“My commute” is not a common answer when people are asked about their favorite time of day, but various advances in how we pay for transit are making commuting a little less of a hassle.

Contactless open payments, private and public transportation pairings, and Mobility-as-a-Service are a few of the innovations transit agencies are testing to cut expenses and make it easier for people to get to places and pay for the ride. Elisa Tavilla, an industry consultant in the Payment Strategies group at the Federal Reserve Bank of Boston, takes a look at the transit payments landscape in her briefing paper, “Would you like a ride with that? How mobile payments are transforming transit.” 

Because people rely so regularly on public transit, it’s become an influential segment of a payments world that’s in constant flux, Tavilla said. 

“If we think about commuters taking public transit at least twice a day, changing their payment habits there can ripple out to a variety of other retail situations,” she said. 

Transit agencies that introduce new options today are often building on progress by digital payments providers in other retail settings, so commuters familiar with existing mobile payment choices are primed for new ones like the “contactless open payments” discussed in Tavilla’s paper. With “open payment,” people will be able to use their contactless bank cards or mobile wallets to make the payments directly from their accounts, rather than relying on a fare card that must be loaded and reloaded as a sort of middle man. 

Contactless cards are common in Europe, and Tavilla believes they will ultimately offer a low barrier to mobile payment usage for U.S. transit riders and general consumers because people are so used to pulling cards out to pay for goods and services.  

Tavilla’s paper also examined new offerings that use mobile apps to link public transportation and private ride-sharing companies like Uber and Lyft in a single payment. This enables customers to order paratransit, shuttle, and carpooling services in areas that aren’t conveniently accessed by public transit. Unlike many similar options today, the services are on-demand, saving the rider time. Meanwhile, transit agencies can save the cost of—for instance—running bus routes to areas with sparse demand.  

“Mobility-as-a Service” is a related concept, but it expands across all modes of transportation in high- or low-demand areas. MaaS relies on a digital platform that integrates end-to-end trip planning, booking, electronic ticketing, and public and private transportation, allowing users to pay in one transaction. If it works as reliably and efficiently as envisioned, people could potentially ditch their car, Tavilla said. Of course, there are still some kinks to fix, including figuring out how to accurately compensate each mode of transportation for its portion of a customer’s trip. 

Tavilla said people need to be aware of what’s available and what’s coming in transit for the same reason transit payment innovations are so influential—because so many people use these transit systems every day. “These advances have the potential to positively influence people’s everyday behavior and their daily lives,” she said.

Download Tavilla’s brief here.