Mastercard: Invisible Payments Power Mobility As A Service

It wasn’t so long ago that traveling to a new city meant swinging by the bookstore, picking up a guidebook and planning the itinerary based on one’s research of the area. Entire businesses were built upon the notion of providing local tips and expertise to non-locals.

Thanks to the smartphone, those days are gone – but in terms of a digital replacement for the guidebook, it’s still largely a cobbled-together experience across several apps with different purposes. Travelers book their hotel on one app, their dinner on another and their cab ride home on a third.

It’s convenient-ish, but leaves a bit to be desired.

Tourists aren’t the only ones who struggle to get around in the city – indeed, the city’s own residents likely know its faults and challenges better than anyone. Urban hubs are becoming more congested by the day, and many innovators are working hard to make cities “smarter” – both in the sense of bringing smart tech to bear, and in finding creative ways around systemic problems like traffic.

“Mobility as a Service” is the moniker for the digital interfaces that blend planning information, booking tools and, of course, payments – all with the goal of enabling an efficient and enjoyable time in the city, whether users are staying for a day, a week or indefinitely.

In a recent discussion with Karen Webster, Will Judge, head of urban mobility for Mastercard, explained the Mastercard view of the Mobility as a Service concept, why it will become integral to the smart city of the future and how Mastercard is lining up its pieces to become a pioneer in this emerging space.

Smart Starts

London is an early example of a city that’s bringing the paperback guidebook into the digital age. Its Visit London app, in which Mastercard invested and powers payments, essentially ties booking, transit and activities functions together in a neat package to attract visitors and help travelers make the most of their time in town.

Judge said the recent integration between Uber and Masabi, in which Mastercard holds a minority stake, is another early chapter in the story of digital urban interfaces and Mobility as a Service, especially as Uber branches out into car rentals and bike sharing. He predicts that “enlightened” car companies will soon start to see what Uber has seen, and will offer customers mobility packages rather than just cars.

Indeed, Daimler and BMW appear to have seen the light, announcing last week that they are officially merging their mobility services business groups into a single combined entity – which means tying up all their on-demand mobility offerings, from car-sharing and ridesharing services to parking and charging solutions.

Whether a customer chooses to drive their car or string together a trip using public and alternative transport modes, such companies could embed the tools for doing so within their mobile apps – again integrating invisible payments to make it all run.

The bottom line here is the invisible payments, Judge noted. None of this could happen without them – they close the loop, making payments part of the experience instead of a separate step.

“Our interest is in making sure that, as industry structures play out and new players establish territory, all the benefits of Mastercard payments – security, digital and global interoperability – are all there, so customers can make the payments implicit in all this,” said Judge.

“We’re pushing a trustworthy payment system into the background so it’s there, but not an explicit piece on its own – and that’s one of the most exciting things about this trend.”

Transport vs. Attractions

In the days of the paperback travel guide, there were trips that people would simply avoid because of their complexity – or they would simply rent or hire a car to get them to their destination directly. It was too much work to drive to the train station, park, get a ticket for the train and ride it – then find the right bus to make a transfer, obtain a ticket and ride that.

The smartphone has erased that whole headache, said Judge. People are now more likely to make complex, multi-stage trips, and their willingness to do so will continue to grow as their ability to navigate the various stages becomes more and more friction-free.

Some players in this emerging space will therefore choose to make transport their main focus, enabling users to plan and pay for such complex, multi-stage trips from a single platform. Others, however, will take more of an attractions focus, and Judge predicts that the two camps will find themselves competing along the way.

The challenge for players with a transport focus will be ensuring that all pieces of the multi-stage trip fall within the digital experience. The eCommerce bits are the easy part, Judge said – the hard part is making sure that users can tap through a subway gate as part of the multi-stage trip experience.

Whichever focus companies take, Judge said it will be a battle to become (and remain) top of mind with consumers in what is becoming a very active sphere of competition across all markets and regions. He said it’s important for cities and transport authorities to establish and maintain a place in the evolution, or they will get pushed back in the consumer’s mind.

The Best of Both

The perfect app would, of course, encompass both transport and attractions, with invisible payments embedded for each. However, in the real world, you can’t be all things to all people. Areas of focus will emerge on each platform that throws its hat into the Mobility as a Service ring.

Similarly, said Judge, an app like this will find different use cases with different people, and it may be that the same app can’t serve the business traveler, the family on vacation and the daily commuter equally well. Thus, it’s possible that multiple iterations of the same Mobility as a Service concept could end up coexisting peacefully within the same city, each serving its own audience.

Finally, there’s the question of who, exactly, is going to build these digital urban interfaces. Will it be the public sector – mayors and transit authorities – or the private one? While that will largely depend on where the city is located, Judge said, ideally this would take the form of co-creation between the public and private sectors.

He noted that there has been an increased willingness on the part of the public sector to participate in such co-creative models for building such capabilities. Many mayors and transit organizations are employing chief information or technology officers who are familiar with such an approach and are ready to bring their skillset to the table.

According to Judge, this is one of many signs that people across the board are now recognizing the power of a digital interface and beginning to work toward making one happen.