Mobile payments could be the simple answer to the complex transportation equation

Mobile payments could be the simple answer to the complex transportation equation

Nowadays, mobile phones are the lifeline of our society. Having a constant connection and access to different services has already revolutionized many fields and service delivery processes. The public transportation sector is not an exception - mobile solutions offer a single channel for transport providers to connect with their customers. This promises to change the overall travelling experience. Travellers could access real-time information, maps, timetables, share opinions and pay for their trips, but it also changes the way of how providers manage their resources.

Stanford University conducted a study on transportation which reflected the feedback of 19 000 consumers in 19 countries and identified significant challenges faced by the growing urban centers. It turns out that only about half of people use public transportation for their travel. Commuters choose transportation type based on three factors: convenience, reliability and overcrowding. Convenience and reliability are the most important traits for all age groups.

Complexity of the payments is often at the root of many common complaints. If it was easier to pay for public transport, average use would increase by 27%. About half the consumers also complain about needing different tickets for different means of transportation, finding the fare info or needing to pay in cash. These inconveniences are enough to make someone ditch public transport and use their own car.

In addition to inconvenience, there’s also fear included. People mostly pay for transportation with cash or credit cards. But the high risk of credit card fraud makes the consumers wary about giving our card information. A growing amount of people (young audiences and underbanked in emerging markets) do not have access to card based payment methods at all. This means users want and merchants need to implement alternative payment methods.

All in all modern transportation system needs an on the go payment system that matches the consumers’ actual needs and travel patterns. As transportation usually means smaller and casual payments, it should be a universal on the go solution that doesn’t require physical money, hand out sensitive information or intersect the commute into illogical pieces. Mobile payment methods are an answer to all those concerns.

Mobile payments for mobile people

Mobile payments are financial transactions authenticated, authorized and confirmed by using a mobile device (e.g. mobile phones, tablets or smart watches). Technological innovations have also grown the mobile payments market and it keeps on growing. Direct Carrier billing is an online payment method which allows users to make purchases by charging payments to their mobile phone bill.

Direct carrier billing offers a seamless alternative to the card-based payment methods, as the payment device is always with the customer. Some of its strong suites are the following.

  • There are 25x more people with access to carrier billing than credit cards. Yes, 25x more. In the emerging markets of Latin America, Central & Eastern Europe, Middle East, Africa and Asia, credit card ownership is usually in the low single digits (2-5%). At the same time, almost everyone has a mobile phone and more than 50% of these phones are smartphones by today.This creates a huge gap between users who are able to access digital content from their mobile devices, but are unable to pay for it. Carrier billing resolves the problem by making online payments available to any phone owner, both prepaid and postpaid.

  • Seamless and quicker payment journey for the customer. With carrier billing the customer journey decreases from average 8 steps to only 2 - the customer has to only type in his mobile phone number and confirm the payment compared to inserting the numbers of the credit card.

  • People are more responsible with their phone bills than their credit cards. In carrier billing, bad debt either doesn’t occur at all or is below 1% of the transaction volume. In comparison, 7% of credit card users in the US have a balance overdue for more than 90 days and 3% of debts are completely written off by banks.

  • There is less risk for fraud. People fear credit card number theft; they don’t fear phone number theft. In the United States, 6.5% credit card owners fall victim to identity theft each year. In these cases, consumers can dispute payments and demand their money back, which also puts the merchant at risk of having their account closed. Every carrier billing purchase requires physical access to the device which means identity theft is significantly more difficult.

How can Fortumo support the transportation ecosystem of 21 century?

In order to perform competently on the market, companies need to challenge their thinking on how to design the transportation ecosystem that works for everyone. There’s no point in betting on the customers patience and willingness to work around a clunky system. On top of that the next generation has grown up using technology and expect the most effortless and seamlessness solutions from all services.

Uncomfortable systems alienate customers and neither the companies or our growing cities can afford that. As direct carrier billing also reduces the operational cost for the provider and brings more customers on board, it really is a simple answer to this complex equation.

Fortumo can help build seamless payment solutions, penetrate new markets quickly and generate growth in both the number of customers and revenue. We provide a flexible one integration hosted direct carrier billing (Hosted DCB) solution that you can start using right away. In addition to web-based direct carrier billing, we also provide a fallback option for paying through text messages, in case the user does not have internet access or uses a feature phone. Fortumo platform also includes messaging API that enables direct communication with the customers and advanced reporting tool for measuring and monitoring the process.

If you’re interested in taking your transportation payments to the next level or want to find out more, get in touch and let’s get you started.