New York City commuters – arguably the most on-the-go demographic in the United States – do not want to wait for anything. Which means the inefficient, rush-hour obstacle course that stands between commuters getting their tickets and catching their trains needs to have far fewer obstacles.
Mastercard's VP of urban mobility, Will Judge, believes that particular piece of inefficiency should be eliminated from mass transit.
“The basic philosophy of open payments is this basic notion that customers should not be forced to change the money they already have in their regular accounts to a special form of money for transportation," said Judge. "It’s a terribly inefficient way to ride."
It’s an inefficiency that the New York Metropolitan Transportation Authority (MTA) has not only acknowledged, but committed to doing something about. Last week, they officially tasked long-term Mastercard partner Cubic Transportation Systems to implement a new fare payment system across the city’s entire subway (and bus) system.
Once that new system is place, riders will be able to pay at the gate using contactless payments. Riders who also use the Metro-North and Long Island Railroads will be able to merge their tickets into one integrated form of payment.
This announcement follows news in early October that Mastercard’s Masterpass was joining the MTA eTix platform so that railroad customers could buy tickets whenever they want.
It’s a great leap forward for commuters – and, Judge noted, a major opportunity to smooth out one of commerce’s most irritating frictions.
The High Throughput Challenge
“I’ve been tracking payments in New York City on the subway for more than 10 years now,” Judge noted of his long history of considering what is a deceptively complex payments challenge: Moving a lot of customers through a very tight space in a very prescribed amount of time.
“[Transit operators] are trying to process many hundreds of people to board at the same touch point – which means the goal is to push something like 40 people per minute through each gate line at peak travel times,” Judge said. He pointed out that making this work smoothly requires a “slick” process that can take money from the customer in a very fleeting but steady and secure manner that requires minimal interaction.
Historically, Judge noted, doing that is a lot harder than it sounds. In the earliest days of public transport, when users paid with cash directly, public transportation systems lost a tremendous amount of revenue to bus drivers pocketing coins. Tokens, tickets and transfer slips emerged as a solution to that problem, but created in its place a very complicated system of transport payment for customers to navigate, and for the MTA and New York City Transport Authority to manage.
It also makes the city’s public transport systems much less accessible to outsiders and visitors to the city.
“Things like the MetroCard in New York or the CharlieCard in Boston tend to be city-specific programs, and they have not been designed for the needs of the many millions of people who come to cities for brief periods of time – for vacation, on business trips, whatever,” Judge said. “Go to an airport and see how many consumers immediately opt to get into a taxi or an Uber, even though in many cases, there is a rail service to the airport.”
Without an easy way to buy in, or the know-how to access the systems, Judge noted, hailing a car or taxi is the more straightforward option. But now, with the ability to pay with their choice of funds directly from that account, city systems become operable for anyone.
“And operable on any device – phone, smart watch, fitness wearable – the open contactless payments really make it the consumer's choice.”
Building A Better Future For Transport
More than just improving the experience as it exists today, Judge noted, the ability to use a contactless payments solution – with no separate transit card or token - gives the operators the flexibility to build better, more tailored systems for tomorrow.
Judge pointed out that cities might want to lower the pressure on stations during peak times by offering fare discounts for those who travel off peak, or against the flow of traffic – or they could experiment with different pricing bundles to see what encourages ridership. Today, he noted, those kinds of experiments would entail physically adjusting hundreds of machines city-wide, and with contactless payments, it simply entails changing a payments database in a table.
“In London, they have just rolled out a program where if you board and ride one city bus, and then board and ride another within 60 minutes, the second ride is free through the app,” Judge offered. His view is that there are any number of products that can be introduced at fairly low costs in that same way: A cap on daily charges, or free transfers between lines, for example, in order to incentivize consumers to try a more efficient mass transportation operating model.
In New York, for example – the city that never sleeps – waiting on a subway, or spending energy and effort figuring out the intricacies of riding the bus, is increasingly not the way people want to spend their waking hours. Instead, digital payments can make the entire experience as easy as waving a phone or tapping a card.