David Zipper is a Resident Fellow at the German Marshall Fund and a Partner in the 1776 Venture Fund, where he oversees investments in smart cities and mobility ventures. Following his tenure as director of NYC Business Solutions in Mayor Michael Bloomberg's administration in New York City he served as director of Business Development and Strategy for two mayors in Washington, D.C.
I have a confession to make. I’m not proud of it, but my own laziness often drives my transportation decisions when I’m in a new city.
Case in point: I recently flew into Austin’s airport and needed to get downtown. I had a couple of smart cards in my wallet and a few transit apps on my iPhone, but none would get me anywhere in Austin. If I wanted to use public transit—something I generally like to do—I’d have to figure out how to buy a ticket for the local Capital Metro system. An advertisement in the airport invited me to download the Capital Metro app, but my lazy brain wasn’t having it. “Nope,” it said. “Too much of a hassle. Just grab a Lyft; the app is already on your phone.” And so I did.
The seamless convenience of private mobility services like ride hail is a wonderful thing when you travel. If you think about it, even taxis have interoperable payments across cities: you can use a single credit card (or cash) to pay any taxi. But if you want to use public transit when you’re on a trip, you’ll need to get a new app or a smart card that becomes as useless as a foreign currency when you return home.
Come to think of it, is there any product or service other than public transportation that requires you to manage a new way to pay when traveling to a different American city?
The failure of transit systems to align their payment systems is more than a nuisance for travelers; it’s an incentive for them to forego transit entirely and instead use an alternative mode like ride hail or taxis that puts additional vehicles on the road (yes, I’m guilty as charged). That means cities get more congested while transit systems lose out on passenger revenue. Worse, the hassle experienced by visitors trying to buy a ticket risks turning them off from transit overall (assuming they can afford other options). Our cities and transit systems alike would benefit from seamless payments that work equally well when you’re at home as when you’re on a trip.
It’s worth stopping to ask why we don’t have something so intuitive as a national system for transit payment. After all, other countries do; you can use a single travel card to ride a train, tram, or bus in Switzerland, and ten different Japanese transit cards are all compatible with one other. But in the United States the best we’ve been able to muster is something like the Bay Area’s Clipper card, which works across 22 local transit agencies. And even the Clipper card won’t get you anywhere if you’re outside Northern California.
Transit payments were simpler right after World War II, when a rider could pay a dime to ride in cities like Chicago and New York. But as fares rose and prices varied, agencies began issuing their own tokens that couldn’t be used for anything else. The magnetic strip cards and plastic smart cards that came later allowed fares to become even more complicated. Today, the Clipper card must handle some 35,000 fare rules that determine how much a Bay Area ride costs.
Fare complexity is a headache for commuters, and it also made it harder for transit agencies to manage and sync up their payment systems. A company called Cubic Transportation Systems (Cubic) acts as a payment systems integrator for eight of the nine American transit agencies with the most riders—and each of those agencies has its own bespoke system. Matt Cole, the CEO of Cubic, said in an email “we believe it is important that a region have its own system to ensure that all traveler segments are equitably catered for.” But are the mobility goals of Baltimore’s MTA really so different from Washington’s Metro—transit agencies 40 miles apart whose separate, Cubic-built fare payments systems can’t connect with one another?
Complicated transit fare structures and bespoke payment systems make life harder for software companies like ReachNow that build mobile ticketing apps sitting on top of hardware from companies like Cubic. Nat Parker, ReachNow’s CEO, says such fare differences “form the bulk of the software development complexity and cost that we incur.”
Transit agencies can set the stage for integrated payments by adopting open technology architecture, which prevents them from being locked into a particular company’s proprietary hardware and software system. With open architecture, an agency has the flexibility to plug new technology solutions into its overall payment system and more easily link with those of agencies elsewhere.
The final ingredient to seamless payments would be a slick user experience that feels the same regardless of where you happen to be when you unlock your phone. Startups like Transit and CityMapper are working to offer that, developing software that integrates the various mobile ticketing companies—and also private mobility providers like carshare and scooter companies. That could enable the multimodal Mobility-as-a-Service future that transportation wonks anticipate. According to David Block-Schachter, Transit’s chief business officer, “the best thing we can do with transit payment is get out of commuters’ way. What they really care about is getting from A to B in the easiest way possible.”
Block-Schachter foresees a future where you can use your Transit app anywhere you like, whether at home or on a trip, to travel on any available mode. The Transit app would lose its usefulness if public transportation agencies pulled out, so agencies would maintain leverage in how they are presented compared with other mobility services—something that might not happen if they allow tickets to be sold inside the walled garden of a ride hail company like Uber, which RTD in Denver is about to try.
For my preferred vision of the future, I look to TriMet, Portland’s regional transit agency, and their new Hop pass (available as an app and a physical card). Bibiana McHugh, TriMet’s manager of mobility and location-based services, says of Hop’s development: “one of the first things we did was to simplify the fares. We also used open architecture so we could have multiple vendors—if we want to replace one, we can.” Acting as its own systems integrator for Hop, TriMet avoided the risk of being locked into a particular company’s proprietary system.
In August 2017 TriMet began to accept payments directly through Google Pay (then called Android Pay) and Apple Pay. That means TriMet removed the friction from buying a transit ticket that has pushed away travelers like me. By enabling payments through ApplePay, I can tap my iPhone to board a TriMet vehicle without even downloading an app (there are still advantages to downloading, such as monthly fare capping, but doing so is optional). It seems like a little thing, but for time-sensitive (or lazy) visitors, this is a big deal. Of course, accepting Apple Pay and Google Pay also makes commutes a little easier for the Portlanders who take the vast majority of local trips.
Innovations like the Hop pass suggest that, after 75 years, we may finally be returning to the easy, seamless transit payments that our grandparents enjoyed. As someone who wants to see transit compete and win in an increasingly multimodal world, I’m excited. It can’t happen soon enough.