Contactless payment methods in public transportation have become a game changer, transforming how commuters plan journeys and interact with transit systems. The rise of connected, digital payments is providing riders with seamless user experiences, along with delivering other benefits such as enhanced sustainability, improved economic growth, and operational efficiency, along with better accessibility for passengers. New generations of riders demand seamless, convenient, and modern solutions that better cater to their evolving needs. Transport authorities must relentlessly innovate to keep pace, benchmarking themselves against other industries to meet and exceed customer expectations. The notion of integrated ticketing systems in public transport promises to change the way riders pay and access various modes of transport through a unified platform, such as mobile apps or contactless credit and debit cards. These systems have already been implemented by multiple cities worldwide such as London and Hong Kong, which are rapidly increasing their reliance on cashless transactions for the majority of transit operations. The big question everyone is asking, however, is whether or not integrated ticketing systems can contribute to solving various issues in transit along with providing much-needed relief for overburdened metropolises in facilitating faster, safer, and more convenient rider experiences. In this article, we’ll look at the role of integrated ticketing systems in mass transit and how cities can leverage these solutions to achieve the best outcomes for everyone.
The Current State Of Transportation Systems In The U.S.
According to the US Department of Transportation, transportation is still one of the highest annual consumer expenditures in 2023, totaling around $12,295, annually. Data also shows that the portion of household expenditure spent on transportation in the United States is much higher than that of people in other industrialized nations, mainly due to Americans’ predominating car dependency. This difference is more evident among low-income residents and marginalized communities, despite government efforts to subsidize transportation. Americans spend significantly less on other transport modes, such as public transit, even though we’ve seen an increase in the expenses associated with owning and maintaining a private vehicle. In 2022, it was reported that low-income households spent an average of 30% of their income on travel, including the need to own a car. Many US cities lack reliable, well-funded, and inclusive public transport options, often leaving populations with little to no options. Personal vehicles are seen as a necessity for those needing access to important societal facilities such as employment, education, or healthcare. This creates a noticeable financial burden on average American households, exacerbating both economic and social inequalities. It also seems that fewer Americans use public transit regularly or walk and cycle to work which is attributed to the lack of accessible and integrated active mobility and transit infrastructure. An estimated 45% of Americans have no access to public transportation options at all. The antiquated designs of U.S. cities and car-centric neighborhoods force millions to pay for private transport that they otherwise would likely not choose if they had safer and more affordable options.
Compared to many of its global peers, Public Transport Agencies in the U.S. are also still struggling to reach pre-pandemic ridership levels. Transit systems in Dublin and Vancouver are reported to be moving roughly as many people as they did before COVID-19, however, passenger trips in the Boston and Washington, D.C. regions are still down 24% and 19%, respectively. The decline in ticket fares has opened gaping budget gaps that American transit authorities are trying desperately to fill through public subsidies. Many have claimed that the U.S. is lagging in transit innovation along with learning some hard lessons from the past. The nation is continuing to spend billions of dollars on expanding highway systems rather than funding public transport, backed by the Landmark Infrastructure Bill that was passed in 2021. Since the passage of the enormous $1.2 trillion Bipartisan Infrastructure Law, efforts have been underway to upgrade the US’s crumbling bridges, roads, ports, and public transit systems, although a larger sum seems to have been diverted into the maintenance and widening of roads rather than the upgrading of bus networks and the expansion of rail systems and cycling infrastructure. Of the reported funds allocated to states, more than half – around $70 billion – have been spent on the resurfacing and expansion of highways which experts predict will only worsen traffic congestion and contribute to a further decline of air quality in cities. It’s reported that more than 131 million Americans were residing in areas with unhealthy air between 2020 and 2022 and the pandemic shutdown failed to create net improvements in air quality. The US’s fixation with building roads – along with the nation’s overdependence on cars which is now responsible for over 40,000 annual deaths, underlines a dramatic increase in human loss of life which is now causing many states to rethink conventional transport planning in the United States.
