet companies are currently in the fray to capture the FASTag market. The excitement is driven by the sops offered by the transport ministry.
The bank that acquires a toll plaza and instals its payments system gets 1.25% of every transaction. While the bank that issues the FASTag and backs the payment infrastructure gets a commission of 1.5%.
“In a typical card business, we make 0.2%-0.3%, while in this we make 1.5% as the issuer bank,” says Abhijeet Sehgal, co-founder and chief executive officer of 1Pay, which owns 1Move, a dedicated payments solution for ETC that connects vehicles with toll plazas and banks.
1Move’s platform is aimed at commercial vehicles or fleet owners. The startup, whose Mumbai office lies in the vicinity of the headquarters of highway concessionaires, is working with five banks of the 20 that are participating in the ETC sector. For some banks it is providing just the software-enabling issuer payments infrastructure, while for others, including HDFC Bank, it is providing software as well as managing FASTag sales.
“Big transporters need more balance in the wallet in order to pay for tolls,” Sehgal says, highlighting the INR1 lakh limit for wallets. Multiple wallets for multiple vehicles will become a complex proposition for a fleet owner, Sehgal, who has a background in the logistics and transport business, says.
Backed by the banks, 1Move offers commercial fleet owners an option of having a bank account-linked FASTag. For personal vehicles, it has wallet-linked FASTags.
E-tolling makes sense for trucks
The ETC business is expected grow around 30% year on year thanks to various awareness campaigns, mandatory prefixing of RFID tags, and increase in automobile production, according to PwC.
A major chunk of this growth will come from commercial vehicles.
The commercial-vehicle count in the country is around 14 million at present, up from 9 million two years ago, according to Sehgal. And given that only 1 million or so FASTags have been sold so far, there is huge headroom for growth. E-tolling helps vehicle users reduce fuel cost and cut average waiting time by around 10 minutes at toll plazas, according to the PwC report cited earlier. The report says a pan-India electronic toll collection system on national highways may help vehicle users save around INR87,000 crore every year.
“Even if we assume an average ticket size of INR250 for a truck and multiply it by four swipes a day, the daily toll per vehicle is INR1,000 per day. For a fleet owner with 4,000 trucks, it means INR40 lakh worth of toll every day,” Sehgal says.
At this scale, the impact of government incentives such as 5% cashback also magnify. Add to that the fuel and time saved from swift passage through toll plazas and fleet owners’ ability to track their vehicles.
IRB Infrastructure, the owner and operator of India’s first expressway — the Mumbai-Pune highway — and many others, got 20% of its total toll revenue from ETC in FY18, compared with only 2% in FY17, Sudhir Hoshing, joint managing director of the company, tells ET Prime.
FASTag revenues have grown significantly backed by heavy commercial-vehicle traffic, Hoshing says.The road ahead: Can RFID be the Aadhaar for vehicles?
India’s road network transports more than 60% of all goods in the country and takes care of 85% of its total passenger traffic. National highways, which only make up for 2% of roads in the country, carry 40% of the overall traffic. With a steady rise in vehicular population, both commercial and personal, only technologies such as FASTag can save the day.
With the government working towards starting FASTag services on city and state toll roads as well, 2,000 more toll plazas are likely to be added.
“Toll is one part of the story. There are other periphery ancillary services such as parking that these RFID tags can provide. That’s the next stage of business. We are putting up an RFID-based solution in malls and parking lots. Toll will be a major business for RFID, followed by parking, fuel, and then challan,” Sehgal says.
Then there’s an array of cross-selling opportunities.
“As an additional benefit, the existing FASTags can be linked to the insurance policies of the commuters. Not only will the FASTags help the commuters do away with the need of carrying policy documents, but also facilitate a seamless, hassle-free journey,” the PwC report mentioned earlier says.
Another use for RFID tags is the linking of FASTags with GST e-way bills. The move is expected to prevent chances of vehicles transporting goods to places other than those declared in the e-way bill challan.
Clearly, RFID tags have the potential to become a single-point access window for any information on vehicles.
1 CONTRIBUTOR COMMENT
• 60 days ago
Madhav Samant
Managing Partner , NAP Financial Wellness LLP
I have been using a Fastag for the past few months and the experience has largely been positive. However, besides monetary incentives other measures such as clearly marking the Fastag lanes - there are usually more than one, and dis- incentivising non-Fastag users need to be taken. This will further increase adoption
Like 1 like
o
Priyanka Salve
Senior Staff Writer , ET Prime
True. Adoption and awareness of the product are the two main issues right now. The government soon wants to make all lanes hybrid, accepting both cash and tags, however I think that might be counter productive as people with tags will have to wait with others paying via cash.
Like 3 likes 55 days ago
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