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Why Smartphone Train Ticketing Hasn’t Sped Up

It’s the T if you’re in Boston, the L in Chicago, the Subway in NYC, the Muni in San Francisco, Metro in Los Angeles and the Tube in London. Just like each city has its own local flavor for its public transportation, each has its own distinct card ticket — a form factor that innovators with mobile payments hope will pave the way for the next generation of traveler.

Unfortunately, it’s a transition that’s been pretty uneven across most major cities where the lowly paper ticket still rules the ride.

Chicago seems to be the pace car for mobile fare apps. It’s been testing its Ventra app since October 2014 that will allow users to use their smartphones with pre-loaded virtual tickets with conductors on the Metra and Pace — the suburban train and bus option — to scan and collect fares. It’s still in test mode but is anticipated to rollout this year. NFC mobile ticketing will be available sometime in 2016. The Chicago Transit Authority (CTA) already had a bumpy ride introducing the Ventra contactless card payment system that temporarily derailed the company’s relationship with its rider base, including giving riders cards that doubled charged or didn’t work at all. Those situations have been resolved and the CTA has made plans to add mobile payments by early next year.

“By early 2016, the app will allow customers to download a virtual Ventra card onto their NFC-compatible mobile devices, which will allow them to access their Ventra transit accounts to pay for rides on trains and buses directly from the Ventra app by touching the phone or device to a Ventra reader,” CTA said.

Ah yes, the magic words – their NFC-compatible mobile devices. Rollout will still be slow as handsets with NFC capabilities work their way into the hands of CTA users.

For East Coasters, the rollout is much slower.

In cities like Boston and New York City, the transportation agencies face a much larger, and older infrastructure. In NYC, there’s been talk for years of putting the old-school paper MetroCard to rest. The rollout of a new digital system in this gigundo metropolitan area has been pushed back multiple times, but is now estimated that those familiar yellow and blue flimsy cards with the bold magnetic black stripe will be a thing of the past come 2022. Yes, seven years from now. The hesitancy to move faster stems from a fear of glitches, which is a high risk considering the massive number of daily riders. Getting it right the first time is their only option to avoid chaos.

This is the city that until 2003, still allowed riders to use subway tokens.

New York has an interesting plan. Instead of re-inventing the wheel twice, what transportation officials are hoping to do is replace its paper cards with technology that customers already have at their fingertips. That means replacing MetroCards with chip-embedded contactless bank cards. 

But because those type of cards haven’t been widely adopted by banks and financial institutions at the anticipated rate, the MTA was forced to push the brakes on that plan.

‘There’s one example of where stepping a little bit too far and a little bit too aggressively on the technology front presented a problem,'” MTA chief Tom Prendergast said.

That plan makes a huge assumption – that banks issue contactless EMV cards – and that is a big “if” especially as the world is looking for lots of excuses to leapfrog over cards entirely to mobile apps. So, the big question here is whether even 2022 is too soon for the MTA unless they, well, shift gears and consider a new strategy.

 San Francisco’s Muni is now catching onto the trend, too.

Early in 2015 the agency said it will also be testing a mobile fare payment app for iOS and Android. Users can buy tickets from their smartphone using their bankcard or PayPal account and redeem with the conductor who will have new equipment to verify mobile fares. (NYC is also looking into this option, as well as allowing riders with key fobs or credit cards with RFID or NRF technology.)

According to Muni, the pilot program is part of a broader push to test mobile payment options for public transportation throughout the Bay Area, using a new version of the Clipper card, a region-wide fare service accepted by multiple transit operators,” MediaPost reported.

Nationally, it appears transportation agencies want to make a switch — but technology needs to catch up. Transit companies have placed their bets on NFC chip-enabled cards but banking on mobile apps means that enough smartphones with NFC capabilities have to be in the hands of consumers to make that work. Convenient and fast, yes, but the same dependencies exist in enabling mobile payments via NFC at restaurants or retailers.

“Smartphone ticketing is going to be the way to go in the future,” said Martin Schroeder, chief technology officer at the American Public Transportation Association, the trade group that represents U.S. transit agencies. “It can replace the ticket vending machine, right there in your hands, without riders having to wait in line, and it also provides flexibility in selecting payment methods.”

In cities like London, the future is already here, and has been here for some time; the same is the case across Europe’s railways.

It was 2012 when news surfaced that commuters could soon use their smartphones for contactless payments at train terminals. The smartphone ticket, which was an enhancement from its contactless payment Oyster card, used a quick tap at the terminal, the rail platform gate or with a bus driver for quick travel. NFC was a norm in London before it was much of a thought in the states, thanks to the London Olympics and the big push (and funding) to enable that technology at Tube rail stations for a fairly concentrated metropolitan environment that already had contactless cards and handsets in the hands of its consumers.

Access to funding is another impediment to making the move away from paper to digital subway payments. In New York, this issue, in particular, has led to the delay.

“At the end of the day it comes down to cost, efficiency of scale and gaining critical mass – there needs to be one system that caters for all, rather than several fragmented ones – and right now we’re in a period of transition,” Marie Ng, vice president of client solutions and innovation at a NYC research firm Millward Brownsaid in an interview in early 2014.

“Not everyone owns a smartphone, and among those who do, not everyone uses mobile payments,” she added. “The challenge with mobile payments in the U.S. is it’s fragmented both from a technology standpoint and ownership standpoint.”

And not much has changed a year later.

Smartphone ownership is on the rise as prices have dropped, and mobile payments are slowly becoming more than just a topic of conversation. But the same chicken and egg issues exist for public transportation systems as any physical merchant. Until enough consumers have smartphones, and smartphones capable of powering an NFC-enabled transaction, transportation agencies won’t break open their budgets to adapt technologies that don’t have a large customer base capable of supporting it. Like most industries that involve evolving technologies, one can’t adapt without the other. And that’s what’s happened in the case of transportation agencies and smart ticketing/mobile payments. They need each other to power forward.

Until then, subway riders in New York City can rely on those old-fashioned blue and yellow magnetic strip tickets.

At least until 2022. Maybe.

But hey, at least they’ve gotten rid of the token.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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