Low-cost, High-Frequency Bus Services Could Be The Key To Improving Public Transit In The U.S.
Public transportation in the U.S. is facing many challenges including aging infrastructure, underfunded agencies, unreliable and inefficient services, and low ridership levels. Some have proposed solutions focusing on new technologies, such as self-driving cars and flying taxis, however, it’s quite evident that we need feasible solutions now to solve the many pressing and ongoing issues which have been around for decades. In 2023, buses were the most used transit mode in the U.S., having transported more than 7.11 billion passengers. One might think that policies and strategies would be abundant on how to run bus systems effectively, as well as seamlessly gather and use data to measure customer satisfaction and improve services, however, this isn’t always the reality. The lack of generally agreed-upon performance metrics or standards regarding customer satisfaction and national reporting statistics creates significant barriers for many agencies nationwide. The majority of transit projects tend to have a mixed set of goals and objectives, often lacking a clear and objective understanding of what problems need to be solved, or in what priority. By contrast, bus riders have a much simpler perspective on the matter. Their biggest complaint about public transport, particularly when it comes to buses, is that they are unreliable and slow. The recurring issue of ghost buses, inconsistent schedules, inefficient routes, and sometimes entire fleets showing up together is a major reason why many people are reluctant to use buses for their daily commutes. Data shows us that transit riders in the U.S. prefer high-quality transportation, with low-cost, accessible services as opposed to free rides or an abundance of inefficient, unreliable modes.
Authorities responsible for managing the roads on which buses travel, often require buses to use the same congested lanes as cars, despite their ability to carry many times more people and offer an attractive alternative to single-occupancy vehicles. Poor service quality does little to combat traffic congestion, which only adds to generating more expenses for cities and transit authorities. Unreliable public transportation makes it harder for workers to find jobs and even more difficult for those who rely on it and are unable to afford other alternatives. Buses in many parts of the U.S. often lag in delivering an adequate standard of service or covering the appropriate areas riders need. However, this doesn’t reflect the bus’s true capabilities. Buses have a superior advantage over other types of transportation due to their size, capacity, affordable nature, and ability to provide services to multiple groups of society while covering a maximum amount of ground. They can be a cost-effective and efficient solution for moving a lot of people since they run on existing roads without the need for expensive new infrastructure. U.S. cities are now coming around to the idea that buses have an important role to play in the future of public transit and are combining this notion with careful and strategic planning along with investment in various transit technologies. An expansion of bus networks would be the fastest and most economical way to serve U.S. citizens and grow transit ridership in the sprawling landscape of American metros. Something as simple as redesigning bus routes and balancing bus stops could essentially mean cities and agencies can reduce operating costs, freeing up funds and room for other initiatives and investments.
A more strategic approach to transit planning could ultimately be a game-changer for transport authorities and operators. For instance, since 2020, TransLink in Vancouver, Canada has redesigned their bus stops along five popular routes. This has saved riders up to ten minutes per round-trip during the busiest hours, while also reducing peak fleet requirements and saving more than $700,000 CAD (€477,400) in annual operating costs. Establishing dedicated, car-free transit lanes that facilitate faster and more efficient bus trips should be a priority for agencies. The introduction of such priority lanes is common in many countries, including Canada, Australia, and Poland. A growing number of U.S. cities, such as Richmond, Virginia, and Madison, Wisconsin, are also now adopting their first Bus Rapid Transit line services. The Los Angeles Metro Busway is a sterling example of how a well-developed Bus Rapid Transit System can address the issue of reliability, speed, and convenience. The agency not only excelled in giving riders faster, more convenient trips but also managed to improve the overall reliability and efficacy of their fleets. The MTA concluded that the introduction of Rapid Bus routes coupled with their initial investment in branded buses, new stops, signal priority, and various other upgrades practically paid for themselves through increased efficiency and ridership levels. Eliminating overly frequent stops and long dwell times which slow buses more than anything else proved to be indispensable. According to the MTA and researchers, among the biggest contributors to long dwell times are cash payments at the fare box. The second is considered to be the number of stops while the third has to do with their placement. Faster buses will result in better fleet utilization, lower labor costs, more revenue, and improved flexibility in operations. Data-driven periodic assessments can also aid operators in upgrading routes and schedules to better match current demand and ridership patterns. As a result, planning and operations become more efficient and intelligent.
