Coins, magnetic tickets, and propriety smartcards are about become a thing of the past for the billions of global mass transit users. The next evolution in the transit fare system are open payments, a technology that enables transit agencies to lower operating cost, increase passenger flow and satisfactions, and make an overall simpler riding experience. With 60 billion mass transit rides in Europe, 10.4 billion in the US, and 1.9 billion in Canada, the industry is ready to adopt open payment plans as soon as possible.
The dream of the open payment system is to replace coins and bills, magnetic tickets, and transit smartcards with just one, universal transit card and your own mobile device. Mobile payments are growing in frequency and are expected to grow from $241 billion in 2011 to $1 trillion in 2015. This industry is big, and only getting bigger, and is also readily available to be integrated and available within the transit system.
The open payment technology would be available at turnstiles and when entering a transit vehicle. Passengers would scan a payment card, contactless ID card, or mobile device before boarding the transit system. This data would be shared and transferred to the back office software and then to an acquirer. The acquirer would then pass this data through the cloud, extracting the proper monetary amount from the passenger's bank account.
Nearly all transit systems plan to adopt open payments within the next ten years, with forty-percent of the transit systems dedicating to the new payment plan in less than two years. The United States has already adopted some open payment transit systems, with SEPTA in Philadelphia, SunRail in Florida, and CTA in Chicago. Canada has also adopted open payments for TTC, operating in Toronto. Along with these systems already in place, more systems are planning to open in Calgary and Edmonton, Canada, as well as Portland, Orange County, New York, Washington DC, and Dallas within the United States.
Operating costs add up quickly with traditional fare collection. These costs include revenue processing, maintenance, back office, customer service, fare media, and security. Sixty-two percent of travel agencies believe that the true cost of fare collection is at minimum 11%, meaning that eleven cents of every one dollar of fare is lost due to collection. With open payments, some agencies will be able to cut their operating costs in half. Open payments can help cut operating costs by reducing the need for propriety card procurement and fraudulent protection, ticket vending equipment and maintenance, call and customer service centers, and cash handling and reconciliation.
Open payments will also assist in improving rider satisfaction by being more accessible and user-friendly. Sixty-five percent of riders complain they worry about not having enough money to pay for a trip, forty-three percent feel ticketing machines are difficult to use, and another forty-three percent have complained that they missed their ride while waiting to buy a fare card. Additionally, US commuters currently spend 32 minutes per day accessing transit. Open payments will reduce wait times and delays by an estimated fifty-nine percent, as well as assist the sixty-four percent of commuters who use multiple lines in an easier and quicker transfer.
Open payments will also assist in improving rider satisfaction by being more accessible and user-friendly. Sixty-five percent of riders complain they worry about not having enough money to pay for a trip, forty-three percent feel ticketing machines are difficult to use, and another forty-three percent have complained that they missed their ride while waiting to buy a fare card. Additionally, US commuters currently spend 32 minutes per day accessing transit. Open payments will reduce wait times and delays by an estimated fifty-nine percent, as well as assist the sixty-four percent of commuters who use multiple lines in an easier and quicker transfer.​
This post is written by John, he works at Coupon Audit.
