It’s impossible not to notice them: they seem to be everywhere. Scooters, rental bikes, and electric mopeds are now an integral part of the modern cityscape. They transport people that last mile and promise to transform the urban mobility in the process. Are we dealing with a genuine change that points towards a car-free future – or is it a passing fad that will go the way of fidget spinners?
Predicting the future is notoriously hard, as countless Vision 2020 papers can attest. Still, the trends look promising. For example, the global scooter sharing market was already valued at USD 99.8m in 2018, and market estimates suggest it may reach USD 553 million in 2025. Can it get there? How can it happen? And, most importantly, what must happen for the market to grow?
We’ll try to answer some of these questions. First, we’ll look at the trends. Then, we’ll consider whether they can become sustainable tendencies. Finally, as a payment company, we’ll see what ECOMMPAY can do for the future of mobility. If you’re already familiar with the trends, you can click here to skip right ahead to this part.
A road bump
So, what is the current state of mobility industry?
For decades, personal mobility – at least for lazy people – was almost synonymous with owning a car. They have numerous advantages that have made them popular. The list of disadvantages, however, is just as long – and it’s beginning to take its toll.
First of all, the impact on environment is increasingly obvious. States are beginning to take action, taxing older cars and introducing emission regulations. Numerous European cities have gone so far as to ban diesel vehicles altogether.
The taxes and regulations also drive the cost of car ownership higher. Data suggests that worldwide car sales peaked in 2017, stagnated in 2018, and started to decline in 2019 – even before the pandemic and its accompanying economic slump.
Quite obviously, the pandemic did little to help the global car sales, and a sharp drop is projected for 2020 – estimates suggest it could reach 30%. It might be too early to welcome a car-free future; if you look at the 2008 data, you see that, while sales slumped during the last recession, they rebounded strongly in 2010. Moreover, even the 2020 drop will still be notably higher than the 2007 peak.
But there’s one thing that’s different this time around: cars are no longer the only game in town – or in the city, as the case may be. It should, of course, be mentioned that bikes have been around for ages. In some notable cases, they’ve even become more popular than cars.
Still, these cases are notable precisely because they’re so few. In most cities, cars still rule the streets. Bikes, even though they’re a permanent fixture, have never achieved dominance. Why would the future be any different?
Electric vehicles shaking up the industry
A notable difference is the entire business model of the new mobility industry. Previous personal mobility solutions focused on ownership. If you wanted to get around, you bought a car or a bike. Now, rental is an increasingly popular option.
It’s little wonder, then, that electric vehicles (EVs), now that they’re actually viable, are an increasingly attractive option. They’re silent, emission-free, and require far less maintenance. They also benefit from new advances in electronics and batteries, whereas the fossil fuel car is a mature technology with limited room for improvement.
Moreover, they seem to fit the modern lifestyle better; they’re essentially another gadget. We’re very familiar with gadgets you can charge at home. We’re much less familiar with complex mechanical devices that you have to fill up with explosive fuels. And there’s no denying that their smaller ecological footprint is an increasingly important consideration that will only become more important.
All this adds up to some rosy market projections. For example, Bloomberg research suggests the share of EVs in new car sales could reach 10% by 2025, jumping to 58% by 2040. The consensus is clear: electric vehicles are a very powerful trend that is likely to grow into a sustained tendency.
Think small: how micromobility changes the game
You might have noticed that we often use “electric vehicles” instead of “electric cars”. That’s no coincidence: the two are not synonymous. Electric vehicles include a plethora of smaller devices such as scooters and mopeds – or, if you’re adventurous, even skateboards and unicycles.
Smaller vehicles have several distinct advantages. We may think of cars as something that transports us – yet, strictly speaking, most of the fuel is spent on transporting the car itself. The average car easily weighs north of 1600 kilograms; even though the average human could lose some weight, we’re still just a tiny fraction of that.
Lugging all that dead weight around might be less of a problem for fossil fuel cars, yet it is absolutely detrimental for electrics. It is true that battery packs are getting cheaper every year. Nevertheless, they remain the single most expensive EV part, and you really want to get as much out of your battery as possible.
One way of doing this is building smaller vehicles so that most of the battery is spent on transporting the driver, rather than the vehicle itself. Moreover, a smaller vehicle needs a smaller battery, which costs way less.
The next small thing
So we see another very clear trend emerging: smaller vehicles with shorter ranges – or, if you’re into buzzwords, micromobility solutions covering the last mile. These vehicles are not supposed to cover the entire trip. Rather, they are there when you need it, covering that last mile between the public transportation and the final destination.
