Prepaid Transit Applications Show How Prepaid Can Go Beyond Cards

by Ben Jackson 0

With recent advances in technology, thepayments business in general, and prepaid in particular, is movingbeyond its card focus. One area where this is evident is in whatMercator defines as the Transit segment.

The Transit segment measures funds loaded onto prepaid devices forfares on buses, light rail, and commuter trains, and onto cards andtransponders for payments like tolls and parking. The prepaidTransit segment continues to grow as more transit systems adoptprepaid cards to reduce the use of cash and to take advantage oftechnology like contactless cards that can speed people throughboarding or tollbooths.

Two projects in Massachusetts show how this segment is tapping intonew technologies and combining prepaid with existing ones to makelife easier for commuters.

The Massachusetts Department of Transportation has begun offeringprepaid toll transponders to drivers along the MassachusettsTurnpike. Its goal is to get people into the fast lane byeliminating the need to stop at a toll booth. Some drivers couldnot or did not want to attach a credit or checking account to theirtransponders, so prepaid was a way to get more people to use thesystem and eliminate more cash from the system. Read more about thesystem here.

In another pilot that is soon to be launch, the Mass BayTransportation Authority plans to allow customers to pay for trainfares on board commuter rail with their mobile phones. It hassigned an agreement with a British company called Masabi that willprovide an application to let customers display a ticket on theirmobile phones. Currently, riders can pay cash or buy paper ticketsor passes. This will allow for more electronic payments, thoughconductors on the train will need additional equipment to validatethe passes. Read more about the smartphone tickets here.

You can also read the MBTA’s original RFP here.

Because transit has been a pay-as-you-go or a prepaid environmentfor so long, it is easy to get customers to understand how newtechnology can be applied to payment. Transit may be one placewhere new technology gets a widespread test before moving into themainstream.

You can read more about Mercator’s estimates of the size of theprepaid transit market in our prepaid benchmark and forecastreports.

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