An ongoing effort to expand EZPass beyond its original purpose - letting commuters in nine eastern states pay tolls faster - has revived questions about the demand for closed-community stored-value systems.
While some systems have flourished - including Octopus, which lets people in Hong Kong use a single card for transportation and in some retail stores - others, such as the 1997 smart-card implementation on New York's Upper West Side, have flopped.
EZPass, which has recently begun adding retail locations and plans to include more, faces the additional disadvantage that it is not based on a card or a key fob, but on a chunky device the size of a garage-door opener. The device can sit on a car's dashboard or be mounted to a windshield, and it transmits account details to transponders in toll plazas.
Though it functions as a stored-value system, it is also linked to a consumer's credit or debit card; when the balance on an account dips below a pre-specified level, the system automatically charges the card to replenish the funds.
Motorists can currently use the system to pay for tolls on 10 highway networks, 29 bridges, and eight tunnels, and for Big Macs and Quarter Pounders at two McDonald's restaurants in Long Island. If the agency that oversees EZPass gets its way, drivers may soon be able to use the gadgets at more restaurants, as well as to pay for gas and other transit-related purchases, in and out of their cars.
"People like the idea of using EZPass to pay for other things," said John Platt, the executive director of the interagency group in Clifton Park, N.Y., which administers the program. "We think eventually we can utilize the infrastructure that's been put in place by the various agencies" to expand the system's capabilities.
The executives working to expand the system have taken some pages from the playbooks of Octopus and Speedpass. Both these systems have demonstrated the appeal of a transportation payment system that can be put to use elsewhere.
Less definitively, smart-card systems have proven popular on some U.S. college campuses but failed to take root beyond academia. ExxonMobil Corp.'s Speedpass is often cited as a success story, but McDonald's Corp. said Wednesday that it will stop accepting them as of June 30.
But the lukewarm overall reaction to closed-loop payment systems in the United States has not stopped the developers of EZPass from thinking up all sorts of ways to make their technology more useful.
In December, Mr. Platt's group started the process of enlarging EZPass' reach, by asking prospective vendors to submit ideas for new applications.
The agency is now evaluating the 31 proposals it received. Though some were more mundane than revolutionary - one would put sports team logos on the side of the transponder that is visible through a car's windshield - there were 11 payment-related suggestions from several banks, transaction processors, and point-of-sale system operators, Mr. Platt said.
By yearend he expects EZPass to be used for more than zipping through toll plazas and drive-throughs.
This expansion drive also meshes well with consumer desires, according to a study released in February by the Metropolitan Transportation Authority's Bridges and Tunnels group in New York, one of the 21 agencies that accepts EZPass. Of the current EZPass users who responded, 63% said they would be likely to use the system for gasoline, fast food, or parking if it were an option, and 34% said they would be very likely to do so. About 10 million people currently use the system.
Drivers can already use the system for parking at the three major New York-area airports and at Albany International Airport.
"EZPass has been a remarkable success at the airports," said Pasquale DiFulco, a spokesman for the Port Authority of New York and New Jersey, which oversees John F. Kennedy International Airport, LaGuardia Airport, and Newark Liberty International Airport.
Transponders at airport parking cashier windows automatically detect an EZPass unit, and drivers can choose whether to use it or simply hand over cash or a credit card. Mr. DiFulco said the average cash transaction takes 30 seconds, cards require 28 seconds, but EZPass users can pass through the toll booth in a breezy 22 seconds.
The airport systems were installed between January and November 2003, and by this past February 33% of drivers at the three New York-area airports were using EZPass to pay for parking, Mr. DiFulco said. Drivers are already accustomed to making toll payments with the system, so adding parking fees seemed a natural progression, he said. "This is a leap you make pretty quickly."
That's the same thinking used in June 2001 when EZPass was added to the drive-through lanes of McDonald's restaurants in Centereach and Port Jefferson, N.Y. "Cashless is definitely the wave of the future," said Dean Sandbo, a co-owner of the two restaurants.
Also, EZPass makes processing orders faster, he said; the transactions take an average of 75 seconds, compared to 90 seconds for cash payments. "Some customers really appreciate the convenience."
Mr. Platt hopes motorists will get hooked on using EZPass to pay for other transit-related items, including at other fast-food restaurants and gas stations. He said these may be an easy sell to consumers who are happy to authorize payments when they are sitting in the driver's seat, but he also has eyes on the convenience stores at highway rest stops.
Drivers may well prove resistant to carrying around a garage-door-opener-sized box for that, and the agency is considering creating a second type of unit, akin to the Speedpass device, he said.
While he said EZPass has talked about collaborating with the Speedpass team, a Speedpass spokesman said no tangible decisions resulted from their single discussion.
Ed Kountz, a senior analyst with the Needham, Mass., market research firm TowerGroup, said Mr. Platt's hopes are similar to those for the Octopus system, which has become a big hit with consumers in Hong Kong. Conceived in 1998 as a way to pay for fares on several regional transit systems, the stored-value card is now accepted at 12,000 locations, including newsstands, restaurants, convenience stores, cafes, and even swimming pools and horse tracks.
However, Mr. Kountz says he is skeptical about EZPass' chances of emulating Octopus. For starters, when drivers exit their vehicles, they already have a wallet full of payment options and may not need an EZPass key fob. Furthermore, since EZPass is tied to a card account, using it for nontransit purchases adds an unnecessary layer to the payment process, he said - what is convenient at 20 miles an hour may prove needlessly cumbersome on foot.
And even when they are in a car, consumers have proven finicky. Mr. Sandbo estimated that fewer than half of the drive-through customers with EZPass pay for their burgers with it. "The customers that use it really love it. They're kind of hooked on it, but some customers are hesitant about putting anything besides tolls and bridges on their EZPass."
He is also the co-owner of four other McDonald's restaurants in Long Island, but he has no plans to add the systems at any other locations. Instead, he is more excited about the possibility of accepting credit cards.
"Everybody has a credit card, but not everybody has an EZPass," he said. "EZPass is more complicated to set up."
A McDonald's spokeswoman made it clear that it has no plans to install EZPass transponders at any other sites.
According to Mr. Kountz, "there is some potential, but not a lot," for expanding the use of the system. "EZPass is good for people doing something in their car, but it will be an uphill challenge to reach broad-based adoption."
