Hearing the “click-click” of a train conductor punching small holes in paper tickets soon will become less apparent on the Long Island Rail Road when conductors begin using a smartphone device to accept card payments on the busy New York rail system.
Los Angeles-based USA ePay, a payments-gateway company, is testing its PaySaber device on a segment of the rail service through Oct. 9 as a way for onboard passengers to buy tickets with payment cards. The device connects to Apple Inc.’s iPhone 4.
USA ePay introduced its PaySaber line of products in April 2010 (
Some conductors on the Long Island trains running between Ronkonkoma and Greenport for the testing period will use PaySaber POS devices with encrypted readers and thermal printers instead of the mobile PaySaber so they can print tickets for the customers and accept credit or signature-debit cards, Ben Goretsky, USA ePay CEO, tells PaymentsSource.
The PaySaber devices will replace the familiar "duplex" paper ticket and ticket-punch system that conductors have been using for decades. The train conductors will issue customers a smaller ticket printed by the PaySaber with no punching of the ticket required, USA ePay states in a press release.
USA ePay developed a software application for the iPhone 4 customized for the railroad company so the transactions onboard move directly from the mobile phone into the company’s main accounting and financial systems, Martin Drake, USA ePay vice president of business development, tells Payments Source.
“Long Island actually came to us seeking something that would help with their reconciliation process,” Drake says. “The fact we could print out tickets, service the cards and provide the application connecting to their system all in-house, it was what they wanted.”
The conductors had little difficulty learning how to use the PaySaber device, Goretsky contends. “It’s pretty simple because a conductor is used to carrying tickets around, so he’s essentially doing almost the same thing,” he adds. “But instead he’s pressing a card through a reader instead of pushing a button and punching tickets.”
The PaySaber system also accepts cash transactions, which eliminates the confusion of different conductors carrying out different tasks. Commuters like that the card never leaves their sight, while the railroad company believes the service will reduce disputes conductors have with riders who have no cash but are on a moving train, Goretsky says.
If the Oct. 9 trial period ends with the same favorable reviews, Goretsky says his company will expand the PaySaber program to more lines in the Metropolitan Transportation Authority, which owns the Long Island Rail Road.
USA ePay is taking a cautious approach regarding extending PaySaber’s capabilities to include contactless or mobile-phone payments, Goretsky says.
“At this stage, the radio frequency identification technology is not popular enough, and there are no [security] standards for Near Field Communication,” Goretsky contends. “So we will probably hold off on it, but over the next two years we are likely to figure out a way to apply it.”
The transportation industry represents a huge market for card processors and payments gateway providers, but its many different segments make it difficult for payment companies to provide a universal method, analyst Brian Riley of Needham, Mass.-based TowerGroup contends.
“The New York mass transit system is different than the systems serving the suburbs, so you’re not going to get any real play with a new payments system on a subway that is made to move you through the turnstiles,” Riley says. “But [PaySaber] seems to be an appropriate way to handle that particular rail line.”
It would be a better move for USA ePay and the rail line if they could determine a way to reduce the ticket price markup for those who purchase tickets on the train, Riley says. “[PaySaber] could become a conduit for more volume in this manner, but why would you pay more for the ticket?” Riley asks.
In a press release about the PaySaber arrangement, the Long Island Rail Road encouraged commuters to continue purchasing tickets online or at the station before boarding the train, but the company views PaySaber as a way to make life easier for commuters.
"This device uses the latest technology to offer a real convenience to customers," Helen E. Williams, Long Island Rail Road president, said in a press release. "Credit card and [signature-debit] card transactions will allow customers to pay for their fares even when they don’t have enough cash on hand. It also will help the [railroad] to speed up end-of-tour accounting of onboard transactions."
Younger customers on the train often do not carry cash, while smartphone technology continuously offers new efficiencies, making it time for the rail company to explore applications that improve customer service, Williams added.
USA ePay is owned by GorCorp Inc., also based in Los Angeles and operated by Goretsky and his brother.
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