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Signature Redacted Implementation of Multimodal Electronic Payment Systems: Lessons from Los Angeles and Minneapolis-St. Paul By Emily Long BA in Cellular Neuroscience Colgate University Hamilton, New York (2010) Submitted to the Department of Urban Studies and Planning in partial fulfillment of the requirements for the degree of Master in City Planning at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY June 2017 2017 Emily Long. All Rights Reserved The author hereby grants to MIT the permission to reproduce and to distribute publicly paper and electronic copies of the thesis document in whole or in part in any medium now known r hereafter created. Author Signature redacted Department of Urban Sttkefiand ( Planning Signature redacted y 24, 2017) Certified by Sarah Williams Assistant Professor of Technology and Urban Planning Department of Urban Studies and Planning Signature redacted Thesis Supervisor Accepted by MASSACUTS ILNSTITUTE As ia P fessor P. Christopher Zegras OF TECHNOLOGY Chair, MCP Committee JUN 14 2017 Department of Urban Studies and Planning LIBRARIES ARCHIVES Implementation of Multimodal Electronic Payment Systems: Lessons from Los Angeles and Minneapolis-St. Paul By: Emily Long Submitted to the Department of Urban Studies and Planning on May 24, 2017 in Partial Fulfillment of the Requirements for the Degree of Master in City Planning ABSTRACT Adoption of technology in the public sector typically involves a balance of willingness to take on risk and the development of a forward-thinking agenda (Mulgan & Albury, 2003). Technology adoption in the public transportation sector follows this process and as a result, adoption can occur long after the technology is available. As in other sectors, technology has and continues to transform transportation in the US and around the world. Shared mobility services like bikeshare, carshare, and ride- sourcing services are now part of many cities' mobility ecosystem, adding to the traditional modes of public transit, cabs, and private cars. Accessing these different modal options, however, require different payment media and separate mobile apps for each system to plan and pay for travel, thus creating a fragmented user experience. Technological change in existing payment systems, specifically, unified or integrated payment systems, could improve the user experience and reduce the barriers to adoption of more modes of transport-including those that might be more sustainable. While integrated payment, or multimodal payment convergence, appears to be a hot topic among policymakers and practitioners, implementation in US cities has been limited. In my research, I seek to understand the potential barriers to and drivers of multimodal payment technology, studying the adoption of these systems in two regions, Los Angeles and Minneapolis-St. Paul. The research uses literature in the adoption of technology in transportation to contextualize the case studies in Los Angeles and Minneapolis-St. Paul. Through the exploration of these two cases, the research provides evidence that while payment technology has matured to enable multimodal payment systems, institutional factors such as limited coordination between public and private operators and organizational resource constraints remain barriers to implementation. However, incremental collaboration, vocal advocates, and federal funding support for multimodal payment systems might be used as strategies to overcome these barriers. Thesis Supervisor: Sarah Williams, Ph.D. Title: Assistant Professor of Technology and Urban Planning Thesis Reader: Joseph Ferreira, Ph.D. Title: Professor 1 3 Acknowledgements I would like to thank my thesis advisor Dr. Sarah Williams for her help and invaluable advice throughout my time at DUSP. Without her, I would not have been able to complete this thesis. I would also like to thank my friends for their support and levity throughout this process. Super special thanks to my best friend, and my partner in crime, Graham Kelly, for taking the scenic route through life with me. Finally, my deepest appreciation to my mother and my late father, for all the sacrifices they have made for me. Their endless love and support make me who I am today. I dedicate this thesis to them. Acknowledgements | 4 Table of Contents A B ST RA CT .................................................................................................................................................... 3 A cknow ledgem ents................................................................................................................................... 4 Table of C ontents ....................................................................................................................................... 5 CH A PT ER : Introduction ....................................................................................................................... 8 H ypothesis and R esearch Q uestions ...................................................................................... 9 M otivation ................................................................................................................................................ 9 Sustainable m obility ....................................................................................................................... 9 T he burden of ansf s ............................................................................................................. 10 Electronic Paym ent System s.................................................................................................... 10 Im plem entation in public transit ...................................................................................... 11 B enefits.............................................................................................................................................. 11 Implem entation in other transportation services ...................................................... 11 M ultim odal paym ents convergence................................................................................. 12 R esearch M ethods ............................................................................................................................. 12 Introduction to Case Studies.................................................................................................... 13 T hesis O verview ................................................................................................................................. 13 CH A PT ER II: Literature Review .................................................................................................... 15 Challenges of M ultim odal Travel ........................................................................................... 15 Types of integration.......................................................................................................................... 16 Evidence for the Need of Multimodal Payment Systems.............................................. 17 B enefits of transit sm art cards ........................................................................................... 17 Em erging trends............................................................................................................................ 18 Current Electronic Paym ent System s ................................................................................... 19 Sm art cards...................................................................................................................................... 19 M obile ticketing ............................................................................................................................. 20 Contactless bankcards ................................................................................................................ 21 Architecture of Electronic Fare Payment Systems ......................................................... 21 Closed versus open paym ent .............................................................................................. 21 Table of Contents | 5 Card-based versus account-based.................................................................................... 22 Implementation Barriers to Multimodal Payment Convergence ............................. 23 T e ch n ica l........................................................................................................................................... 2 3 Innovation adoption by transit systems ......................................................................... 25 Influence of institutional factors on multimodal payment convergence.......... 27 F in an cial b arriers.......................................................................................................................... 2 9 CHAPTER III: Case Study I Minneapolis-St. Paul................................................................. 31 O v e rv iew ................................................................................................................................................ 3 1 Existing public transportation system............................................................................ 31 Transport mode share ................................................................................................................ 34 Multimodal Payment Convergence ....................................................................................... 36 Metro Transit's smart card: The Go-To Card .............................................................
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