When Payments Disruptions Hit Nashville, Things Are Looking Good

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In the world of payments and transportation, the initial phrase of a disruptive technology is to eat away at the user base of traditional payment and transportation methods. But you know things are being really disrupted when those traditional forces embrace the disruption as a way to improve their offerings. In Nashville, Tennessee, that has now happened with Uber and Lyft. As those services disrupt and transform the very notion of urban transportation, mobile payments are going along for the ride—and it’s a beautiful one-way trip.

These are the exact kinds of changes that payment facilitators will deliver. And as cities and their commuters rapidly move into next-generation payments, the demands will expand to all kinds of businesses—especially small merchants—who will now have a ready-made customer base itching for new payment methods, but with no way to deliver. Enter their regional PF. Transportation is arguably the most important sector to modernize because the repetition involved (a regular commuter can use such a service 10 times a week, with five roundtrips) is the best way to quickly get a population comfortable with new payment procedures. Repetition creates habituation.

But first, let’s look into what Nashville has in mind. The idea is for Metro Nashville transit to integrate Uber and Lyft as, if you will, last- and first-mile services. Use your mobile device to buy one ticket to the city transit operation and an Uber/Lyft will pick you up and take you to the train/bus station. And Uber/Lyft will take you from the train/bus station where you arrive to your destination. At last, a one-payment mechanism to literally take you from your house to your office. And the massive volume potential in this metropolitan deal would sharply lower rates, making it attractive to all. That’s the idea, at least.

“Metro Nashville transit officials are in preliminary talks about forming a partnership with ride-sharing services Uber and Lyft in a push to expand mobility options and ways for customers to pay fares.With representatives of both companies on hand, Metro Transit Authority CEO Steve Bland on Monday made pitches to Mayor Megan Barry and her top aides about a pair of possible pilot projects that would look to take advantage of the rise of Uber and Lyft,” according to a report in The Tennessean. “One of Bland’s ideas is a new ride-share pilot project that would seek to link MTA’s bus system with Uber and Lyft in order to offer customers so-called first mile/last mile services that city bus routes don’t reach. Under this arrangement, Uber and Lyft would be used to provide riders access to their final destination after they get off a bus or to take riders from their origin to a bus stop. Bland provided an example of offering a combo rate priced between $6.40 and $8.40 for a trip from Madison to downtown. The same trip typically costs $12 to $16 by Uber or Lyft and $1.70 by bus. The plan would cost Metro $500,000 in operating funds to get off the ground. A second pilot project involving Uber and Lyft would be for a new mobile payment system to allow MTA customers to pay for bus access by card or from their cell phones in the same way they can order ride-share vehicles. The integrated system would cost Metro an estimated $3.65 million.”

Please forgive what is going to sound like hyperbole, but this is potentially a massive change. In New York City, for example, a multi-hour long commute is not uncommon, consisting of a seemingly endless stream of trains and then subways and multiple connections, with an endpoint where the commuter then walks 30 minutes or takes a bus. The idea of a cost-effective pay-once approach for urban areas is remarkably powerful.

It’s also the exact kind of change that will push mobile payments—with NFC or Bluetooth for speed—into every corner of the economy. What has hampered mobile payments more than anything else is a lack of successful repetition. Even Apple fans who love the idea of Apple Pay simply don’t get enough chances to use it to make it a habit. These kinds of deals could make a massive difference.

The fact that the deals are also happening outside of the traditional high-tech cities is another wonderful sign. Had this happened in the usually-expected places—think San Francisco, Seattle, Austin or Boston—it would have meant less. For this to work, it needs to happen organically in communities that are not known for tech. That way, it can’t be dismissed as some new-fangled idea from San Francisco. When the idea is pushed in places like Nashville, Atlanta, Dallas, Chicago and Detroit, it will say how disruptive it really is.

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