The British transport startup Citymapper is competing directly with Transport for London by launching a private sector rival to the Oyster card, offering unlimited travel in the capital’s centre for £4.10 less a week than the official option.

The “Citymapper Pass” allows unlimited travel in zones one and two of London’s fare system, as well as unlimited bus rides citywide, for £31 a week, a discount on the £35.10 that TfL charges for the same journeys. Users do, however, have to pay for at least four weeks up front, while TfL only takes the money as the journeys are made.

In a blogpost announcing the pass, the company said: “Cities are complicated. Our mission has been to simplify them. We’ve solved (and are still improving) many hard problems in urban mobility: multimodal routing to help with directions, a data factory that fixes open data so users can get accurate information, and a myriad of product features that solve everyday use cases. But we’ve always been missing something: ticketing and payment integration so that we can help users with the complete experience.”

Citymapper, launched in 2011 as a mapping app to help Londoners travel their city by public transport, now operates in almost 40 cities around the world. But the company has never had a reliable source of revenue in that time, instead operating on almost $50m of venture capital funding.

While the pass will bring in revenue, it will also result in the company losing money, at least in the short term. Technically, it operates as a simple pre-paid debit card, with Citymapper paying TfL for each journey its users take until they hit the standard weekly price cap.

That means that every user who reaches the daily Tube price cap (£7.00 for zones one and two) at least five days in seven will result in Citymapper losing money on them that week. The company’s explicit plan to counter that loss is to expand the pass by bundling in ever more private offerings, where it has more power to negotiate prices, until it offers a bundle that covers everything from dockless bikes, through rental cars, to ridesharing services.

It already offers a premium version of the pass for £39 a week which includes unlimited use of the TfL-run cycle hire network, and £10 a week credit on another experimental service, the CityMapper “Smart Ride” bus/taxi hybrid.

“Right now, we see a real proliferation of all these private transport players and all these different modes, and more complexity. We want to see if we can abstract it away, and say to the user: we will take care of the hassle for you,” the company’s chief executive and founder Azmat Yusuf told Wired magazine last week. “Any other services that come along can be added over time. If we have scooters coming into the city, we’ll figure out a way we can provide you with access to that as well.”

But the launch of the service has prompted concerns from some that the company’s end goal is to try and burn its funding to establish a large base of users that it can then wield in political battles with city authorities to gain better terms for itself. That model has brought success for companies like Uber and Airbnb, which have reshaped regulations around their needs in cities including San Francisco, New York and Paris.

For its part, TfL says it welcomes the move, although Citymapper had not told the operator it was planning on launching the pass before the first media reports arrived last week. In a statement, the transport body said: “We are aware of Citymapper’s plans to introduce a subscription model, bundling together a number of transport options in London, and welcome products which promote public transport, walking and cycling.”