How Developments In Payment Technology Are Solving Multiple Issues In Transit
Digital payments have dramatically transformed the way we handle transactions, moving society away from conventional cash-based methods. This shift has been particularly evident in the mobility sector, where fast and efficient payments have enhanced customer experiences along with increasing usage of public transport networks. For transit authorities, open-loop payment technology provides a flexible ticketing solution that requires less maintenance since tickets or transit cards no longer need to be issued and maintained. From an operational perspective, this simplifies the process of fare collection and could help reduce management costs. In the past, closed-loop payment systems dominated the transit sector, however, due to their expensive ticketing infrastructures and general inefficiency, they are no longer a viable or attractive option for modern commuters. Once considered a ‘game changer’ in the public transit space, these systems now simply fail to keep up with evolving consumers’ needs and preferences. The demand for better and more seamless methods of payment in transit is evident as over 90% of passengers now expect contactless fare options such as EMV cards for their journeys. The benefits of contactless systems are wide-ranging, from simplifying fares and speeding up boarding to making transit more accessible and attractive, particularly to those who would usually refrain from using it. Fare caps configured in back office systems offer the best-value fares, including discounts and concessions, and are calculated and applied automatically. This makes travel more affordable to low-income members of society who often depend on public transit and might not have the funds for costly upfront season passes.
Account-based Ticketing (ABT) systems have redefined the notion of smart ticketing, helping transport operators move away from old fragmented systems and towards seamless fully integrated solutions. Using the latest technologies available, ABT systems facilitate much faster and fairer ticketing for customers, granting them multi-modal access to a range of mobility services, including public transit. One of the biggest advantages that ABT solutions have over legacy systems is how future-proof they are. Unlike older and more conventional alternatives, modern ABT architecture is designed to keep up with rapidly evolving technologies as well as the demand for multi-modal integration. This is critical when taking into consideration the number of new technologies currently gaining traction across the travel industry, including biometrics, location awareness, and ultra-wideband. An integrated, cashless ticketing system is underlined by its ability to excel in numerous areas, including the collection of valuable data. ABT systems facilitate intelligent data gathering while also facilitating a seamless travel experience for users as they transition between different transport modes, limiting the chance of delays and ensuring more efficient journeys. Collected payment data combined with advanced analytics allows transit agencies to create and tailor services to meet the unique requirements of populations while also making it possible to optimize routes, schedules, and service frequency, resulting in substantial savings and enhanced overall efficiency. Transit authorities, including PTAs and PTOs, could save up to 15% on every sale made by simply removing cash handling from their operations. By adopting digital payments, transport authorities could contribute to the creation of more sustainable public transportation systems. The environmental impact of producing physical tickets, including CO2 emissions, is considered to be substantial. Digital payments help reduce paper and plastic waste by removing the need for physical tickets. Decreasing the use of single-use tickets through reusable smart cards or digital ticketing has the potential to save millions of tonnes of waste each year.
