Mobile/Contactless Payments Have Found Their Sweet Spot: Public Transit

As retailers struggle with mobile (and appear to have just about surrendered on contactless) payment, they might want to consider taking a look at their local public transit systems—literally. Throughout the world—and the U.S. is no exception—contactless and mobile payments are typically highly successful in mass transit experiments, where speed of payment is crucial. (The U.S. parts ways with much of the world, though, when it comes to retail mobile payments. Although omnipresent in parts of Europe and Asia, mobile is just now starting to take hold in the U.S.)

China e-commerce leader Alipay last week started a mobile payment experiment, using what it calls an acoustic payment vending machine, and the machines are placed alongside the Metro Line 4 in Beijing. When shoppers/riders use the Alipay app, the phone generates a sound and a unique pattern is created. The pattern will stay valid for five minutes, according to Finextra.

In London mass transit, nontraditional payments may soon hit a huge milestone. The agency responsible for London's is considering outlawing cash on the buses by December, the BBC reports. Today, noncash-paid bus fares account for some 98.5 percent of all bus transactions, so it's easy to see how keeping a cash management system active for those 24 million annual cash transactions could become expensive. Authorities report it has already cost about £30 million a year.

"There will come a point when it won't be worth collecting cash anymore," said Leon Daniels, managing director for surface transport at Transport For London, which runs the buses.

Although it's mostly obvious why mass transit systems are so compatible with non-cash systems, it might be quite beneficial for retailers to watch how riders interact with these systems—especially to make purchases beyond transportation—and to observe behaviors that might help their stores make mobile interactions more comfortable. It might just be that subways could be the world's most cost-effective focus group.

For more:
-See the BBC report
-Check out the Finextra story about London buses
-Read the Finextra story about Alipay in China
-See the Alipay report in Xinhua News (in Chinese)
-See the Alipay report in Xinhua News (in very rough English, courtesy of Google Translate)

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