What’s the Cost of Open Payment Systems?

These new partnerships call for many change, such as management efforts related to customer service, staff re-training, public education and other related business issues. All this has to be done to ensure that success can be measured in terms of increased revenue with reduced operating cost while providing better convenience to the customers.

In Closing

The open payment system solution started with an easy-to-understand notion — use your contactless bank card everywhere. People grasp the concept; it is easy to understand. It is just like the ATM card and customers like that simplicity. But then complexities begin to add as people ask “Why not add in use of the NFC/smart phone?” Also keep in mind, the bank card/ATM system matured over about a 25- to 30-year period. It too had its growing pains with technical aspects and business ecosystem development.

A lot of progress has been made with the New York and Salt Lake City experiences on smaller scale of operation. Further work was done by SEPTA in addressing business case propositions; we will know the results by this fall. In parallel development, everyone will be watching what the PATCO pilot brings to the Philadelphia/New Jersey region. These are all work-in-progress initiatives.

It will be a trade-off every financial manager has to make: What is best for customer convenience, what is going to cost the least money, and what will be my payback period for the investment? One question to ask is: What will be my long-term cost for ongoing transactions — every time a customer uses a bank card or a smart phone? How does this compare with an in-house smart card system?

A final personal thought: If we shift too heavily from a buy now/ride later approach, are we not encouraging a deficit-driven model — spend first/pay later? One needs to be aware of that fact every time the financial people formulate their guiding principles. Remember the old adage: No ticket, no ride!