A few systems such as the New Jersey Transit and Boston’s Massachusetts Bay Transportation Authority have already switched over to mobile, but why are the rest lagging? Mobile ticketing and payment makes perfect sense in the world of public transportation, where consumers are always in a rush and trying to travel as quickly and efficiently as possible.

“At the end of the day it comes down to cost, efficiency of scale and gaining critical mass – there needs to be one system that caters for all, rather than several fragmented ones – and right now we’re in a period of transition,” said Marie Ng, vice president of client solutions and innovation at Millward Brown, New York.

“Not everyone owns a smartphone, and among those who do, not everyone uses mobile payments,” she said. “The challenge with mobile payments in the U.S. is it’s fragmented both from a technology standpoint and ownership standpoint.”

Planning ahead
Boston’s Massachusetts Bay Transportation Authority began offering mobile tickets last year with a branded app. The app lets consumers display a mobile ticket to the train conductor, as well as check schedules, maps and service alerts (see story).

The mobile ticketing there is powered by Masabi, which also helped roll out mobile ticketing systems in San Diego as well as Virgin Trains, First Great Western and Cross Country in Britain.

According to Josh Robin, vice president of North America at Masabi, London, the company is operating live services across 17 agencies and brands. Last October, Masabi announced that sales of tickets using its mobile technology passed $100 million.

New Jersey Transit has also launched an app called MyTix last April that enables mobile ticketing, and it has since been expanding it across lines.

Yet while these locations seem to have understood the potential in mobile, other major cities are still lagging behind.

New York City’s MTA is still solely based on paper ticketing. The MTA plans to roll out a system by 2019 that incorporates near-field communication or radio frequency technology to let consumers tap a key chain, credit card or smartphone to move through turnstiles.

The Chicago Transit Authority is also testing out NFC for a new ticketing system, but it has yet to announce any launch date.

The trouble with NFC, however, is that iPhones are still not NFC-enabled, so a majority of consumers would not be able to access the technology.

“At Masabi, our philosophy is to leverage whatever customers already have in their pockets,” Mr. Robin said. “To date, we have focused on visual tickets and bar codes as these are supported by the vast majority of phones currently in circulation.

“But we are also working hard to lead the way in the newest and most innovative ticketing channels – we are currently doing extensive research and development on areas such as Bluetooth Low Energy and other contactless payment channels,” he said.

Why mobile
While the typical argument with mobile payments is that there is no need to replace the credit card, mobile makes complete sense for public transportation in particular.

“Using mobile to replace traditional plastic tickets can decrease operating costs, improve line-speed throughput, reduce physical waste, all the while thinning the bulk of a customer’s wallet,” said Drew Sievers, founder and CEO of mFoundry, Larkspur, CA. “Using mobile for public transportation is a no-brainer.”

When commuting to work in the morning, consumers would certainly benefit from being able to tap their cell phone, which is most likely already in their hand, instead of reaching in their bag or wallet for a MetroCard.

Additionally, reloading time or money onto a card could be done anywhere and anytime as opposed to having to wait in line at a kiosk at a station. Mobile also does not require exact change.

“As a daily transit rider, when I look around my bus or train, people are glued to their phones, and it just makes sense for agencies to leverage this medium to make life easier for riders,” Masabi’s Mr. Robin said.

“The beauty of mobile is that it is a true two-way channel for payment,” he said. “While a card or paper ticket simply lets a customer ride transit, a smartphone lets the agency communicate back to riders with relevant information or ways to enhance the commute.”

Once public transportation systems create mobile ticketing, they can go beyond the basics to deliver deals, coupons and advertising as well. There is an open communication channel that did not previously exist.

The hold-up
Despite all these benefits, many public transportation systems have not yet adopted mobile.

However, while the benefits are clear, the reality of rolling out mobile ticketing and payments is quite challenging.

“Unfortunately, it’s dependent upon what I call the perfect storm of inefficiency: mobile carriers, public transport administrators and local/state politicians,” mFoundry’s Mr. Sievers said. “More to the point, it requires aligning a struggling technology like NFC via a publicly managed entity like the MTA, all the while trying to find non-existent budget. Good luck with that.”

New York is one of the most populated cities in the world, and transitioning public transportation to mobile requires a lot of manpower, time and money.

“I think with [New York] it might just be the infrastructure, and it’s just a massive city,” said Sheryl Kingstone, Toronto-based research director at Yankee Group. “It’s not an inexpensive alternative to really go down that path.

“The infrastructure’s changing so what do they want to do, are they embracing NFC, are they going to do beacons, are they going to do Wi-Fi and all of it is still up in the air,” she said.

“The problem is if they try to put a plan together for ten years, then you might as well just scrap it because in ten years from now there’s going to be more technology.”

In general, public services like transportation tend to take longer to adopt new technology than privately-owned merchants and retailers.

“Public transportation agencies are not in the business of taking risk,” said Mac Brown, director of communications at GlobeSherpa, Portland, OR.

“By and large, traditional fare types such as cash, paper tickets and smart card technologies have served transit agencies well – until now,” he said. “The world has changed quickly as consumers have moved aggressively to mobile.

“Large transit agencies and even smaller ones have a hard time keeping up with tech and may have underestimated the significant role mobile devices can and will play in the system, especially for young, affluent or tech savvy riders.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York