PayTollo Blog

The Future of Toll Payment

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Original blog post can be seen here IBTTA - The Future of Toll Payment


Overview

In looking to the future, there are ample opportunities for increased use of tolling as a pricing mechanism. It is widely recognized that fuel taxes and other excise taxes will not be adequate to pay for the impending needs within transportation. Through more convenient toll payment methods, user pay systems certainly become more practical. The industry needs to rely on a transportation payment system that covers all modes of transport including public transit, ferries, taxis and vehicles for hire, etc. Solutions have evolved and the next generation of payment systems are now capable of accepting payment for services and products incidental to transportation including fuel, parking and other commercial transactions.

Economic Competitiveness and Transportation Payment Systems

Research is prolific in showcasing the importance of the transportation relationship to a nation’s global economic competitiveness, most specifically related to freight transportation: truck, rail, water and air.  For example, of the four methods, the truck moves 88.3% [1] of the value (not volume or weight) of freight in the United States and it is the highway infrastructure that makes this movement of freight value possible.  It also allows automobiles and small truck fleets to support the service industry while providing local deliveries.

Both international economic competition and national economic growth occur when nations focus resources on the construction and preservation of their arterial highway/interstate networks given that the funding for highway infrastructure is considerable.  Furthermore, there is increased opportunity in that the Interstate system, the largest public works project in the history of the U.S., is reaching the point that it will need to be reconstructed and expanded to continue supporting economic growth.

Many nations are turning to “pay for use” systems where the convenient and accurate methods of payment can satisfy both point-of-sale (parking, hired vehicles, gated facilities, fuel purchases, etc.) and high-speed transactions (open road tolling) allowing customers to seamlessly move across the transportation network.  Modern, flexible, and seamless payment systems support efficient transportation systems and their continued enhancements that, at the core, support economic competitiveness. It is “Transportation Payment Systems” not “toll payment systems” that are needed.

“Toll payment systems” are technologies built to serve specific corridors and regions, based on technology from the late 1980’s. The first Electronic Toll Collection systems went into operation in 1986 in Norway and 1989 in the United States. Large back-office operations are required for answering calls, mailing bills and servicing unique transportation corridors with unusual devices. The system is inefficient and attaches a 10-25% operations cost. New transportation payment systems need to be inexpensive to install and operate, and capable of supporting a wide range of point-of-sale and high-speed transactions.

Ubiquity

Ubiquitous Transportation Payment Systems are available to all users utilizing a mode of transportation not restricted to a certain corridor, region or state.  The technology used to satisfy a ubiquitous payment system must be in itself ubiquitous.

The Pew Research Center indicates that 97% of the adult population in the United States own a cell phone of some kind and 85% own a smart phone. [2] Market penetration in other countries ranges widely but correlates with economic position. Technologies that are supported by cell phones (texting) and smart phones (location) will likely be the platform for payment technology. We have already seen this in retail markets and there is every reason to believe that those existing payment platforms can be built out to service transportation needs.

Location-based payment systems are as ubiquitous as a credit card. They are inexpensive to install in terms of the physical infrastructure (GPS location based) and the back-office operations (text, email and chat supported) are extraordinarily convenient. Immediate customer notification occurs automatically, identifying customer actions needed that can then be universally performed by the customer on their smart device. These payment systems offer the ability to easily and quickly subscribe to a payment service that can assist both frequent and infrequent users of transportation facilities.

Accuracy

Accuracy is certainly significant when making the correct revenue payment to the collecting agency.  For years, location-based payment systems have undergone extensive testing and have been operating in high-speed toll applications as well as point of sale transactions. Payment has been accurate and back office operations have been handled through text and email operations. There have been occasions when the location-based payment systems have identified revenue transactions when existing Electronic Toll Collection (ETC) systems did not recognize the same transaction. Documentation of these test results are public information and readily available. All transactions are easily audited as data is electronically archived, including communications with the customer.