A growing number of public transit agencies are tapping into cloud-based solutions to gain a deeper understanding of their customer base. They’re leveraging the speed and scale of cloud infrastructure to analyze available data and gain a deeper insight into ridership trends and behavior. Transport authorities collect tremendous amounts of data on their passengers as well as their vehicles. The added computation on demand which is delivered through cloud services, makes it possible to add on more servers whenever they are needed while the Internet of Things sensors help monitor activity, at all times. Agencies are leveraging Computer-aided Dispatch, Automatic Vehicle Location, Intelligent Transportation Systems, Fare Collection Systems, and Geographic Information Systems to not only track their fleets but also improve their services and increase operational efficiency. 5G cellular networks keep all that data moving, ensuring a smooth flow of information. The management and effective use of data has become essential for high-performing transit operations. Buses are turning into literal ‘’computers on wheels’’ that produce massive amounts of data extracted from systems such as CAD-AVL, passenger counting, GNSS, vehicle health monitoring, and payment systems. Agencies should be wise to invest in a comprehensive Account-based Ticketing solution that comes with the right set of tools and is feature-rich, along with providing agencies with a user-friendly back office where they can easily adjust fares, monitor ridership, and receive regular reports. Furthermore, ABT solutions that operate under a SaaS model allow agencies to see their return on investment (ROI) right away. Another added benefit of a comprehensive, fully integrated solution is the impeccable level of security that they will receive which applies to all transactions and validation methods. A fare collection system that is both hardware and media-agnostic will allow agencies to leverage account-based ticketing using legacy equipment and without the need for additional investments while giving them a suite full of validation tools. The back end of these solutions can offer agencies valuable insights into their decarbonization efforts through a CO2 emissions reduction dashboard. This makes tracking the progress of sustainability targets much more productive and easier. ABT systems are also ready for deployment with MaaS, meaning that an open API solution can be integrated with other mobility solutions, promptly and efficiently.
The Importance Of Elevating Rider Experiences Through Integrated Fare Systems
Shared mobility solutions are rapidly gaining traction around the globe due to their unique ability to supplement riders’ travel needs by closing the first and last-mile gap between their front door and a bus stop, rail station, or transit hub. These new forms of mobility include micro-mobility options such as e-scooters, bike-sharing, ride-hailing, car-sharing, and public transit. Services in this category provide a cleaner and more cost-effective alternative to private car ownership, however, their long-term success hinges on their ability to provide smooth, efficient, and reliable payment experiences. Whether a user is paying for a quick bus ride or unlocking an e-bike, а frictionless payment process is essential for making these sustainable options more accessible and appealing to the general public. One of the biggest challenges in multimodal networks is ensuring users can seamlessly switch between different modes of transport without having to deal with consistent payment issues. If we want people to use these mobility solutions in combination with public transit, they have to be able to book a ride, unlock a bike, or pay for a bus, with as minimal friction as possible. This is precisely where integrated payment solutions could come into use. These systems allow users to move quickly and effortlessly between multiple modes and transit services without the need for multiple apps, accounts, or different payment methods. For commuters, digital payment systems streamline the process of purchasing fares by eliminating the need for cash or physical tickets. This ease of use translates into shorter queues, quicker boarding times, and a more pleasant travel experience. Furthermore, many digital payment systems can automatically calculate the best fare based on travel patterns, ensuring commuters always pay the best possible price. The availability of real-time data further assists riders in keeping up with all aspects of their journeys – from timetables to evolving road conditions, and recommendations for best- routes or journey planning.
When it comes to multimodality, ABT systems enable a more intelligent approach to fare collection that makes it possible to facilitate a travel experience without the need to carry multiple tickets or cards. Riders can gain access to a variety of transport services by simply tapping or scanning a secure token on the available readers within a station. These tokens, which include bank cards, smart cards, and mobile phones are linked to an account in the back end that logs each journey a passenger takes. By tracking the location and the number of taps made with a token, intelligent software can calculate the right fare for the passenger, and the correct transaction is finalized at the end of the day once the number of journeys finishes. Account-based ticketing provides riders with a choice and a modern, comfortable way to pay for their journeys on any mode, whether they are using public transport, shared mobility, or any ride-hailing services. Passengers can simply log in to their account and enable their preferred validation token. This fare media can look like anything from an NFC card to a mobile app, a Contactless EMV card, a smartwatch, or any other smart device that a person may carry on them. Contactless bank cards or Contactless EMV (cEMV) are the most common ways to use Account-based Ticketing. This method is extremely simple and convenient as most people already carry a bank card or a digital wallet. Riders are not required to understand complex fare and zone systems; they can simply use their preferred fare payment upon boarding while all fares are calculated and payment is processed in the back office. Agencies on their end, can offer dynamic pricing with special off-peak fares or offers which makes transit affordable and appealing. ABT systems are also highly scalable and can be adapted to accommodate the evolving needs of transit networks, allowing them to increase their capacity for serving more passengers, without requiring substantial infrastructure changes. When investing in an ABT solution, transport agencies will also need to be diligent in investing in robust cybersecurity measures to prevent any data breaches and protect passenger information.