Moreover, the user does not have to own them. They indeed work as a solution, rather than a product. This brings us to the next big trend: mobility as a service (MaaS)
Mobility-as-a-Service: Shift towards service economy
The “as a service” concept originated in the IT industry, where it’s been spectacularly successful. It’s based on a simple idea: people often don’t need the product itself; rather, they need the service it provides.
Different subscription-based services are a well-known example. Rather than buying and downloading their films and music outright, people opt to pay a subscription fee and access an entire catalogue of movies they can stream. They never really own the movie, but turns out that most people don’t care as long as it’s easy to access.
It’s easy to see why it’s a lucrative business model; rather than making just one sale, the business gets a repeat customer and a steady income.
There are obvious benefits for the customer: they don’t have to worry about parking, charging, or maintaining their vehicles. Moreover, they don’t have to buy the vehicle; they can just pay for the mobility they need and not pay for all the time the vehicle remains parked.
The same principle applies: users don’t care about owning the vehicle as long as it’s easy to access.
MaaS is not confined to electric vehicles. Companies like Uber and Lyft started out as ridesharing services, as people signed up to accept passengers in their own cars. Shared bikes are another MaaS product. Still, electric vehicles and MaaS are a perfect match.
For one, electric vehicles are new and pricey. They have some appeal just because they are new, but people may be reluctant to become early adopters. MaaS allows them to dip their toes in the water without buying the vehicle outright.
Second, the vehicles themselves are more robust and require less maintenance. This is a notable bonus for a vehicle that spends much of its time on the street and sees heavy use.
Third, they are essentially electronic devices, not a complex mechanism with electronics bolted on it. They can easily achieve things like GPS tracking and remote connectivity, which are vital for a MaaS vehicle.
Always connected: how 5G will change mobility
So far, we’ve looked at things that are already here. The next trend: 5G and constant connectivity admittedly is a little bit in the future. Still, that future is already being rolled out.
You may think that we’re already constantly connected, yet 5G promises to turn this up to 11. It promises much faster speeds, low latency, and greater network capacity. This means another tend for the mobility industry: it becomes feasible to have vehicles that are always connected.
This has some immediate benefits, such as avoiding traffic jams or finding the best parking spot. It can also allow new solutions. Rental vehicles could immediately recognise and remember their customers, much like you can log on a streaming service on any device and immediately access your favourite movies and music.
And, much like the streaming service suggests new series to watch, the always connected vehicle could suggest new places to go. For example, if you’re passing a Starbucks on your morning commute, the vehicle could suggest stopping by to get your daily caffeine fix.
Yet the ultimate prize, of course, is self-driving cars. This isn’t purely a question of technology; before they can hit the road, driverless cars have to clear some legal hurdles. Still, once they do appear, it is quite safe to assume that most people will hail them from their smartphones, rather than own one outright.
The big picture
Now that we have the pieces, let’s try putting the puzzle together.
Car sales are falling, for numerous reasons. People have less money to spend on status symbols. Environment is an increasing concern – both for customers and governments. There are increasingly appealing alternatives, which promise greater convenience and lower cost of ownership.
The necessary technology is already here, it already works, and it already is being used. Yet it still is a young technology, and it will benefit from further research and investment. There’s a lot of room for improvement.
The mobility industry will also benefit from new technologies, such as 5G and driverless cars; once they appear, they should fit right in. Putting it all together, there’s good reason to suggest that the industry is well poised for growth.
Yet there’s still one thing we haven’t talked about: payments. Observing trends and predicting tendencies is fine and well, but, if the industry is to grow, it must find a way to make money. That’s where payments come into play.
It can’t be an afterthought, either. The mobility industry is almost entirely cashless; simple, safe, and convenient payments are an integral part of the entire customer experience.
The Mobility as a Service business model relies on tying all things together in one neat package: it must be easy to find and request a vehicle, it must be easy to use it, and it must be easy to pay.
Moreover, plenty of companies have noticed that mobility is a booming industry that promises massive results. The playing field is already packed, and new companies keep trying their luck. Exceptional user experience – including payments – is one way of standing out.
So, keeping the bigger picture in mind – how do you choose payments for mobility industry?
How to make them pay
The mobility industry may still use the existing payment methods, but it has its own requirements.
Consider a typical usage scenario. The ride must be close to the user; you can’t cover the last mile if your vehicle is a mile away. Let’s assume you see a number of electric scooters parked nearby, all from different operators. Which one do you choose?
The obvious answer is – the one that you’ve used before. Still, we’re talking about a relatively small transaction, not a major life decision; brand loyalty may not be that much of a factor. If there’s an unfamiliar scooter near you and a more familiar one further away, you’ll probably download the app and give the new one a go.
