The future of transport is digital: the customers

by Philippe Clapin and Didier Le Guirriec, Sopra Steria France

In our series of three articles looking at the digitization of transport we will explore some of the most impactful areas of this new paradigm:

  1. The customer
  2. Management of services
  3. Infrastructure

This first article will look at the customer, the driving force behind the digitization of the service.

Why digitize?

There has been a major shift in consumer perception and expectation of how a service works. This can be attributed to the rise of the Internet and in particular to the consumezisation of the Internet with platforms like Facebook and apps like Uber. Gartner has been watching and predicting outcomes from this consumerization and expect fluidic and dramatic changes in how services expect to be delivered.

Our customers are rapidly becoming technology sophisticates and as we move well into the 21stcentury, those customers will be the true digital natives, with an expectation that the products and services they use are digital. In addition, public transport is seeing increasingly heavy usage patterns as people including those in less developed countries, move into urban areas. Transport is an area that is now crossing the chasm into the age of digitization and with that comes challenges in how to handle the end to end customer experience and at the same time optimise on the use of technology to enhance this experience.

Challenges of serving the customer in a digitized transport system

One of the challenges and also the greatest benefit of a digitized transport system is the offering of a contactless payment method.

Contactless ticketing challenges: To truly embed contactless ticketing into a given transport system, it needs to be holistic. That is, it needs to work across every touch point in the transport eco-system – from carriers, to passengers, to local authorities and transport providers. Each must be enabled to proffer, moderate and accept the contactless method. Taking the system and extending it to cover all modes of transport, including, car shares, trains, buses, taxis and even bike hire schemes, is also part of the remit of the contactless ticketing network.

As part of this challenge, industry bodies such as the Smart Ticketing Alliance and Smart Card Alliance are working towards creating standards and industry collaboration, similar to those in the mobile phone ad banking sectors to encourage interoperability between transport systems throughout Europe.

Contactless ticketing benefits: The paramount benefit of offering a contactless ticketing system to customers is convenience. Urban transport is seeing some negative changes, including increased commute time. The average commute in London is 74 minutes and in New York it’s 75 minutes. Anything that can speed up a person’s journey is welcome and a quick swipe of a card, as opposed to pushing a ticket through a barrier, can do that – how often have we experienced a ticket getting stuck in a barrier or being held up by someone experiencing that?

People like contactless too. It’s easy to use. You don’t have to remember to ‘top up’ cards and you can use the device, such as a mobile phone, that you use for all of your other transactions. In fact the idea of contactless payments, in general, is taking off. In the UK there are 76 million contactless cards issued (more than the total population). In Australia, two thirds of the population own a contactless card and 53% use those regularly. In the US 80% of those who have contactless cards used them once a week. The reason for the popularity of contactless is the removal of barriers through ease of use and contactless ticketing is just another application of this method.

Transport for London is one of the first systems in the world to embrace contactless ticketing in a holistic manner. TfL have found this new system, which is integrated across almost all modes of transport in London, to be a success, with 20% of all pay-as-you go journeys now contactless less than a year since its launch.

One of the other major benefits to both the consumer and the transport provider is the integrated nature of the contactless ticketing system. Contactless is a more personalized and transparent method of ticketing and provides more insightful audit. Users can keep track of their payments and check out their travel habits in a way traditional ticketing doesn’t allow. Transport providers can offer enhanced services and have constant contact with their customers.

Security is a possible area of concern for contactless ticketing. However, as tickets are generally at the lower price bracket they in turn have a lower barrier to uptake. Further, older technologies incorporating magnetic strips could be counterfeited, whereas many contactless ticketing systems utilize modern security techniques and authentication methods.

Strasbourg Transport Company: a modern day contactless ticketing success

The Strasbourg Transport Company (STC) is a successful example of how contactless ticketing can work. They have rolled out a Near Field Communication (NFC) method of transport ticketing to the French cities of Strasbourg and Caen. The ticketing system is based on a mobile app known as U’GO which utilizes NFC technology to purchase tickets on public transport across the cities.

One of the great benefits of the system is that it is entirely ticketless. The cost of the new system is less than a tenth of the cost of a paper-based ticketing system, savings in paper and printing alone being part of this cost reduction. The system itself is entirely turnkey, with a connected mobile app, website and information system. The system has taken into account modern requirements of multicultural, connected, smart cities with multi-lingual web content and adaptive design for use across device types. The approach that STC is using is an all-encompassing one – supporting customers from ‘door-to-door’ and embracing dialogue and discourse through online content and social outlets.

In a survey on the U’GO ticketing system, 90% said it was a useful application and 85% said they would be continued users of the system.

The future

Contactless ticketing opens up a number of new avenues to make travelling easier, cheaper and more convenient. Contactless ticketing has the potential to offer other add on value services such as vouchers and gift opportunities. As well as cutting ongoing costs, it allows a transport provider to truly interact with their consumers and build a trusted relationship.

Discover more about our experience delivering intelligent transport solutions.

The future of mobile payments is contactless

Mobile payments may well be set for a period of explosive growth, according to the recent Guardian article “Mobile payments: the brave new cashless future”, but it won’t just be down to Apple Pay, despite its apparent success since launching in the US in October of last year.

Yes, Apple Pay might be convenient and secure – two of the three consumer-centric attributes which MasterCard’s Jorn Lambert identified in the same article as key to the success of m-payments – given its reliance on a tokenized set of card credentials in an embedded Secure Element, a Touch ID payment authorisation process and a slick user interface. However, it falls short when it comes to the third attribute identified by Lambert, namely ubiquity. Never mind that Apple Pay is only accepted at the 3% of US retail terminals which have been upgraded to support contactless payments, it is also only available today on the iPhone 6 (and soon on the iPhone 5 for anyone who pairs it with an Apple Watch) so it definitely won’t be everyone’s favourite way to pay, at least in the short term.

Separately, Kevin Dallas of Worldpay took the view that merchants need to ensure that they partner with the “right” payment app since research suggests that consumers will only load one or two payment apps on their phones to avoid confusion. Since in-store retail payments still account for over 90% of all payment transactions by dollar volume, we would argue that the “right” mobile payment app for merchants to support is one which is optimised for use at a point of sale (POS) terminal. The following might help those merchants who are still sitting on the payments app fence come to the right decision:

  • Apple Pay was launched to support both in-app and tokenized in-store NFC (contactless) payments
  • Samsung Pay has just been launched to support both NFC and magnetic secure transmission technology (MST)
  • Google have recently announced support for Android Pay which uses NFC and tokenization
  • MasterCard announced (Sept 2014) that all legacy POS devices in Europe must support contactless payments by 1 January 2020, with all new POS devices to be compliant from the start of 2016

Merchants who today accept card payments will – in five years or less – be accepting contactless card and mobile payments. Those merchants who today do not accept cards but who want to accept mobile payments would do well to consider a future where smartphone penetration is expected to reach 6bn subscriptions by 2020, where the dominant handset models will be mobile payment and NFC-compliant and where their competitors are servicing customers with these handsets at contactless POS terminals for both low and high value transactions.

That’s right: the future of mobile payments isn’t cashless, it’s contactless.