Is the Transport Ticketing and Payment Sector on Track for a Revolution?

28 March 2017, UK

Originally posted on masstransitmag.com

Ridership and revenue are intrinsically linked for many transit agencies, meaning there’s little opportunity to grow revenue without first boosting ridership. But as passenger expectations spiral upward, their intolerance of any form of friction steers them to alternative modes of transport, thus making it increasingly challenging for transport operators to stimulate usage.

To achieve any uptick in ridership, operators need to first identify the major pinch-points and assimilate mechanisms into their systems that will work to reduce the friction.

Where’s the pain?

The journey-planning and ticket purchasing process, for many, is where the friction kicks in, and it’s where mobile technology can shine as a key player in alleviating pressure. Within this process there are a number of issues that increase friction including, but not limited to:

Navigation of transit networks and access to timetables: These can present a real challenge for many.
Interaction with ticket machines and sales agents: Confusing interfaces and long queues can cause frustration; being able to purchase tickets when you need and pay for travel using the payment method you want makes the experience much more enjoyable.
Access to information in the commuters hand when they need it and ensuring it is relevant to them right here and right now: Using the location services of phones and real-time data feeds.
From planning the journey to the selection of the ticket and finding the right way to pay for it, mobile can facilitate a seamless experience for commuters.

When you demystify the challenges, remove the layers of complexity and make the experience easier, you can then drive more people toward public transport. This is where mobile becomes so useful — it’s a device passengers carry with them and they can easily access a large swathe of information that then makes the purchase simpler.

Moreover, with smart device usage creeping up through different age brackets, the concern surrounding the challenge of sparking wider adoption no longer becomes the issue that we think it is and will quickly become obsolete. Mobile penetration in many countries is well above 50 to 60 percent; it’s not just millennials with smart devices, there’s a tremendous penetration of mobile devices across all generation bands.

On the flip side, even with a surge in smart device usage mobile will never become the entire solution. We’ll never have a singular, default mode of communication and within the wider travel ecosystem there’ll always be a need for an element of human interaction.

But if you can change at least 50 percent of your customers to self-serve through mobile their devices, you’re left with a smaller portion of passengers who prefer to walk in to a call center to purchase a ticket. This can reduce costs for operators as you don’t need as many ticket machines or personnel on the ground. This was evident when Transport for London (TfL) moved to contactless credit cards — the number of machines and ticket offices could be reduced and savings were achieved in the early part of the transition.

You can cultivate even more loyalty when personalized services are added into the mix, such as real-time information, booking or information services, because patrons will start to see the ongoing value in utilizing them.

Mobile devices — and cloud computing, too — play a huge role in equipping service providers with the opportunity to personalize services. From the moment a customer opens their app, it knows where they are, and can then recognize their travel patterns and even work out the best times for travel.

The future of personalization is heavily dependent on how much a customer will reveal about themselves, with the issue of privacy being a concern for them. But the flip side is that the more information they divulge, the better the service can be. The amount of data collected can seem intrusive, but it can also be significantly beneficial.

More than just a loyalty influencer, the personalization of services can also help impact consumer behavior, which in turn engenders a positive chain of reactions for the operator and consumer alike.

In providing better value for their customers — such as offering cheaper travel options during off peak periods — operators are faced with potential benefits. Understanding passengers’ travel patterns and delivering information direct to their hand can not only help them make travel choices relevant to them but also opens up the opportunity for operators to reduce peak loads and costs of operations whilst providing discounts for their travelers. Timeliness and accessibility of information is vital in this respect.

Additionally, by having personalized services — as provided by mobile — operators can offer rebates if they fail to meet service levels.

Beyond this, you can reward passengers more effectively for the change in their travel behavior by presenting them with loyalty bonuses and start linking services together more adroitly.

In short, personalization of services can raise operational efficiencies, create additional revenue streams and enhance the customer journey. Consequently, you open the door to increasing loyalty and repeat usage.

Bottom Line Benefits

When any innovation is rolled out, the purse strings are likely to feel an initial squeeze, but with the implementation of mobile ticketing and payment technology, it won’t take long to feel the benefits.
By introducing mobile ticketing, many of the costs of maintaining a reload or sales network can be reduced as travelers are effectively bringing their own reload or sales device with them, therefore the requirement to provide these channels is reduced.

