It might feel like everywhere you turn on the Internet these days, there’s someone telling you that in the near future you’ll pay for literally everything with your phone. Soon you’ll just run around your supermarket with a basket, scanning every item with your mobile wallet and walking out without even talking to the checkout girl — your account has already been debited. Presumably your phone will have to also come with a tool to remove magnetic loss-prevention tags, because this idea is totally absurd. The retail industry loses an estimated $10 billion annually to shoplifters; why people think retailers will overhaul all their systems to make shoplifting easier is simply beyond me. There is, however, one industry that will find an enormous amount of value in mobile payments: mass transit.
Boston’s MBTA announced it will be introducing mobile ticketing to their commuter rail. Insert joke about Charlie here. The transit authority will partner with Masabi US, Ltd, London-based developers of “mTickets,” which allow mobile users to buy tickets from anywhere, and flash the scannable code to conductors, saving time and paper in the process.
According to a story on Mobile Payments Today, ticket vending machines are only present at about half of the MBTA’s 140 commuter rail stations, which means that customers frequently have to buy their tickets on board from a conductor. Now, they’ll be able to use their cellphone. Monthly pass holders will also be able to load them onto their phone, reducing the risk that they might lose something so valuable.
This might be one of the most transformative uses of mobile payments in the developed world to date. While M-Pesa has made life easier for countless Kenyans, who don’t have as developed a banking industry as we do, the mobile wallet can’t make such a strong case in the States: we have access to cash from massive networks of ATMs and access to money via credit and debit cards, which already offer relatively friction-free payments. We simply don’t need mobile wallets for retail purposes in the same way that nations with less developed economies do, even if that seems counterintuitive to the technophiles who love mobile wallets.
Transit tickets have some unique features that make them particularly ripe for a mobile payments takeover. First, unlike in retail, cash payments are not frictionless on mass transit. Fares change all the time, and often come out to strange sums. Frequently, it’s difficult for buses to take bills. Here in Brooklyn, the bus costs $2.25 a ride and it only accepts coins for customers who want to pay cash. Otherwise you need a MetroCard — but if you’re riding the bus it’s likely because you’re nowhere near the subway, which is where you get MetroCards in the first place. Being able to pay for your ride from wherever you happen to be will not only save the transit authority money, it will also make your life better.
Secondly, fare collection is frequently a cause for slowdowns on certain forms of mass transit. While fare is collected off-board on the subway, bus drivers need to sit through lines of people paying with coins, bills, transfers, passes, etc, to ensure that the transit agency is getting compensated for their services. Many bus rapid transit systems (like Bogota’s TransMilenio) have made the switch to off-board fare collection, speeding up bus service in the process. Mobile payments will help this process for regular bus and light rail systems that cannot afford to, or don’t have room to, create “stations” for off-board fare collection.
Relatedly, with mass transit, the good (your ride) is intangible but the proof-of-payment is very tangible — and very easy to lose. This is one of the most vexing things about riding mass transit: losing a transfer or ticket and having to pay again. Or, worse, losing your monthly pass. Lose your monthly Unlimited MetroCard here in New York City, and you’re out $104. No thank you. By keeping your pass or ticket on your phone, you won’t have to worry about misplacing it.
Unless, of course, you lose your phone. Which gets us back to the limits of these payment schemes. Mass transit is a public service, above all else, and owning a cellphone of a certain caliber cannot be a prerequisite for all the benefits of citizenship. But in conjunction with other forms of payment, mobile will certainly help mass transit achieve efficiencies that were previously unavailable to it.