Amazon’s transit-friendly posture should provide momentum for digital ticketing and other subway improvements in Queens, N.Y., and northern Virginia — and if recent history is any indication, Amazon may take an active role in improving that infrastructure.
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The e-commerce giant on Tuesday announced it would locate at least 25,000 jobs in both Long Island City and National Landing in Arlington, Va., as part of multi-billion-square-foot offices and other facilities. Amazon specifically mentioned infrastructure improvements and mass transit as attributes that make both locations attractive.
Amazon made reliable transit part of its criteria for choosing its second U.S. headquarters and has already invested $60 million in transit in Seattle, where its main headquarters resides, for increased bus frequency and the city’s new streetcar system.
An turnstile entrance to the Amazon Go store is seen in Seattle, Washington, U.S., on Wednesday, Jan. 17, 2018. After more than a year of testing with an employee-only focus group, Amazon Go opens to the public Monday in downtown Seattle, putting to the test the online retailer's technology that lets shoppers grab what they want and leave without paying a cashier. Photographer: Mike Kane/Bloomberg
Mike Kane/Bloomberg
New York in particular has struggled to replace its aging MetroCard system Past attempts to modernize the Metropolitan Transportation Authority's system failed to improve upon this process; card swipes at the turnstile must be approved within 300 milliseconds, but credit and debit card payments can take much longer. Even MetroCards, which date to 1994, have a high failure rate.
New York is also a planned location for an upcoming Amazon Go retail store, which relies on subway-like turnstiles to identify shoppers as they enter the cashierless store. Though this technology has so far been limited to small stores, in a transit environment the transaction is much more straightforward: Rather than track each product a customer picks up, transit payments are focused just on the entry and exit points.
Amazon dumped some cities from its list for its second U.S. headquarters because of lack of reliable transit, and the company is under pressure to avoid the negative press it’s gotten in Seattle over traffic congestion. Even without Amazon, Queens and northern Virginia have auto traffic problems.
For example, the Long Island City location is near eight subway lines, Long Island Rail Road, a bike sharing service, ferries and LaGuardia and JFK airports; the new East River Ferry has a terminal near Amazon's new office site. Amazon's Virginia location is near several stops on the Washington, D.C., Metro service.
The influx of 25,000 daily commuters will add more volume to transit systems, particularly since New York and Washington are among the few metro areas in the U.S. with comprehensive heavy rail mass transit—New York and Washington are two of the top three cities in terms of travel percentage by mass transit. These commuters will also spur business development near the new offices, further boosting commuter volume.
That would require improvements for both cities' transit systems, which already face myriad problems and have long-standing improvement projects underway. This includes ticketing, where the D.C. Metro has been trying to migrate riders to Google’s mobile payment apps over the past several years, while New York is trying to introduce contactless payments.
Improving payments on mass transit systems is a gateway to other improvements. Mobile wallets and contactless cards makes it easier to enter a transit system and allow account reloading to move outside of a transit network, a current global trend in mass transit systems that frees up space for commuter flow. Mobile apps also support co-marketing and an open system in which transit payments can tie to merchants outside the trains and buses.
Chicago was an early adopter of an open digitized transit payments system, but the U.S. severely lags other countries in transit payments automation. Montreal has used digital payments to manage spikes in traffic by linking incentive marketing to travel during nonpeak times. London's open payment system has migrated to other cities and wearable transit payments are serving as a catalyst for a "smart city" initiative in Singapore. In Tokyo, an Amazon-Go style no-cashier store has opened in a transit hub.
Amazon’s location agreements also feature several tax incentives that could directly or indirectly fund transit projects. In New York, Amazon has promised to invest in infrastructure improvements. The Virginia announcement is more specific, noting Amazon will be linked to improvements to nearby Metro stations.
Existing or new transit projects in both cities will likely require better speed and focus to meet Amazon’s demands.
Amazon, the New York MTA and the Washington Area Mass Transit Authority did not return requests for comment by deadline.
John Adams is executive editor of payments for American Banker. John interviews top executives in the payments, cryptocurrency and fintech... Read full bio
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