The mobile-payments bug has bitten more than just tech giants, financial institutions and retailers — commuter rail systems are very much interested in pioneering this technology too. Two of the busiest commuter rail services in New York plans to test payments technology that eliminates the need for paper tickets.
The Metro-North Railroad and Long Island Rail Road are testing a mobile application that allows passengers to redeem ticket purchases with a displayed barcode, reported American Banker.
According to a monthly newsletter by Metro-North Railroad, the smartphone app lets customers use their credit or debit to make a purchase for any type of ticket. After the purchase the electronic ticket appears as a barcode, which will be scanned by a conductor.
Currently, Metro-North Railroad employees are piloting the app. The program could open to all commuters by late 2013 to early 2014.
Starting later this month, the Long Island Rail Road plans to test a similar mobile app during a golf tour. Passengers can use the mobile app on a route to and from the event. The LIRR didn’t say if or when the mobile app is expected to be available to all commuters.
The path to mobile payments taken by these commuter rail services resembles a model adopted by Starbucks and, most recently, Dunkin’ Donuts. The coffee chains offer mobile apps that allow customers to fund a digital card, which carries a barcode that is scanned during a purchase.
The barcode-based approach deviates from the other popular method of mobile payments — near field communications, or NFC. Using a special chip, consumers can wave or tap their mobile devices against a payment terminal to make a purchase. Google Wallet and Isis Mobile Wallet are examples of mobile-payment projects that are reliant on NFC technology.
In 2010, the New York City subway system and Visa started a pilot that allows commuters to pay their fares at certain turnstiles equipped to accept payments from contactless chip cards and NFC-enabled devices.
The NFC route has received criticism because it requires device manufacturers to build devices that house the NFC chip while the barcode-reliant method can be deployed through most smartphones. With millions of daily commuters in New York City, the industry may find the approach that is most likely to be adopted by nationwide consumers.