E-Z Pass Payments For Tolls, Parking, And Big Macs? By Austin Carr

Article written by Austin Carr on November 27. 2012Courtesy of  FastCompany.comWith nearly 23 million devices already on the road, here’s how vehicle e-payment services could be the next paradigm in mobile payments.

On Nov. 21, an estimated 39.1 million people braved slippery highways and bumper-to-bumper traffic traveling home for Thanksgiving. And if, like me, you’re one of those unfortunate drivers who survived the busiest travel day of the year, you probably wondered at least several times along the way: Who are all these dingbats stuck in the cash-only tollbooth lanes?

All across the U.S., electronic tollbooths offer drivers myriad benefits in addition to the opportunity to whiz through tolls: discounts, reduced congestion, fuel savings, environmental improvements. There’s FasTrak in California; TxTag in Texas; and in the Northeast, E-Z Pass, an association of 14 states, which saw 2.44 billion transactions from nearly 23 million transponder devices on the road. Despite all the mysterious holdouts, that massive user base–only a percentage of the accounts active in the U.S. and Canada–could attract significant new use cases for this oft-overlooked form of electronic mobile payments, according to E-Z Pass executive director PJ Wilkins.

“It’s a very versatile application,” Wilkins says. “There’s a lot of interest in expanding the market. Customers want it–they’re asking for it everywhere. And we’re also getting feelers from other segments of the economy that want to capitalize on the tremendous amount of transponders out there.”

First, however, many industry insiders want to streamline the fractured systems. Think of the e-tollbooth industry like the smartphone market: Like the operating systems developed by Apple, Google, Microsoft, and RIM, electronic tollbooths too are fragmented–only over a slew of state toll authorities, each using roughly a half-dozen different transponder protocols. That means, an electronic tollbooth in California won’t accept tags from Florida, and vice versa. “What are you going to do? End up with five to six devices on your windshield? That’s not the way to do it,” Wilkins says.

Many toll agencies are working to make the systems interoperable–in fact, they are mandated to do so. A law enacted in July called MAP-21 requires electronic toll systems to be interoperable by 2016. With a unified and nationwide system of vehicle mobile payments–boasting likely tens of millions of customers–e-toll transponders could arguably become as appealing to the market as digital payment solutions from Square or Google or any number of brand-name players. (In other words, imagine the market for developers if it was mandated that all smartphone platforms run iOS or Android.)

No wonder the industry is already attracting attention from other business segments. According to Wilkins, major airports in New York and New Jersey are already using the systems to accept payments for parking–no more waiting in line for that parking attendant. And E-Z Pass has received interest from gated communities, which see the system as a possible security solution, and from trucking companies, which could potentially use E-Z Pass someday to track shipments going to and from ports and warehouses.

Perhaps most promising though? A number of years back, E-Z Pass did a pilot project with McDonald’s, which was interested in seeing if the system could streamline payments at drive-through restaurants. For a brief time, at five or so locations in New York, customers could pay for Big Macs via E-Z Pass, but ultimately, says Wilkins, “McDonald’s decided to go a different route.” The problem was that McDonald’s wanted to settle payments daily, whereas E-Z Pass and other toll authorities typically settle transactions on a weekly basis. “Our whole system wasn’t developed to do fast food,” Wilkins says. “If we’re going to get into that type of market–and I’m not saying we won’t–we’re going to have to get into our back-office processes.”

Still, it’s likely in the future that as the technology evolves, such payment solutions could be accessed at restaurants or utilized for other drive-in or drive-through applications. Some companies are testing tolling applications for iPhone and Android devices, Wilkins says, and even doing pilot projects with several toll authorities, perhaps signaling a time when drivers can pay via smartphone rather than toll transponder. “I think we’re going to have to eventually come to some level of comfort with other payment options,” Wilkins says.

Oh, as to why some customers avoid solutions like E-Z Pass and opt for endless cash-only lanes? “That’s always perplexed us,” says Wilkins, who adds that he’s spent a great deal of time studying this issue. There’s a variety of factors involved: Some customers don’t use toll roads enough to warrant opening an account; a large segment of the population is unbanked and believes solutions like E-Z Pass require a credit card; while others just generally shun the technology because, as Wilkins says, “The Big Brother is watching.”

But for the most part, drivers hate having to stop and pay tolls. Says Wilkins, “They just want to keep rolling.”

Source: http://www.fastcompany.com/3003456/e-z-pass-payments-tolls-parking-and-big-macs

[Image: Flickr user VaDOT]