The importance of payment infrastructure in scaling a mobility business
With businesses facing huge pressures due to the Covid-19 pandemic, having access to critcial, scalable payments solutions is now a top priortiy
Our recent history has come to be heavily defined by developments in mobility. The 19th Century was characterised by the rise of steam power, and the resulting revolutions in mobility like steam powered locomotives and ships.
The 20th Century was marked by the ascension of the internal combustion engine (ICE), and subsequently the jet engine, and the revolutions in mobility that arrived with them such as the personal family car and commercial air travel.
The role of mobility in both responding to, and shaping, an everchanging society cannot be understated. But of course, this then begs an obvious question – what will be the role of mobility in the coming years and indeed the future?
Trends in mobility
To help us answer this question, we firstly need to look at some trends which will come to define the future of mobility.
The first of these are environmental concerns – which will see the consumer transition away from traditional ICE powered vehicles towards greener alternatives such as electric vehicles, or those powered by hydrogen fuel cells. In the EU-28, approximately 14 million premature deaths can be attributed to poor air quality, and passenger vehicles are said to account for 70% of greenhouse gas emissions, so this should come as no surprise.
The second trend is increased urbanisation and socioeconomic change, which is leading consumers to move from owning to sharing vehicles.
The popularity of ridesharing and public transit services globally attests to this, complementing the busy urban lifestyle where a vehicle might be needed relatively frequently, but not enough to make ownership economical.
The final trend is broad technological development, which will likely see the human driver usurped as the primary operator of vehicles by artificial intelligence software, resulting in driverless cars which can be used within ridesharing services. Servicing the demands underpinning these trends will be integral to the future development of our society.
There is also huge commercial potential too, with forecasts suggesting that the global mobility as a service market could be valued at around £55 billion by 2030, and this is a number which is sure to rise in the following decades.
However, if any of these economic possibilities are to become a reality, then we’ll need to see the development of auxiliary and associated services to meet the needs of the market.
The most important of these services will be provided by the payments industry. Just as the popularity of ridesharing apps can be linked to the development of mobile payments, the future of the mobility sector will need to find their own bespoke payments solutions to keep services safe and convenient to users.
What do we need from our modern day payments infrastructure?
When it comes to payments software, the average consumer is primarily concerned with two key characteristics – convenience and security.
While a stringent security system is a must have for most people – with research revealing that 90% of consumers maintain worries about being the subject of fraud, and 91% stating that they will not use a platform if they’ve experienced fraud on it – this can’t come at the cost of convenience.
In fact, 92% of consumers state that they expect a fast, frictionless payments experience. As such, the mobility industry should look to implement a payments solution that improves security and sales conversions without ruining the convenience for the end user.
For merchants – it’s important that any payments solution is easily scalable to allow for the expansion of business into new localities. This means that the payments provider should have the necessary local payment methods users expert in their region, localised expertise, and the ability to convert and process a plethora of different currencies.
Merchants will want to enter new countries and markets at speed with a unified payments scenario, therefore a payment solution that takes months to integrate will not be fit for purpose.
Finally, the solution should be able to be personalised, and cater to the individual needs of each consumer. Tying into the aforementioned point regarding convenience, the average modern consumer will lead a hectic lifestyle, and as such will seek to pay in a way that suits them.
This could mean using a traditional payments card, a mobile app such as Apple or Google Pay – the growth in which has been catalysed by protocols such as PSD2 and 3DS2.0 – or even paying through a bot enabled messaging service such as Telegram.
To ensure that the widest possible customer base can be reached and that convenience can be provided for the consumer, the ideal payment solution must be able to be integrated with a wide range of devices and payment methods.
Where can payments infrastructure be integrated with the mobility sector of the future?
With ‘traditional’ cars, there are only a few times where there is a merging with the payments sector – when the vehicle is purchased and a payment is made through a bank transfer, or when the vehicle is fuelled or maintained, and a payment is made through the owners preferred method. The shift away from ownership toward a sharing model, where the vehicle may be both electric and mostly autonomous, will change this.
The car itself could need to become a payments wallet, and the reality of this could be much closer than you think. Visa and Honda have recently exhibited a concept car that makes it simple to pay for fuel and parking through two dedicated in-car apps. With these shared, self-driving cars acting as both a wallet as well as a means of transport, it will be possible to automatically pay for tolls, parking, recharging and usage costs.
Further down the line, it could even be possible to automatically receive rebates from injecting energy into smart grids.
The payment data should be tokenised to ensure that it remains safe, ensuring that end user security is not sacrificed. Going back to our initial trends, this development in payments will help to facilitate all three of those mentioned – the shift toward ridesharing, a reduction in greenhouse gases and the growth in autonomous vehicles.
Mass transit systems will also grow and find greater efficiencies with a properly thought out payments solution. As with most payments’ infrastructure, riders seek simplicity and convenience.
This means that payments infrastructure where riders are forced to use cash – where they might struggle to know how much to pay – or are required to use multiple tickets over the course of their journey could end up resulting in less people using the services. As such, there is an opportunity for payments providers to provide a digital payments solution which would create uniformity of payment across a multi-modal journey.
For example, the London Underground allows commuters to touch in and out of the service with their mobile phone via Apple Pay and Google Pay, making journeys simple and the flow of customers faster. These solutions should be built to cover as many different payment methods and currencies as possible to make it as convenient as possible. This will have two major effects on the wider environment. It will firstly reduce the reliance on single use paper tickets, and the associated environmental impact of their produce.
Secondly, these digital tickets will help to decrease the dwell time – the time where a vehicle remains stationary as passengers embark and disembark – as consumers will simply need to tap in, rather than finding a paper ticket or the correct change. Finally, the data from these digital payments solutions can be fed back into the operators of the networks in order to make them more efficient by organising them around customer demand.
Looking forwards towards the future
The future of our society will be intrinsically linked to developments within mobility. Just as external trends are leading to the increased innovation in this sector, similar innovations in the payments arena can help to drive the world of payments forwards.
In order to make the future of mobile a reality, we’ll need to see development in supporting services. Within payments, this will go towards increased personalisation, security, integration and convenience. Only by doing this, will we be able to create a better future for us all.
Paul Marcantonio is the executive director - UK and Western Europe at ECOMMPAY
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