Alabama Debuts Smart Utility Payments Program

Smart Cities' Impact On Payments, Commerce

It started, arguably, with mass transit, though with many bumps along the way, as the problems are slowly being solved while still bedeviling many cities. But transit will very likely be key – whether that means subways, buses or other, more individual forms of motion, such as rideshares or even scooters.

It will certainly involve parking, and then tolls, and then other forms of commerce tied to transportation. Utilities are in the mix, and most likely other services that all citizens must pay for. The rise of smart cities – the “it” – depends on the spread of digital payments, and as progress continues on those goals, it’s worthwhile to take a quick look at the evolving ecosystem and see where things stand as the midpoint of 2019 approaches.

Payments stands as a massive opportunity when it comes to smart cities. Various estimates support that statement, but among the most reliable – and most cited, which means most influential – comes from Visa, which has said the spread of digital payments across 100 cities (including via smart city efforts) would result in a net benefit of some $470 billion annually. According to Visa, the rise of what is called “cashless” cities “could have a catalytic effect on the city’s overall economic performance, including GDP, employment, wage and productivity growth.”

Small Moves First?

Some locations on the smart city path are starting relatively small, at least at first, on the path to more digital payments and the efficiencies they bring.

That includes Birmingham, Alabama, where city leaders are touting “smart” utility payment options – a program that basically means giving consumers many more places to settle their power bills, including common retail locations. Expect to see more such efforts as cities become smarter (a definition that can vary from location to location, but generally means using data, digital payments, sensors and other tools to bring new efficiencies to daily life). Of course, such efforts involve not only a city, but also a utility provider (and sometimes regulators), making even such a small move somewhat complex.

Bringing more digital payments power to parking can sometimes be – or at least seem like – an easier task, depending on ownership issues. No matter what, parking promises to carry a heavy load when it comes to making digital payments even more prominent in the lives of consumers residing in smart cities. So far, only 11 percent of “global public parking spaces are smart,” according to one report from late last year, but “market spending for smart parking products and services is expected to grow at a compound annual growth rate (CAGR) of 14 percent and surpass $3.8 billion by 2023.”

Parking Growth

In addition to parking, transportation-as-a-service providers and investors are still betting big on shared scooters (and bikes), even as some city residents and lawmakers push back on those instruments of last-mile human motion. As shown by new PYMNTS research, one key to making scooters an even more important part of cities – and smart city efforts – is offering consumers a variety of payment options, even if that means using tools such as QR codes. That holds especially true for cities in Asia.

Payments have another, perhaps subtler, role in the ongoing rise of the smart cities and their prospects for success, according to some observers and analysts. Smart cities will operate not so much on technology as on the data that runs, guides and governs that technology, whether that means its deployment or day-to-day use. And when it comes to data, there is much more involved than just collecting it.

“Payments data is, of course, affected by some of the same issues that have blighted previous smart city data analysis, because people can only spend money on the things that already exist,” reads one recent overview of the issue. “But one big difference of payments data is that it has a clear elective component.”

Just consider it this way: “Credit cards, mobile wallets and pre-paid cards all have very different demographics and usage patterns, so understanding who used what, when and what for can be a powerful tool in planning future services, rather than simply relying passively on monitoring of choices made from default options.”

No doubt the digital payment choices that city residents make over time will help “city developers … tailor their services in accordance with the preferences and characteristics of those consumers, adding another contextual layer to the crucial insight of the city’s inhabitants,” the analysis said.

All of this may seem obvious, but that doesn’t mean any of it will be easy. But rest assured that when it comes to smart cities, payments will have a big seat at the main planning table one way or another.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.