Cities and Urbanization

Innovation in mobility payments is keeping people moving while protecting the planet

New mobility payment schemes in California allow un- and under-banked people to access the Metro system.

New mobility payment schemes in California allow un- and under-banked people to access the Metro system. Image: REUTERS/Carlos Barria

Hannah Keyes
Project Fellow, Global New Mobility Coalition, World Economic Forum
Jamie Wylie
Project Lead, Urban Mobility, World Economic Forum
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  • Almost all of the Northern Hemisphere experienced record heat in July, from Europe to China to North Africa and the United States.
  • Inflation this year is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies.
  • The dual crises of climate change and inflation intersect at public mobility — where individuals should be incentivized with low costs to opt for low-carbon public transit over cars.

A summer of extreme heat incidents, skyrocketing inflation rates and devastating energy and fuel costs have put significant strain on people’s finances.

These challenges have emphasized the need for solutions that can simultaneously cut costs for people while aiding the transition away from fossil fuels — delivering not only lower climate emissions, but also more resilient economies. This applies across all sectors, but it is particularly relevant for the transportation sector.

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Keeping people moving while cutting costs and carbon

Governments and transportation operators around the globe are already adopting innovative solutions to mitigate the harm transportation causes to the environment, and the toll it can take on the wallets of those who use it. Indeed, the summer of 2022 saw governments and operators initiate innovative responses aimed at keeping people moving during challenging times.

In May, anticipating the impacts of rising fuel prices and with a goal of encouraging more climate-friendly summer travel, the German government introduced the €9 public transit ticket. With a single ticket, people across Germany were able to ride all forms of local and regional public transport across Germany for just €9 a month. This three-month initiative was hugely popular and resulted in an estimated reduction of 1.8 million of tons of CO2 and replaced 10% of car trips.

Initiatives like this show that it is possible to reduce costs for people while also combating climate change. To ensure people continue to embrace public transport options, it’s crucial that cities create affordable, sustainable options for people’s daily transport needs.

Innovating mobility payments

An increasingly common innovation in mobility payments from cities is implementing fare capping, whereby travelers using contactless payment for public transport will pay no more than a set amount for travel each day or week.

Cities including London, Dublin and Portland have already implemented this system and now allow passengers to use public transport without worrying about buying the right type of ticket or getting the best deal. According to Visa’s recent Future of Urban Mobility Survey, 61% of respondents said that capped fares would encourage them to take public transit more often than a non-fare capped system.

Early in 2022 the New York Metropolitan Transportation Authority introduced a fare-capping pilot that limited the weekly fare to no more than $33 per week — the equivalent of 12 trips. This means that riders paying with a contactless credit, debit, prepaid card, smart device or OMNY card could pay-as-they-go while benefiting from the weekly discount, something historically only available for those able and willing to pay for a transit pass upfront. The MTA shared that in the first month of the pilot, more than 168,000 benefited from taking enough trips — more than 12 — to earn unlimited rides for the rest of the week. This resulted in savings of more than $1 million in fares for those riders.

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How is the World Economic Forum promoting sustainable and inclusive mobility systems?

Fare capping and contactless mobility payments are attractive solutions for transit agencies looking to reduce costs while providing equitable access to all riders, regardless of their income and access to financial institutions. More agencies globally are shifting to contactless payments, and riders increasingly expect this form of payment. However, one crucial aspect of inclusion in public transit is ensuring contactless payment is accessible to all.

Government initiatives such as the California Integrated Travel Project (Cal-ITP) can help to facilitate public-private partnerships that leave no rider behind. The goal of Cal-ITP is to create an integrated travel experience across the state of California, specifically focused on fare payments and real-time arrival information. For example, in partnership with Monterey-Salinas Transit (MST) and with support from Visa, Cal-ITP launched a contactless payment pilot that enabled un- and under-banked riders to pay for transit via Cash App, and load cash funds into their accounts at local brick-and-mortar retailers, with no bank account needed. MST also introduced fare-capping in concert with the Cal-ITP pilot, creating access to discounts and concessions for low-income riders that would not otherwise have been available, were they to pay with cash for each ride.

Looking to the future

Innovations in mobility payments can deliver concrete, on-the-ground change that keeps people moving affordably for their daily needs while also offering cities a way to boost public transport ridership. Given the impact of transportation on both the climate and on personal budgets, which are growing increasingly tight, innovations in transportation payments are timelier than ever.

Simple changes to the way people pay for and access public transit can encourage the necessary shift in travel behavior to meet the urgency of the day. By offering innovative solutions in transport, cities and operators can deliver affordable, convenient and even more sustainable services — services that meet the needs of people and planet.

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The views expressed in this article are those of the author alone and not the World Economic Forum.

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