The digital revolution is here, bringing with it a host of new opportunities to advance the way we take and make payments. This is especially true in the ground transportation industry, where train and bus operators are faced with an important decision: do they stick with slow, expensive physical payment infrastructure, or evolve to use fast and cost-effective payment solutions?
Ground transportation operators have historically benefited from the luxury of predictable and rising demand. Unfortunately, recent market upheaval has upset this balance leaving uncertainty in its wake. Both public and private operators alike are now facing a fierce new challenge as commuters substitute their normal daily journeys for working from home.
It is estimated that 24% of office workers in the U.K. are now hybrid1
. Alongside a general reduction in personal travel, hybrid working has led to a slump in demand for ground transportation. Whilst offices are starting to fill back up, there are doubts around whether transport demand will fully return to previous levels.
To entice previous commuters to use ground transportation again, transport operators should leverage new technology to create a more streamlined travel experience that offers flexibility, accessibility and integration. Creating a single view of the customer across all modes of transport and allowing them to pay for entire door-to-door journeys with any form of payment they choose could be one answer to this.
Payment systems have always influenced the foundation of ground transportation. However, as consumers’ share of wallet grows increasingly more digital, the average commuter is looking for a mobile one-stop-shop solution. This trend is set to continue as the global use of digital wallets is expected to increase a further 16% by 20242
This means there is a great opportunity for contactless, open-loop payments, where customers can use any payment method and still take advantage of the same fare discounts available to normal customers. Worldpay from FIS® (“Worldpay”) has partnered with Vix to offer these benefits as a standard option to our transit agency customers.
While customers may use contactless open-loop payments for easy trip-by-trip purchases, they are more likely to use open banking for one off payments like annual tickets.
Bank-to-bank transfers, also known as open banking, allow third-party financial or service providers access to consumer banking, transactions and other financial data from banks. This data allows businesses to onboard customers faster and better understand their needs. Open banking reduces transaction costs for operators to a fraction of physical methods. This could enable firms to save money and reinvest in other customer-centric areas, further improving customer experience.
Customers could be incentivized to move over to open banking as it allows instant online payments and offers an easier budgeting experience based on a single aggregated account view of the customer.
Additionally, the decrease in demand for ground transportation has impacted the need for traditional season tickets. In the U.K. the number of rail journeys taken using season tickets has fallen 16.8% in the last three years3
. Weekly season tickets are becoming less necessary for hybrid workers, giving way to a host of more flexible options. These new ticket options could be better served by open banking since all the customer’s information is stored in one place.
Worldpay champions forward-thinking and innovation. As such, Worldpay aims to build payments advantages for clients that are sustainable for the future, whatever it holds. Worldpay has identified three future trends in the ground transportation industry that operators should keep on their radar.
1. Finding success by rewarding loyalty
With a growing focus around customer-centricity and relationships, Worldpay anticipates that loyalty schemes will play a significant role in encouraging more travel. Operators could find inspiration from other industries such as airline frequent flyer programs or build a more holistic approach to loyalty through mutual partnerships with retail and hospitality brands.
2. Building a future-thinking payment strategy
Worldpay’s research shows that the use of digital or mobile wallet payments at point of sale (POS), could rise from 29% in 2021 to 39% in 20254
. This growth of wallet-based payments alongside other alternative payment methods (APMs) implies that the future payment landscape will be considerably different than it is today. Transport companies should think about the long-term payment landscape and build capabilities for the future.
3. Going the extra mile
Looking at the transportation industry with a wider lens could also identify additional opportunities for ground transport. This could involve integrating all points of the consumer journey door to door and not just between stations. The rise of micro-mobility presents an interesting opportunity to combine all stages of the journey. Integration could create a simple user experience for the traveler and greater monetization opportunities for travel operators.
And to wrap up – our key takeaways
In summary, the role of ground transportation has arguably never been more important, with the industry estimated to generate US$261.2bn in global ticket revenues in 2022, a figure estimated to grow up to $319bn by 20265
. There’s an opportunity for operators to gain new demand if they can streamline their customer experience and provide a seamless, customer-friendly way to pay. The challenge will be reigniting and maintaining demand for ground transportation despite a short-term decline. Payments could help to power a transport system that’s ultimately easier to use whilst being more cost-effective for passengers and operators alike.
To learn more, you can read our full insights on the Future of Ground Transportation Payments here
Global Payments Report, Worldpay, 2022
Public Transportation – Worldwide, Statista, 2022