Over the last decade, there has been massive innovation in technology with the use of artificial intelligence to develop smart cars and smart homes. In recent years this innovation has expanded to the transportation industry with the use of digital cash in payment systems. These include cryptocurrencies such as Bitcoin that are created and used online to purchase services.
The inception of digital cash in the transportation industry has made it easier for customers to use trains and buses, bringing a multi-modal means of transport in cities around the world. The added level of security and efficiency digital cash brings has made it a viable currency for customers to use for contactless payments and direct transfers. Here are a few ways digital cash has helped revolutionise the transportation industry.
Contactless payments have gained popularity in many sectors over the last few years. This payment system allows customers to perform transactions with a chip or card using a PIN code. The introduction of contactless payments has transformed cash into an archaic concept. This transaction system is adopted by most trains and buses in Europe where a bus card or chip is used instead of cash as a means of payment. These types of payments are known to provide better security and a more efficient travel experience for users across multiple forms of transport.
Smart contracts help eliminate middlemen
Statistics show that admin costs make up 20% of the total transport expenses. Smart contracts are a blockchain feature that has helped improve efficiency in the freight industry. Essentially, smart contracts act a middleman between the company and the shipper. If a company needs to pay a shipper when the goods reach the destination, the smart contract is programmed to automatically pay the shipper once the goods reach a specific location. This helps reduce administrative costs and any possibility of human error in the shipping process. It also lowers the time lag for the company to realise when the goods have reached the destination and then pay the shipper.
The landscape of ticketing in public transport has been revolutionised with account-based ticketing. This is a technological solution whereby the value of your ticket is stored in a back-office system. The card or chip carries no value but acts only as a form of identification. In order to use the public transit system, customers can use QR codes or transit cards as their accounts are synced to the data in the back-office. They are also able to refill their cards without visiting a ticketing kiosk as the card’s value is already in the system. With the user ID stored in a centralised server, the ACT system has low maintenance costs and provides an overall better customer experience.
The challenges faced by digital currencies in transport
While there is a very high potential for digital currencies in the field of transport, it also brings some challenges with it. When digital currencies are used in operating systems, a greater level of regulation and security needs to be maintained. This is because digital currencies are independent and not controlled by a central authority such as the government. Therefore the adoption of such technology poses a threat of decentralisation which requires greater supervision and management control.
Another challenge faced by the adoption of digital cash in transportation is the threat of cyber attacks. While a customer’s transit card only serves as a form of ID, all the information associated with the card is stored in a centralised back-office system. This system contains the customer’s personal details along with the monetary value of the card. With all this valuable information stored in a single location, any breach of security could be catastrophic as customers are vulnerable to identity theft.
The future of digital currency in transport
Although it has its drawbacks, digital currency is adopted by many public transit systems every single day. With its user efficiency and low maintenance costs, digital currency is set to revolutionise the transport industry. We are likely to see a higher usage of digital cash in buses and metros in the upcoming years as cryptocurrency has made integration with contactless systems used on buses and trains much simpler. While digital currency can easily be adopted by buses and trains it still remains a challenge for planes and ferries to adopt this technology.