Immediate Response Back-Office Systems

Existing ETC systems do not support immediate response. Communications are typically telephonic or in printed form which requires mail services. Such a process can result in customer issues that are amplified with the passage of time. When there is a need to “top-off” an account balance, respond to a transponder malfunction, update credit card information and any other number of issues, response time is essential. An error or malfunction can lead to the triggering of another incident if not dealt with quickly and repeated customer issues can cascade into insurmountable volumes. The ubiquitous smartphone offers the opportunity to push text communications directly to and from the customer instantly. This immediate response and resolution prevents errors from compounding.

Quick Installation and a More Robust Transaction

The potential to install location-based payment systems requires only the geo-position of the payment point and the payment amount. Looking to the future, if charges were uniform for all vehicles, pavement loops would not be required to determine axle count and as a result installation time would be near zero. In fact, geo-position is all that would be required, other than payment violation, which is typically performed with license plate reader systems. As it stands, these issues are currently resolved with software interfacing to back office agency operations. As the logic of location-based payment systems are incorporated into on-board vehicle systems, specific vehicle details become available to the transaction process such as the base number axles, color and other descriptors including the vehicle identification number (VIN) which is useful in violation enforcement and linkage to motor vehicle records. While there would still be a need for license plate image collection, the size and type of vehicle could certainly be registered with the collecting device.  

Technology Available Today

PayTollo, part of the SiriusXM Connected Vehicle (SiriusXM CV) business unit, already offers a wide range of payment approaches that support high speed transportation transactions and point-of-sale capabilities. Their broadly adopted platform integrates payment technology into the vehicles and/or smartphones of its users, and in both cases transactions are processed by the PayTollo back office communicating directly with customers via text and email. Vehicle manufacturers are working in partnership with PayTollo to directly bring this capability to consumers via the head units of their vehicles.

Types of Toll Systems Supported

Vehicle GPS systems and smartphones make it possible to incorporate location as an element of the payment process. 

Geolocation-based Transportation Payment Systems can now support barrier toll systems, ticket systems and manual toll systems requiring gate arm operation. Gate arm systems are supported by point-of-sale technology, allowing customers to process manual transactions without the involvement of a toll attendant. This same technology can be used to process parking transactions and other point-of-sale transactions. All of these supported transactions have been tested with toll agencies in real environments and are operating on several toll systems today.  

Interoperability 

Platforms like PayTollo are already capable of providing toll payment services, no matter the type, on the network of toll roads comprising the Interagency Group (IAG) of the eastern United States, and on most toll systems in California. They can also be quickly and easily interfaced to existing RFID systems. 

Summary

Though there might be institutional barriers to overcome with concerns about risk to the revenue stream, location-based payment systems are available today and can meet the characteristics of a full Transportation Payment System. Location-based payment systems have demonstrated accuracy and the ability to reduce operational costs and have now developed point-of-sale capabilities using the same ubiquitous device, the smartphone. These systems are being incorporated into onboard vehicle systems.  While these systems are complementary to existing RFID operations, they also offer the opportunity to expand beyond toll roads to include parking, subways, buses, ferries, and other modes of transportation, as well as commercial transactions. This payment linkage will provide direct support for the ongoing maintenance and construction of transportation.

In the immediate future, the transportation infrastructure must be regenerated, requiring continued thought leadership about the payment mechanism, both in terms of user fees and direct payment for mobility service.  


[1] U.S. Department of Transportation, Bureau of Transportation Statistics and Federal Highway Administration, February 26, 2019, Freight Analysis Framework, Version 4.5, 1/15/2021, https://www.bts.gov/topics/freight-transportation/freight-shipments-mode (link is external) 

[2] “Mobile Fact Sheet”, Pew Research Center, Washington, D.C. (April 7, 2021) 4/7, https://www.pewresearch.org/internet/fact-sheet/mobile/ (link is external)


Harold Worrall for the IBTTA Blog
www.PayTollo.com
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