Open payment systems are quickly becoming the new norm for accepting payment in today’s society. Since July of 2014, Apple, Google, PayPal, Amazon, Samsung and others have all launched open payments solutions. Revenue from mobile payments solutions in the U.S. and EU is growing at a staggering 42% per year – on track to total more than $90 billion in 2016.
According to a recent VentureBeat article, secure open payments via mobile now account for seven percent of all e-commerce sales, a seven times increase since 2010, and will rise to more than 50 percent in the next three years – meaning revenue from open mobile payments systems will, by 2018, account for more than half of the world’s digital revenue.
Considering customers are now utilizing open payment systems across multiple industries, it’s time for transit agencies to introduce this payment option as well.
There are many benefits to introducing open payment systems. These benefits encompass three main points: customer satisfaction, business intelligence and cost savings.
Customer Satisfaction and Retention
In today’s day in age, customers are more tech-savvy than ever before. Customers are reaching for their smartphones to check their e-mails, check for updates on the weather and check the estimated arrival time for the next bus.
This increase in smartphone usage from your customers creates a new opportunity for your agency to allow multiple forms of payment, including smart media and mobile ticketing via smartphones. Busy commuters will benefit from the ease of use of using their smartphones to pay for their travel fares. By leveraging smartphones and other mobile devices that most passengers now have, you allow them to discover, query, select and pay for fares in a manner with which they are very familiar.
Smart card technologies also provide benefits for your busy commuters. They will no longer have to be concerned about finding exact change for their travel fares – or waiting in line ups at ticket windows, allowing them to tackle their busy schedules.
Business Intelligence (BI)
The introduction of open payment systems will allow your agency to gain many benefits, one primary benefit is the power of information.
Open payment systems allow you to create flexible fare options including capped fares. Capped fares are popular with passengers because they allow for flexible use of transit services for a fixed fee. This allows the passenger to travel throughout a day, or week, without the requirement to buy extra tickets, or worry about spending more than they need to, always knowing that they are going to get the best possible fare. The simplicity of these types of transactions and the opportunity to learn from the BI data they produce is of great value in developing ideal open payments solutions.
You’ll be able to gain more information from your customer base – such as frequently used travel routes, where the majority of transfers are taking place and the peak times of your different routes. This information will provide your agency with insightful data that can be leveraged to create the most effective routes and schedules.
More importantly, the need to warehouse data for long periods of time is mitigated and front office staff are allowed a window into real-time fare collection data - a critical step for implementing advanced BI solutions down the road and providing riders their rewards and benefits immediately. Open payment systems in transit will build from this BI to create new fare offerings based on a passenger’s travel data as it relates to different modes, routes, schedules and contextual circumstances.
Reduced Time and Costs
By consolidating fare rules in the back office environment and fulfilling transactions from account-based systems automatically, the burden on vehicle operators and others who collect fares from passengers (e.g. ticket window staff) are reduced, therefore allowing on-vehicle staff to focus on getting passengers to their destinations at the most efficient time, rather than focusing on fare collection.
Additionally, by leveraging smart card or mobile technologies, the high cost of managing cash is greatly reduced.
Final Notes
Account-based systems for fare collection are a crucial step in allowing public transit agencies to scale their operations in order to accept open payments.
This is a critical time for agencies to evolve their fare collection solutions in advance of a time, coming very soon, when support for passenger’s mobility and digital wallets move from “nice to have” fare collection solutions to the preferred form of digital payments worldwide.
You can get started by learning more about the future of automatic fare collection in our new eBook here.
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