Payments for Mobility: A Gateway to Transportation Access and Financial Inclusion

When we look around today, we see an increasing array of transportation options available to connect us and our communities. After decades of policies and programs focused on changing driver behavior, mobility innovations have expanded the types of vehicles available, the business models equipped to deliver shared options, and digital platforms enabled to plan a multimodal trip. But there is another important transition underway: how we pay for transportation. 

Widespread adoption of the contactless EMV global payment standard by US issuers, along with general smartphone use and digital wallets, mean that customers increasingly expect a digital option for all types of purchases, including mobility. Undoubtedly, investments in increasing reliable multimodal options should continue to make it more convenient, affordable, and sustainable for people to get around. But we can also leverage these innovations to take a fresh look at the role of data and payments for mobility in nudging people to more sustainable travel behavior while also improving the customer experience. 

For those of us who are already fully banked, this will all sound familiar. Wouldn’t it be nice to pay for your bus or train the same way you pay for other things, without needing exact change or to prepurchase a merchant-specific card or account? Would you consider riding transit more often if so?  Results from cities around the world show that accepting open loop payments can increase transit ridership, reduce bus dwell times and operational costs, and improve rider satisfaction. 

But from the perspective of those who are unbanked or underbanked—roughly 18 percent of American adults—paying for mobility could be a pathway toward financial inclusion. There is significant overlap between transit rider demographics and people who are not fully banked. In the future, a cash paying rider could learn about digital payment options through their transit agency, be able to use the account on their transit trip, but also to pay for other mobility options like shared mobility or parking, and for non-mobility uses, like housing or food. 

Monterey-Salinas Transit (MST) in Northern California recently explored this idea with a pilot to provide information about low-cost, easy-access payment options to transit customers using the Square Cash App and Visa Cash App Debit Card. A regional marketing campaign resulted in new accounts that were not linked to a bank account, and while the customer’s first tap was on transit, a few months later their largest expenditures were on other essentials like food.

Beyond transit, digital payments – and access to the broader financial system – can help to incentivize sustainable travel choices. For example, a cashback rewards program could provide travelers using transit, paying for electric vehicle charging, using carshare, or accessing micromobility with a 100 percent cashback credit on qualifying purchases. This essentially replicates the framework of distributing mobility-specific benefits to targeted groups, but does so in a way that allows recipients to use their account for more than just transportation and, in turn, build trust with banking institutions that offer broad avenues to financial inclusion, like building credit. For transportation agencies, this could reduce the cost of administering accounts and cards for people, leveraging the global financial system for things like security and privacy standards. 

At this moment in time when many people are struggling to make ends meet, the transportation industry has an opportunity to use digital payments as a gateway to enable a truly equitable and inclusive system, reducing barriers to travelers and ensuring we deliver the best value to the communities we serve. 

Carley Markovitz is a Principal at Rebel Group. Lilly Shoup is Managing Director at Rebel Group.

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