Evaluating Different Business Models and Pricing Approaches for Mobile Ticketing

Nihit Jain

Associate, Transit Technology/Data Consultant

Philadelphia, PA

Outline

• Key Payment Takeaways

• Introduction to Mobile Ticketing

• Transit Mobile Payment Industry

• Mobile Payment Costs

• Case Studies

• Key Takeaways

Key Presentation Take-Aways

• Think about both, Upfront Costs and Ongoing Costs

• Don’t forget about penetration rates and transaction costs

• Mobile payment is only one part of your fare collection strategy

• Think about fare policy and where you want to go long-term

• Choose carefully between visual validation and onboard validation

Transit Mobile Payment How do you define it?

• Mobile phone acts as Fare Media

• Fare products available through mobile application, web portal, retail outlets

• Validation on phoneoVisualoOnboard (Barcode, NFC, BLE)

APTA 3-Day

Valid Until:Sep 18, 2019 13:00

52D3

Transit Mobile PaymentHow important is it?

• Tell us what you feel about mobile payments

• https://www.menti.com/6c47j6ttbc

Transit Mobile Payment Industry What is their historical strength?

Parking Systems

Bus Systems

Multimodal Systems

Mobile Payment Systems

Mobile Payment CostsHow do Vendors make Money?

Vendor CostsCapital Annual

OngoingTransaction

FeesMerchant

Fees

• Validators: $1-3K• Communications:

$100-500• Integration:

Highly Variable

• Hosting: $0-50K• Maintenance: 5%

of HW• Support: $0-100K • Communications:

$50-100/vehicle

• Vendor Service Fee: 3-8%

• Merchant Setup Fees: $10-50K

• Interchange Fees: 10-40cents

+ 1-2.5%

Mobile Payment CostsWhat else do Agencies Spend on?

Agency CostsMaintenance Customer

SupportIT / Finance Marketing

• Validator Maintenance

• Call Center / Customer Service

• Finance / Revenue Management

• Marketing Staff• Advertising

Mobile Payment CostsWhat defines your long-term costs?

• Let’s look at some (theoretical based on real) business models, cost numbers, and their impact on the agency finances

• https://tinyurl.com/y5jacv9f

Case StudyHampton Roads Transit

• Finding a pathway from Mobile to a Systemwide Alternative

• Some Lessons• Onboard Validation• Device Management

Mobile Ticketing Pilot Phase 1

(Visual Validation)

Mobile Ticketing Pilot Phase 2

(Onboard Validation)

Full System Rollout (Account-based

System)

2018 2019 Future

If Successful

Case StudyDASH

• Rapid implementation needed due to WMATA Station closures

• Visual validation rollout in short timeline.

• Potential for agencies to piggy back on contract for regional approach.

Case StudyGreater Dayton/RTD/Spokane Transit

• Desire for longer term replacement of full fare system and move away from cash payments

• Multimodal payments / MoD / MaaS

• Institutional partnerships (e.g. Universities, Retailers)

Sourced from Transit App, https://medium.com/transit-app/

Business Models in the FutureSo what might change in the Future?

• Ticketing through other third party apps

• How do they various parties make money?oCut of overall pieoAdditional demand

Sourced from Transit App, https://medium.com/transit-app/

Key Presentation Take-Aways

• Think about both, Upfront Costs and Ongoing Costs

• Don’t forget about penetration rates and transaction costs

• Mobile payment is only one part of your fare collection strategy

• Think about fare policy and where you want to go long-term

• Choose carefully between visual validation and onboard validation

Thanks!

For any questions, please contact:

Nihit Jain

nihit.jain@ibigroup.com

(617) 450-0701 x 51644