So we come to the first requirement: setting up payments should be fast, intuitive, and simple. You should be able to do it with one hand on your mobile while standing in the middle of the street and short on time. The reason is simple: if you need a ride, you need it right now. First-time customers will learn about your company when they’ve got your scooter, rental bike, or moped in front of them. It’s highly unlikely they’ll sign up at the comfort of their homes and then venture out to find one of your EVs.
How do you do that? Few people would consider typing in payment card numbers their favourite activity; if you can help them avoid it, do it. For example, you may consider adding a payment card scanner to your app: the user takes a picture of their card, the app recognises it and fills in the fields.
Secure payment data
Once you have their card data, all the future payments should be possible without it. This means you will have to store their payment card data and use it when they want another ride.
Now, storing payment card data may not seem like much of a challenge, but trust us on this one: it very much is. There are strict legal requirements, not to mention customer expectations. And there should be. Plenty of people would like to steal your users’ payment data, and plenty of people are trying. Even one unauthorised charge can be a PR nightmare; a massive data breach may well take your company down.
This means that all payment data must be stored safely and securely. One way to do it is to use tokenization. This means that your payment provider first authorises the card to make sure it’s a legitimate card and the data are correct. Then, the provider saves the card data on their servers and issues you a unique token for each customer. The token contains no payment data whatsoever, so you can store it on your own server. When presented to your payment provider, they will use it to identify the customer, retrieve their payment data, and charge them.
Having solid security behind the scenes is vital, but not enough. Your customers should also feel secure. For example, some scooter rental companies may require depositing a certain amount of money to your account before the first ride. This makes sure the payment card is working, yet it may also deter some users who are vary of paying before receiving the service – especially if there’s another option in front of them.
A good solution is zero-amount authorisation, which makes a small mock payment of a predetermined amount which is then refunded. Your customers don’t have to pay in advance before their first ride, and this helps build a better experience.
Speaking about paying for rides: your customers want to pay only for their actual ride, so the amount is seldom fixed. You may set a minimum amount for a ride, and it’s a good idea to set a maximum amount. Other than that, unless you make that your unique selling point, there’s no set amount for a ride.
On the other hand, you also don’t want your customers to ride for hours, only to find out they don’t have enough on their card to pay. So how do you charge an amount you don’t know beforehand?
This may require another technical solution: the user first authorises you to charge their card up to a certain amount. For example, you are authorised to charge them up to EUR 20, and this sum is reserved before the ride. If they travel less than that, they are only charged the actual amount, not the entire EUR 20.
What if they travel more than EUR 20? There are several available solutions. Once the ride is finished, you may cancel the initial authorisation and request the full amount. If available, you may also choose adjust authorisation: you can increase the initial authorisation and charge the actual amount.
So far, we’ve only talked about cards, but they’re not the only option. In fact, they may not be the best option in some markets. Mobility business is highly localised, so you must offer the payment methods your customers already use. This may mean things like e-wallets or local prepaid cards.
On the other hand, if you operate in more than one country you should provide a unified payment process for all countries. This does not mean you cannot add local payment methods; you can and should. This does mean the payment scenario should be immediately recognisable and accessible to customers from other countries.
Consider someone who already uses your service at home. They travel abroad and find your scooter at their destination. They might be encouraged to try it, if only to see whether it works just like in their home country. You should make sure it does.
customers request their rides from their smartphones, which means they probably already use Apple Pay or Google Pay. If it’s available in your country, you should consider enabling it
Finally, keep in mind that your customers request their rides from their smartphones, which means they probably already use Apple Pay or Google Pay. If it’s available in your country, you should consider enabling it – or at least choose a payment provider that supports it.
The scope of this article would not allow us to explore other promising branches of the mobility industry. Still, we hope you’ve gained a better understanding of its present state, its future prospects, and its requirements.
As a payment company, we also hope we’ve managed to show the importance of payments. It may not be the first thing on your mind, but you can’t build a business without it.
We’ve talked a lot about the concept of “as a service”; rather than doing everything on your own, you can buy the functionality you need from external providers. Well, you may think of your payment service provider as Payments as a Service. They do all the behind-the-scenes work. They make everything runs smoothly and securely. And they follow the latest trends to make sure you can receive the best solutions for your business.
Of course, we’re ready to offer you all the things we’ve discussed, and we’d be happy to explain how we can help bring your ideas to life. Still, the most important thing to keep in mind is this: it’s just getting started. Keep moving; it’s going to be an exciting ride.