Regardless of the path that U.S. mass transit systems ultimately take to make their payment systems more efficient, those changes seem to be in everyone's best interest: in a perfect world, in which a contactless or mobile payments ecosystem has been well-established, these kinds of payment systems would significantly decrease the inefficiencies of current fare systems. Costs associated with operations like producing and maintaining card machines and even transporting and counting hundreds of thousands of coins every day would be virtually eliminated.
And what might make capturing those efficiencies more attractive? The amount of data that could be gathered and directed toward targeted marketing is staggering. According to 2011 data from the U.S. Census Bureau, the average public transportation user spends 95.4 minutes commuting every day, and this represents only a percentage of the total time Americans spend on buses, trains, and underground rail. If even a small chunk of riders started using contactless cards or mobile payments to pay for the bus, credit card companies or start-ups like Square would gain access to daily information about when and where their customers are traveling. Harnessed correctly, this kind of data could be used to tailor advertising to fit a subway rider's morning commute perfectly -- who wouldn't use a coupon for coffee at the Cosi near Dupont Circle if it popped up on their phone as they exited the metro?
Of course, this kind of "secondary use" of consumer data raises red flags about privacy concerns. In some ways, the interests of a private credit card or mobile payments company would be aligned with that of the bus rider. In a perfect world, companies could provide riders with more tailored and relevant information (i.e. advertising) about the world around them.
Then, again, the world of targeted marketing hasn't always been perfect. One can imagine ways in which uses for this kind of location data would not align company and consumer interests, which is somewhat more problematic. In a conversation with Ryan Calo, a law professor at the University of Washington and privacy expert, he pointed out that if companies use information about how people ride public transportation against them, say to create a system of price discrimination so that coffee at Cosi is more expensive during the hours of the bleary-eyed commute, that would constitute a kind of harm to the consumer.
The online world "is a mediated environment, in that there's a layer between what you do and your experience," Calo said, but when this kind of data use "begins to spread to the offline world...[it] blurs the distinction that we have between the online world and the brick and mortar world." This highlights the important distinction between "push" versus "pull" data transactions, to borrow email terms for a moment: if we automatically give up ever more information about our location and traveling habits every time we ride the bus, then morning commutes become just one more space in which profitable information about our private lives becomes thoughtlessly available to private companies who might not have our best interests in mind.
Despite these cautions, there are responsible ways to deploy more efficient public transit payment systems, especially if consumers are aware of how their information could be used if they choose the convenience of a contactless or mobile swipe. But at this point, at least in the United States, this potential is a long way from being realized -- the technology market is too fractured to support a major shift in the way we pay for the bus any time soon.