In Transit Payments, Going from Cards to Mobile Is a Rough Commute

Toronto's mass transit system is embarking on a mobile ticketing initiative that the system's operators hope will become the dominant payment system within three years — a time frame that demonstrates how hard it is to migrate to new payment technology.

"We're not there yet, but there's lots of learning out there that we will draw on as we come to that," said Brad Ross, executive director of corporate communications at TTC.

Toronto recently signed a contract with the mobile ticketing company Bytemark to support TTCconnect, the transit system's smartphone app.

Bytemark already enables mobile ticketing for a Toronto express train that runs between Union Station and Pearson Airport, and the vendor will now extend that technology to other parts of the transit system.

Toronto public transit includes streetcars, subways and buses, all of which rely on an aging and disjointed mix of cash, tickets, tokens, passes and a master farecard system called Presto for payments.

The Presto farecard is being rolled out gradually, with the entire system scheduled for conversion by 2016. About two dozen subway stations recently added Presto to coincide with the Pan American Games, which are currently underway in Toronto. The city's new streetcars also support Presto cards.

The next iteration of the Presto farecard should include mobile payments, likely by 2017, as well more open-loop payment options such as credit and debit cards, Ross said. Mobile ticketing refers to making ticket purchases from a mobile device using stored credentials, then showing the app to a conductor or bus driver as proof of payment.

Open-loop transit payments are a more frictionless way to serve travelers, who would not have to navigate local differences when visiting a new city. London, for example, supports open payments in its transit system, and Chicago is working on a payment system that includes both open- and closed-loop options.

The Toronto transit system is the first major metropolitan subway deployment for Bytemark, which has worked with New York Waterways, part of Chicago's commuter rail network and Austin's transit system. The subway stations in Toronto have wireless access, allowing the app to be used underground, said Micah Bergdale, CEO of Bytemark.

The company is working with local organizations to build a mobile wallet with broader acceptance, Bergdale said. "Whether it's a retailer or tourism or other attractions around the area, we are looking to link with that," Bergdale said.

In Montreal, for example, the mobile transit app uses technology from SAP to extend special offers from local retailers for riding the system at non-peak hours; the goal of these incentives is to reduce congestion.  Toronto's mobile strategy is not that far along, though Ross sees the possibility for ancillary benefits to a fully open, mobile payment system.

"Understanding who your customers are and where they are coming from and going to will also be of great benefit around service planning and understanding travel patterns," Ross said.

Toronto's three-year time frame may sound like a long-term roadmap, and Bytemark’s deployment currently does not include the city’s suburban commuter rail system. But most older transit systems, such as New York, Chicago and Toronto, are a mix of transportation modes and payment types that have a long legacy, often dating to the systems' distant past as independent passenger railways. The rail systems aren't interoperable, and as such the payments aren't, either.

"A lot of the systems were built so you could take payments through a turnstile, or you have a commuter rail system that uses conductors," said Ben Jackson, director of the prepaid advisory service at Mercator Advisory Group, adding that mobile commerce and transit tie-ins are still in their earliest stages in most circumstances. "It's not being widely done now."