‘A developed country is not a place where the poor have cars. It’s where the rich use public transportation.’ – Gustavo Petro

Public transportation is a serious topic these days. When properly implemented, it can be an affordable and environmentally friendly means of travel. Compared to individual fossil fuel vehicles, public transport offers a cleaner commuting alternative.

Unfortunately, much of the success of public transportation systems depend on public infrastructure, which is often a mishmash of antiquated systems and ideas. Furthermore, many areas struggle to create a cooperative network that embraces multiple providers across the network – bus, rail, scooter, bicycle and so on.

For context, consider the following data about the forecasted growth of public transportation in the United States, as taken from Statista:

  • In the Public Transportation segment, the number of users in the USA is expected to amount to 122.7 million by 2027.
  • In the Public Transportation segment, the number of users in Europe is expected to amount to 535.8 million by 2027.

There are, of course, other critical factors in a successful public transportation system – reliability, efficiency and so on. But we’ll be staying within the context of payment for this article.

Known Fare Ticketing

Arguably, the simplest payment method for public transportation is ‘known fare.’ This is the method of buying a ticket in advance, via mobile ticketing, in person at the station or on board the vehicle and defining (at the time of purchase) when and where you will be traveling. Compared to other payment methods, known fare ticketing can be effortless and elegant – especially when only one or two fare options are available.

In the US and Europe, there are multiple ways to pay for a transit ticket:

  • Pre-booking online and displaying an email receipt/ticket
  • Pre-booking online and picking up a physical ticket at the station
  • Making an in-app booking via the operator’s app and displaying a ticket there
  • Buying a physical ticket at an unattended kiosk or from a person at the station
  • Buying a ticket on board directly from the driver

While known fare is conceptually simple, purchasing tickets can seem complicated and intimidating for first-time travellers. For instance, known fare tickets tend to be unchangeable. If you want to get off three stops early and need to reboard or realise later that you need to travel further, you will need to purchase another ticket.

In addition, you must understand where and how to buy a ticket and which ticket type is correct for you. Are you in Zones 1-3? Or Zones 6 -9? Does travel at 4 p.m. qualify as Super Off Peak, Off Peak or a Peak fare?

This confusion can be a barrier to entry for many potential travellers, who will elect for a taxi instead of fumbling away at a ticket machine. In some instances, smarter tickets can be issued with RFID properties – facilitating a tap-to-enter model. This takes us into the world of ‘closed loop’ ticketing.

Closed Loop Ticketing

In London, a prime example of closed loop ticketing would be the Oyster Card, and in New York, the OMNY card. The idea behind closed loop is to encourage riders to top up a card with credit, which they can then use to tap across the system for payment. Riders can add credit in the same ways known fare tickets are purchased – online or at the station.

Where closed loop shows advantages over traditional known fare models is its ability to tap across a network without negotiating ticket types. Fare aggregators emerge in this model, automatically calculating the best fare for the consumer based on the number of ‘taps’ they’ve made over a day, week or even month. This frees the consumer from the pitfalls and complexities often associated with known fare transit and opens doors for value adds such as loyalty programs.

Where closed loop sometimes disappoints, however, is with visitors and first-time riders. Like known fare, you need to purchase (and add credit to) a closed loop card, which can be intimidating for a first-time user. Thankfully, this is where ‘open loop’ transit can help.

Open Loop Ticketing

Open loop transportation allows consumers to use their contactless bank card as their ‘ticket.’ Rather than topping up a closed loop card with funds, they can cut out the middleman and tap their credit card to access the network directly.

This has proven to be an ideal approach for consumers and has greatly increased the adoption of contactless EMV cards in available territories. In London, this system was added alongside the existing Oyster Card closed loop system and has shown incredible success. Consumers benefit from an aggregated fare system without the need to purchase and add funds to a closed loop card.

The popularity of pay as you go with contactless has grown in recent years, particularly with customers using mobile devices as more people adopt the latest smartphone technology. Across London, contactless journeys now make up around 71 per cent of all pay as you go journeys on buses, Tube and rail services in and around London, up from around 31 per cent in 2016.” – Transport for London

A Call for Innovation in Public Transit

While all of these systems have their uses, real-world complexity emerges when actually planning a journey. Should I tap on to the bus system? Or buy a known fare ticket from the railway? Which ticketing system is going to work best for my specific needs?

This is where we see a need for what is often referred to as Mobility as a Service, or MaaS. We see several examples of this available today. For instance, you can choose between buses/coaches and trains on the Trainline app or use the “journey planning” tool in Google Maps to see public transport options in various cities.

These are promising steps in the right direction. However, the real-world issues around public transportation require greater access to real-time data across multiple operator networks to be truly effective.

For example, an ideal scenario would look something like this:

  • Take the A bus to the train station
  • Ride the train to your destination
  • Ride the B bus from the station to your destination
  • Finish your journey using a scooter

A consumer’s journey should have the flexibility to change in real time. For a truly hassle-free journey, payment options must be fluid, and insights must be dynamic. Is the bus delayed? Take a different route. No scooters near the bus stop anymore? Consider walking or using a rideshare service.

A regular complaint about public transportation is that it is too slow, expensive and unreliable. There are limits to what a payment provider can do to alleviate these inconveniences. However, ease of access and flexibility of choice are critical in ensuring the success of public transport in the future.

In summary, simplicity is key when it comes to payment in public transport. At times, known fare achieves this, while at other times, open loop fare aggregation is the best solution. No matter how someone wants to pay, these systems must be able to coexist in a harmonious way that truly serves the consumer. A network made of a dozen different transport cards, mobile apps, physical tickets and so on is not inviting to those who can choose other options.

The public transportation network must aspire to become simpler, more economical, faster and greener than its personal vehicle counterpart. Until the systems provide more value to a consumer than purchasing a car, the battle is far from won.

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