People more open to innovations in transport tech

Paula Gilbert
By Paula Gilbert, ITWeb telecoms editor.
Johannesburg, 20 Mar 2019

The world is becoming more open to innovations in transport technology and the younger generations are embracing new transport apps and mobile payment solutions.

This is according to a new study by financial services giant, Visa, in collaboration with Stanford University, which found global consumers would be more likely to use public transport if the associated technology were improved.

Visa commissioned the study, "The Future of Transportation: Mobility in the Age of the Megacity", to better understand the challenges commuters face today and will face in the future.

The survey was conducted with over 19 000 consumers living in either of the two biggest cities in 19 countries* including local respondents in Cape Town and Johannesburg.

The study found 50% of people open to new innovations would be more likely to use public transport if they had access to a consolidated app that allows them to plan and pay for journeys across a mix of public transport.

Younger generations are more convinced of the value of such a service, with 64% of Generation Z (age 18-25) and 55% of Millennials (aged 26-45) in favour of such an app, while Generation X (aged 46-55) and Baby Boomers (aged 56+) were more circumspect, at 42% and 32% respectively.

South Africa was on trend, with 77% of Johannesburg commuters and 76% of Cape Town commuters saying they would be willing to try a consolidated app to make payments for public transport.

According to the UN, by 2050, 68% of the world's population will live in urban centres and the number of "megacities" with populations greater than 10 million people will rise from 43 today to 51 by then.

SA is no different, and the transportation dilemma might be even bigger here, with the majority of the country relying heavily on the public transport system. In fact, according to the General Household Survey for 2018, a total of 54.2 million minibus/taxi trips take place in SA per month, which equates to 650.4 million each year.

"While cities like London set an example today for smarter transportation, when we look at smart city initiatives in Dubai and, in the longer term, South East Asia and Sub-Saharan Africa, the developing regions will leapfrog current thinking in mass transit," the report says.

Car is king

Overall, the research found 44% of urban residents use public transport as a way to get to work, school or university, rising to 54% for personal travel.

Across all cities surveyed, the personal car remains the top mode of transport for commuting (60%) and personal travel (61%). However, Africa had the lowest rate of car commuters, with 47% driving to and from work, school or university and 46% using cars for personal journeys, with the majority of Africans using public transport. In contrast, Australasia sees the highest car use at 72% for commuters and 77% for personal travel. North America is not far behind, with 70% of people using a car for their commute and 68% for personal travel.

Globally, car use is also less pronounced for younger people, with only 42% of Generation Z respondents using a car to get to work, school or university, or for personal travel. In comparison, 67% of Millennials use a private car for either work or personal travel, with 61% of Generation X and 59% of Baby Boomers using a car for work.

"The lower car use seen with Generation Z has been attributed to various factors, including rising car insurance costs, a decline in disposable income, environmental concerns, and people waiting longer to have children, meaning that a car is not seen as a necessity until later in life."

In addition, owning and regularly using a car in congested cities with well-established public transport networks may seem impractical, particularly when car share is an option. This appears to be an alternative that younger people are more open to than older generations, according to the research.

Commutes are also getting longer, with 46% of the people surveyed having seen their commuting times increase over the past five years, and 37% expecting longer commutes over the course of the next five years.

Across the regions surveyed, Australasia (51%), Africa (50%) and Asia (47%) saw the highest proportion of respondents whose commuting times have increased over the past five years. The same three continents also had expectations for longer commutes in the future, with Africa leading the way at 45%.

Malijeng Ngqaleni, deputy director-general of South African inter-governmental relations, states 60% of South African households spend on average 20% of their monthly income on transport, while in rural areas this can be as high as 31%.

Mobile payments

According to the study, payments lie at the heart of every form of travel, and will continue to become more integral as more cities move to contactless public transportation, digital payments for parking and rental services such as bikes or scooters.

The survey found 27% of consumers would use more public transport if it was easier to pay.

Various types of tickets at different modes of transport, complicated pricing structures and that it is time-consuming to pay are pain-points. Consequently, the ability to plan and pay for trips in a consolidated matter on a smart device is likely to increase mass-transit usage.

In terms of SA, the study found the use of cash-only payments was a frustration for 38% of Johannesburg commuters and 37% of Cape Town-based commuters. Another frustration when paying for public transport is long queues, with 67% of Johannesburg commuters and 64% of Cape Town commuters complaining about this.

Globally, 41% of respondents said "cash-only" payment was an annoyance and made them less likely to use public transport and more likely to drive their own cars.

App travel

Over the last few years, a number of mobile taxi-hailing apps have been launched in the South African market and commuters seem open to the possibilities presented by mobile apps.

Globally, the rise of taxi-hailing apps was also evident, with 43% of respondents already making use of them and a further 32% willing to try them. There were clear generational differences within this, with 59% of Baby Boomers saying they have tried or are willing to try taxi-hailing apps, compared to 80% of Millennials.

"When looking across the technology landscape, there already exist many products that could easily address people's daily frustrations with travel. However, none of these solutions should be developed in isolation," says Herman Donner, a researcher from Stanford University and the report's co-author.

"A major challenge therefore lies in first identifying relevant technologies that provide suitable products for the market, then managing implementation in conjunction with a broad set of stakeholders, including mobility providers, technology companies, infrastructure owners and public transport agencies. From our research, we think that many of these small, incremental changes have the potential to make a significant difference in people's daily travel, whether it's to help find parking, get the best price to refuel their car, or plan their journey on public transportation," he says.

The study found people are open to innovations in transport technology, such as apps that provide clarity and improve convenience. In fact, 28% of respondents who travel by personal car were open to the introduction of number plate recognition systems that can automatically debit drivers' bank accounts for the fuel they buy and 47% would like to see innovations that would advise on the cheapest fuel available.

However, innovations related to modes of transport themselves had less positive perceptions: 37% of respondents are unwilling to try driverless taxis, with 60% saying safety concerns could deter them.

Visa's top five recommendations

o Invest in connectivity: Governments need to invest in an "always-on" data infrastructure, which is fundamental to the technology solutions that consumers demand.

o Create a seamless payment experience to support commuter journeys, with multiple "legs": Governments and urban planners need to collaborate with think tanks, automotive and technology firms, and payments providers.

o Integrate personal authentication into the payment experience: The role of digital ID in the ecosystem is critical to address the changes in the way people use transportation, ensuring both payment and personal authentication is easy and seamless.

o Design commerce systems with all members of society in mind: When designing the commerce ecosystem, all members of the transportation ecosystem need to challenge their thinking to include seniors and the un- or underbanked, ensuring no one is left behind.

o Develop strategic partnerships to drive insights: Cities should partner with corporations that can broaden insight, aiding in planning. Artificial intelligence in combination with big data can be used to analyse data about consumption, movement and changing trends to anticipate needs in real-time, as well as provide cities with insight that can help with future planning.

* The cities and countries covered by the study were: Argentina (Buenos Aires, Cordoba), Australia (Sydney, Melbourne), Brazil (Rio de Janeiro, Sao Paulo), Canada (Toronto, Montreal), China (Shanghai, Beijing), Egypt (Cairo, Alexandria), France (Paris, Marseille), Germany (Berlin, Hamburg), India (Mumbai, Delhi), Japan (Tokyo, Osaka), Mexico (Mexico City, Guadalajara), Poland (Warsaw, Krakow), Russia (Moscow, Saint Petersburg), South Africa (Cape Town, Johannesburg), Sweden (Stockholm, Gothenburg), South Korea (Seoul, Busan), UAE (Dubai, Abu Dhabi), UK (London, Birmingham), US (New York, Los Angeles).