As shared mobility platforms continue to expand, cities and transport authorities will have to collaborate with MaaS and technology providers to find feasible solutions that enhance the capabilities of these platforms to integrate various payment options—credit cards, mobile wallets, contactless payments—into one cohesive and unified platform. Facilitating access to these options through trusted platforms will increase the likelihood that users will pick more eco-friendly transport options as opposed to their cars. Furthermore, offering incentives such as discounts or rewards for choosing greener modes of transport could further encourage more people to adopt sustainable travel habits. The role of data and technology in establishing seamless services and user experiences should not be undermined by any transport agency looking to improve its service offerings and increase ridership. According to the Data Standardisation Study on Shared Mobility, the transportation sector has undergone tremendous changes in the last decade, driven by the widespread adoption of smartphones and various digital platforms. The accumulation and availability of real-time data with other technological advances are becoming more crucial for cities in helping them offer a seamless transition between different transport modes, whether that’s e-bikes, public transport, or ride-hailing services. That being said, how authorities choose to use this data (or fail to) will ultimately determine how effective their efforts will be in improving and expanding current networks or preparing them for future integration with MaaS platforms. Mobility hubs will also play a pivotal role in the future of urban mobility, acting as centralized points of transport that will ultimately lay the foundation for integrating these services, as well as help shape an ecosystem for facilitating digital payments and collecting valuable data that will inform and reshape future transport policies.
If We Want Better Transportation, We Need To Rethink Our Approach To Urban Planning
The reality is that there is no silver bullet that could automatically solve the many problems of U.S. transport systems. Even with a tremendous amount of federal funding flowing into public transit, authorities’ efforts could prove ineffective, without the proper mindset for change, new policies, governance, and investment in the right technologies and solutions. It would be an even bigger mistake to think that new shiny, expensive subway stations will make Americans ditch their cars for good. Nearly 75% of the US is made of suburban or rural areas, making it impractical or nearly impossible for the majority of these populations to connect to public transit, let alone rely on it for their daily travels. However, similarly, suburban-orientated countries such as Canada have proven that it is possible to create an efficient US public transport system. The answer is often in finding the right approach. Many agree that the key to effective US transportation systems lies in using the roads we already have and establishing better bus networks as well as leveraging existing infrastructure, such as commuter rail networks. Take the Chicago Metra Rail, for example, who have a network expanding into the suburbs with over 1,200 miles (1931 km) of tracks. The rail is almost exclusively used by weekday commuters who wish to escape the typical hour of traffic. Fares, however, are considered high (US$8-15 per trip), with trips to the city center considered to be slow, and trains typically only run every 1-1.5 hours after 8 AM. Instead of allocating an exuberant amount of funds to create new subway systems, Chicago (and other cities), could take advantage of their existing rail lines and transform them into high-capacity, high-frequency, low-fare routes. Sounds impossible? Ottawa managed to achieve this by transforming its outer commuter rail lines into high-frequency trains which arrive every 15 minutes, and they did so for a total of $16 million. Another example is Munich, Germany, with an underground metro system that is even smaller than Washington DC’s. Their extensive network of commuter rail—the so-called S-Bahn—offers passenger rides all day, at an interval of 20 minutes, providing an affordable and viable option for travel between suburbs.