Studies of actual mobile or contactless implementations have shown bus operators can lower their on-board cash collection by as much as 30 to 40 percent as a result of passengers using mobile or contactless methods of payment, there is then a reduction in cash handling costs on buses and the associated cash leakage. And those few minutes taken up by handling cash along the route are reduced, thereby speeding up the operations on the network, which can also then reduce the costs of fleet operations as less vehicles are required to meet timetable demands.

With this in mind, bus operators can potentially reduce their fleet sizes significantly because their headway increases as the buses run the route more efficiently — in short, fewer buses are needed to keep to the same schedule. There’s significant cost savings in both the efficiency of the network as well as the cost of actually buying or selling tickets.

Future Forecasting

The development and adoption of innovative mechanisms in transport ticketing have furnished operators with a brighter outlook for provision of improved customer service in their industry, but they must take heed of alternative, on-demand transport services that are bursting onto the scene with their promise of a wholly frictionless experience, such as Uber, Lyft or GrabTaxi. To retain a competitive stance, operators will need to continue to innovate, and part of this journey over the next 10 years may see a shift in focus from ticketing to payments.

It’s true that the innovation of technologies in transit can be generally slower than other markets — but it’s not necessarily the same across the world and trailblazing payments and social media platforms such as AliPay or Line from Korea are already paving the way in the payments scene through the introduction of innovative payments solutions both in transit and in many other spheres of day-to-day life where payment plays a role — bringing a social aspect to payments. To some extent in Asia, companies and transit authorities are jumping the curve and the pace of change is much higher, largely because the mobile platform and the services it brings around social networking, messaging services and peer to peer payments are such a big part of life already — hence, solution providers are going straight for mobile solutions. But even in the United Kingdom, we are already seeing how both Visa and Mastercard are proving themselves as innovators in this space.

Frontrunners like these recognize the need for solutions that are built around the user’s needs and wants, paying particular attention to the fact that travelers today need the timely delivery of information, they need choice, and they need all of this “now.”

There’s no doubt that much of the travelling public has become more and more impatient and that their attention spans are shorter than ever before. This is partly due to the information revolution in mobile devices, and it’s become a major challenge for transport providers.

Navigating timetables and maps is a thing of the past, it seems: travelers don’t have time to dig out the information for themselves or work out how to get from A to B. They want to be told what the best options are for this travel, then turn up, take the right journey for their needs — be it the fastest, cheapest (or most scenic), then pay the appropriate fare. Indeed, with the ongoing introduction of mobility as a service (MaaS), regulators and operators are applying more focus to this path, especially around the move to on-demand bus services and ride sharing through public transit operator platforms. But while alternative transport competitors in this arena, such as Uber and GrabTaxi, might be more expensive, they are still winning because they are able to remove the pain from the process. And so this is what mass transport operators need to ask themselves: how can we make our system just as frictionless?

High-Five to 5G

The not-so-distant implementation of 5G could be a savior for transit operators in this respect. Our entire ecosystem is going to change radically when this is rolled out and it is likely to make a significant impact on the wider passenger journey.

The volume of data and the speed at which it will be provided over 5G will allow for the provision of a whole different level of services. Combine this with cloud computing services and machine learning systems and the passenger experience is will be transformed, possibly in ways we can’t envision today.

It will create innovation in how payments work. A variety of pre-paid products will become available as the real time communications that 5G will provide will allow for real time validation of ticketing and payments through to the back-end funding sources, which will allow for new payments providers to participate in these schemes, such as companies that will be enabled through the SEPA “Instant Payments” reform in Europe and the Asian providers such as AliPay, tencent etc. who are already providing these instant or “peer-to-peer” payment services.

Furthermore, a greater variety of services/devices will be linked to transit schemes, allowing for real time feedback from devices which will assist in planning, predictive analytics and journey management. Ultimately, the mobile device will start to link transit with other services on the device and across a much wider network to bring about better options for both transit and payments.

Positive progress has already been made in mobile payment solutions, but the real innovation will be how they transform and become part of the whole journey. As it reshapes and adopts a more integrated form, more people will drive down the mobile payments path.

Moreover, when 5G, cloud computing and machine learning finally come together it’s going to be revolutionary, and mobile will have an exciting part to play in the ensuing chain of reactions that will hit the transport industry. Why? Because the mobile device and other networked wearables will be the link between the consumer and the networks — providing crucial data to the networks and receiving personalised information relevant to the commuter. All of which will work towards providing a better journey, for both the network and the customer.

Originally posted on masstransitmag.com

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