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MasterCard positions smartphones as remote control to cities

MasterCard’s partnership with Cubic Transportation Systems points to the growing relationship between mobile payments and the transportation sector, suggesting that digital payments may soon overtake physical ones, a move that would convenience operators, retailers and travelers.

The partnership, which was announced at Mobile World Congress in Barcelona, Spain, was forged to help millions of commuters worldwide experience more convenient and personalized ways of traveling. MasterCard’s services will aid merchants and operators as well, thanks to the platform’s ability to offer flexible pricing and personalized rewards for consumers milling around transportation hubs.

“This partnership, combining MasterCard’s leadership in everyday payments and loyalty management with Cubic’s NextCity Platform, aims to develop one fully integrated solution that consumers can use to interact with a city, turning the mobile device they carry in their pocket into a remote control for the cities that they live in or travel to,” said Will Judge, head of urban mobility at MasterCard Enterprise Partnerships, London, Britain.

“Navigating a city’s transit system in a city you are not familiar can involve multiple steps and wasted time queuing at information desks or ticket offices, dealing with cash-based systems, or purchasing multiple paper tickets or specific transit cards,” he said.

“Many of us now carry a mobile device in our pocket that can simplify, speed up and personalize urban mobility – the experience does not need to be full of friction.”

Driving commerce
MasterCard will be integrating with Cubic’s NextCity platform to allow transportation operators to provide flexible pricing centered on system demand. The brand’s digital payment service, MasterPass, is set to merge with Cubic’s NextWave journey planning and ticketing mobile application, a move which may spur other credit card companies to also integrate with ticketing apps.

Both companies believe the partnership will help the conversion of the $200 billion cash payments in the transportation sector into digital payments, streamlining the experience for all customers and operators involved. This will also save operators money for cash-handling.

With mobile payments gaining significant traction lately, it makes sense for financial institutions to turn to transportation companies and digitize the payment process. By rolling out globally cohesive payment solutions for transportation systems in urban and metropolitan areas, travelers will no longer need to carry several print tickets.

“Consumer engagement with mobile technology is driving a digital revolution, changing the way that consumers purchase goods and services,” Mr. Judge said. “In terms of public transport they no longer want to queue at a ticket office or information desk when they carry a connected device that can allow them to go about their daily activities conveniently and quickly wherever they are.

“Consumers are embracing a digital lifestyle and are more connected than ever – it’s predicted that 75 billion devices will be connected to the internet by 2020. To meet this shift, shopping and payment experiences need to evolve as consumers are looking for experiences that fit in with their life.”

MasterCard and Cubic already have an established working relationship in select cities, including Chicago and London. They launched contactless payments four months ago in London and have seen more than a half-million daily journeys via buses and underground trains paid by a mobile device or contactless bank card.

The number of journeys leveraging digital payments increases 10 percent each week.

Retail opportunity
MasterCard teaming up with the NextCity platform will be beneficial for merchants. The partners are currently developing ways of enabling retailers in and around transportation hubs a manner of alerting passersby to special promotions and personalized deals while on-the-go.

Consumers will also experience real-time guidance on their smartphones, with suggestions for the best ways to travel. MasterCard and Cubic hope to roll out fare incentives if transportation systems become too crowded or congested.

“Through the partnership between MasterCard and Cubic, travelers will be able to receive a variety of different personalized offers – the possibilities are endless and will vary depending on the retailers available in any given transit environment,” Mr. Judge said.

“As an example, a daily commuter could be offered a loyalty reward for purchasing their newspaper in a specific location each day, or offered a discounted coffee or meal in a nearby restaurant if they choose to take a later train to aid with overcrowding during peak services while a long-distance traveler could be offered a discount at a restaurant or bar in or around a major transportation hub in the hours leading up to their journey departure.”

Final Take
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York