The question remains, however, that even with more frequent, reliable train systems, how can cities transport people to these commuter rail and subway stations, especially in the suburban regions? Countries such as Canada may have the solution. Toronto, a car-dependent metropolis much like many US cities, has established an efficient suburban bus network that feeds into other subway systems. Bus networks in Toronto are designed in such a way that practically every commuter lives within a 15-minute radius of a 24-hour bus station, with every major road having a bus route that arrives at an interval of 10 minutes. Furthermore, roughly 70% of the Toronto Transit Commission’s costs are covered by fares, proving that the way we design transit routes ultimately impacts ridership levels and revenue. Even more interestingly, many Canadians own a car, but they choose to ditch it in favor of more convenient options. By making use of the already existing transit fleets, the US could also facilitate efficient and convenient transport to and from train stations, as well as across suburban regions. Facilitating seamless payments will also play a crucial role in determining the success of such efforts. Riders don’t want to deal with having to buy tickets from multiple vendors and would much rather use an integrated platform where they can pay for everything, in one place. Issues regarding the safety of transit networks remain another major barrier for the average commuter. For instance, in 2022 alone, the NYC subway saw over 25 incidents where people were pushed into tracks, resulting in 2 deaths. In 2022, the Chicago Transport Association further reported a total of 375 violent crimes on its rail system. The Los Angeles Metro is another frequented site for incidents involving violent passengers which often makes people feel unsafe. This is another area where integrated payment systems could offer relief for agencies in the U.S. by speeding up boarding times and making journeys faster.
When it comes to safety and accessibility, the US can learn a lot from Hong Kong’s MTR network. In Hong Kong, the subway’s (often floor-to-ceiling) glass doors shield the tracks to ensure no one can fall onto them, while also maintaining quiet and clean stations. Train services run approximately every two minutes. Simple, understandable signage and color-coded stations facilitate easier access and allow riders to navigate the network with ease. Station attendants and cameras continuously monitor activities in facilities, providing a sense of safety at all times. WiFi is freely available, and stations and train cars are wheelchair accessible to ensure no one is left behind. Safety and hygiene standards are largely maintained by small train fees. Hong Kong’s MTR is cheap, but it’s certainly not free. Easy-to-use touch-and-go payment cards, which work for any of the city’s trains, buses, or trams, provide services to unbanked passengers as well as track distances traveled, ensuring payments are convenient and equitable. Furthermore, as of August 2024, riders onboard Hong Kong’s MTR can pay their fares using contactless bank cards or any smart wearables and e-wallets. The extensive upgrades in Hong Kong’s stations, such as floor-to-ceiling glass doors do come with substantial funding, however, through a combination of business partnerships, such as the leasing of retail shops located at nearly every station, Hong Kong’s MTR has managed to generate profit despite high construction costs. The MTR’s success serves as a reminder to U.S. agencies that with proper planning and investment, profitable transport networks are possible.
Final Thoughts
While the shift towards integrated ticketing for public transit shows promise in solving multiple issues in transit, it’s important to consider all aspects of transportation planning which includes a comprehensive approach that extends beyond just the adoption of the latest technologies. The change that is needed in U.S. systems requires diligence from both city authorities and transit agencies who need to work together to ensure these investments fulfill their set tаrgets and achieve their full potential. This means being proactive in expanding existing transit fleets, investing in practices that improve the efficiency and efficacy of operations, elevating maintenance standards, and conducting thorough surveys to understand passenger demographics and preferences. Technology is an indispensable ally, however, solutions need to be baked up by intelligent decision-making, while being reinforced by robust data, and continuous monitoring and evaluation through each stage of implementation. Transport authorities will also need to ensure digital literacy and technological education for all segments of society which is imperative for the successful and widespread adoption of newly deployed solutions. By carefully navigating the current challenges of the transport sector, cities can ensure the transition to integrated cashless ticketing can yield a variety of positive outcomes for everyone, from enhanced efficiency and accessibility, to cost savings and substantial environmental benefits.
AUTHOR
Ilina Chipilska is a marketing expert with more than 10 years of experience being involved in a wide range of projects. At Modeshift she manages all marketing activities and the company's online presence.
