5 ways mobile transit payments evolved—in just the past two months

Transit payments are picking up speed, literally, as multimodal ticketing, booking and payment become the ultimate prizes for companies looking to meet consumers where they ride.

The captive and habit-forming nature of transit has long made it a target for payment technology. What’s new in just the past few weeks is how the trend is moving far beyond the car, train, bus and car-sharing app. Transportation in 2019 has become a full portal to financial services—and a way to centralize urban movement at the same time.

Here are five major transportation developments that are designed to connect digital ticketing to a much larger world of digital ID, commerce and financial inclusion.

A Mastercard Inc. credit card is arranged for a photograph in Tiskilwa, Illinois, U.S., on Tuesday, Sept. 18, 2018. Visa and Mastercard agreed to pay as much as $6.2 billion to end a long-running price-fixing case brought by merchants over card fees, the largest-ever class action settlement of an antitrust case. Photographer: Daniel Acker/Bloomberg
Mobility as a service
Mastercard last week embedded its payment and security technology into Kisio’s trip planning and ticketing engine, allowing companies to book full trips through a single app. Kisio also joined City Possible, a Mastercard initiative aimed at developing sustainable cities.

The collaboration has a large addressable market given Kisio’s base of more than 50 transportation providers in the U.S., France, Canada and elsewhere.

“The payment and the ticket are critical to the opportunity to automate multimodal transportation,” said Miguel Gamino, head of global cities at Mastercard.

Mastercard also holds a minority investment in Masabi, a mobile ticketing company that has signed a deal to enable Uber riders to use the ride-hailing app to book tickets for trains and buses.

"Beyond automating ticketing, mobile technology can help riders plan and book entire trips based on the fastest route, cheapest cost or environmental emissions,” Gamino said, adding a recent test at sports facilities in Chicago convinced 18% of riders to wait to enter the transit system to avoid a spike in ridership after a game.
Visa debit cards
Visa Inc. debit and credit cards are arranged for a photograph in Washington, D.C., U.S., on Friday, Oct. 20, 2017. Visa is expected to announce fourth-quarter earnings figures on October 25. Photographer: Andrew Harrer/Bloomberg
Visa last week also launched a transit project, announcing support for the National Common Mobility Card in India, a card that can pay for buses, commuter trains, tools, parking and retail.

Indian card network RuPay has also partnered with banks to issue mobility cards, a key step in integrating transit payments with general commerce.

In India, Visa’s NCMC cards will support contactless payments, providing a link between transportation and Visa’s broader goal of using contactless payments to improve the user experience of plastic cards, with Visa CEO Alfred Kelly saying during a recent earnings call that contactless usage is up in more than 20 countries.

And even in transportation systems that have adopted open loop and contactless payments, such as London, adoption of contactless is accelerating, as is the link between transit payments and downstream use.
Uber app
The Uber Technologies Inc. application icon seen in an arranged photograph taken in Bangkok, Thailand, on Friday, March 9, 2018. Grab, the dominant ride-hailing service in Southeast Asia, is close to finalizing a deal to acquire Uber's business in the region and may sign a deal this week or next, according to people familiar with the matter. Photographer: Brent Lewin/Bloomberg
Citywide ride-hailing app
Denver is an early market for Uber’s diversification, where the app began supporting transit booking payments through its app a couple of weeks ago.

Already well known for its easy user experience to book and pay for rides, Uber is under pressure to do more, as other ride sharing apps such as Grab, Ola and Lyft diversify.

It may seem counterintuitive, but by tying itself to city transit, Uber can gain user share by providing multiple options at airports, where travelers frequently seek an Uber ride upon arrival.

By giving another option if there are delays—Uber has also changed how it books rides to accommodate volume spikes at airports—the ride-sharing app can embed itself deeper into consumers’ travel activities.
Tim Cook, chief executive officer of Apple Inc.
Tim Cook, chief executive officer of Apple Inc., waves after speaking during an event at the Steve Jobs Theater in Cupertino, California, U.S., on Tuesday, Sept. 12, 2017. Apple Inc. unveiled its most important new iPhone for years to take on growing competition from Samsung Electronics Co., Google and a host of Chinese smartphone makers. Photographer: David Paul Morris/Bloomberg
Apple Pay's next step
Apple CEO Tim Cook is leaning on transit payments to push Apple Pay toward its goal of 10 billion transactions, making a point to mention the importance of transportation in Apple's most recent earnings call.

With iPhones not selling as quickly as in the past, Apple is relying on services to pick up the slack, and that includes Apple Pay and the new Apple Card.

Cook sees transportation as the ticket, as Apple Pay plans to support ticketing and payments in New York, Chicago, Portland and other cities this year. Other major cities, such as London, Moscow and Shanghai, already support Apple Pay for open-loop transit fare payments.

"We believe that using Apple Pay on transit systems will spur more adoption and get even more people using Apple Pay in the U.S.," Cook said during Apple's earnings report on April 30.

Apple Pay has in the past year added CVS and 7-Eleven to its merchant network, giving it access to two retail chains that are often located near subway stations.
New York MTA subway
An MTA employee rides a train on the newly opened Second Avenue subway line in New York, U.S., on Sunday, Jan. 1, 2017. The first train departed the 96th Street station at noon after a speech by New York Governor Andrew Cuomo. Photographer: John Taggart/Bloomberg
The Big Apple goes contactless
The New York MTA in early May sent out a series of tweets providing information for OMNY, the transit system's new contactless payment feature.

Test deployments began on some subway lines this spring, and the system also supports third-party mobile payment apps such as Apple Pay and Google Pay. A deeper deployment on commuter rail lines and subway lines is also in the works.

Apple and Mastercard this spring touted New York's transit system as a use case to push their broader payment strategies by targeting commuters and travelers in New York.

While there are dozens of other transportation projects underway, New York's influence on the model can't be understated. New York's transit ridership is more than ten times higher than Chicago, and New York has long attempted to phase out its closed-loop payment system in favor of something more digital and interoperable.

These attempts have often sputtered — but given the pressure on large payment companies to gain traction for new mobile payment initiatives and the city's need to upgrade infrastructure, there are more factors working in favor of these projects now.