opinion
Predicting the Future of
Payment Methods
Andrew McArdle Booker discusses what the future might hold for the evolution of payment systems .
By Andrew McArdle Booker , Crane Payment Innovations
Introduction We hear it with the emergence of every new payment technology : “ This is the new payment technology that will revolutionise the way we pay for products and services ! In X years , previous payment methods will be so passé and will wane . RIP cash and current technologies ...”
OK , maybe it is too much of a dramatisation , but effectively this is the tone we heard when credit cards were introduced as a method of payment for public transit . And this is the tone and excitement we are hearing with the emergence of NFC , and smart cards before that , as the next exciting payment technology for public transport . So , let ’ s take some time and consider what happened in the evolution of payment systems at the ticketing point of sale at public transit stations , and try to draw conclusions on what the future might hold in this regard .
Public Transit Points of Sale The point of sale for a public transit service could be either at a booth manned by a human teller , or an automated pay station . Since the desire of most operators is to phase away the booth in favour of automated methods of payment , we will focus on the latter . Automated pay stations can be a Ticket Vending Machine ( TVM ), Add Value Machine ( AVM ), or a fare box . For the purpose of this discussion , let ’ s consider what happened at the TVM .
First , it was cash payment , then magnetic stripe-based credit and debit cards . And yes , these two cashless payment methods were forecast to eventually completely displace cash . Then payment for ticketing using a PC over the Internet , and then contactless credit cards ( at least in some countries ). Not long ago , we saw the introduction of ticketing using applications on the mobile phone . And now comes NFC on smartphones as the new method payment on the block , promising to become the new king of payment for public transit .
Think of the above , and then take a look at TVMs today , and what you will see is a machine that , more often than not , enables all of these payment methods combined . Cash payment is still offered at most TVMs as is some form of cashless payment . Each time a new payment method is added , the capital and operational costs of Automatic Fare Collection ( AFC ) systems increase for the operator , which is increasingly finding itself unable to phase out any existing payment method .
There have been instances where some operators wanted to phase cash away from their TVMs , but they did that by enabling their ridership to alternatively purchase tickets with cash at designated retail locations , thereby simply shifting the channel , perhaps even at a higher operational cost than would have been if the operator processed cash at its own premises ( after all , those retailers want a cut ).
In fact , when one abstracts the different payment methods into two main categories : cash and cashless , and regardless of whether the consideration is payment share in public transit or any other industry ( like retail for example ), an observable pattern emerges . Cash
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