How Uber’s transit plans are taking shape in Denver

As fintechs race to reinvent transit payments, Uber's laying the groundwork in Denver to make sure it takes a leading position.

The city’s Regional Transportation District (RTD) and the ride-sharing company are collaborating with technology company Masabi to enable riders to buy pay for rail and bus fare within the Uber app.

The deployment is reliant on attracting new users, since transit’s not an easily recognizable use case for Uber, and most American cities do not have extensive rail-based transit networks.

Greg Mionske/Bloomberg

As Uber diversifies, it needs new use cases for its app beyond scheduling rides, and Denver needs ways to expand its ridership and draw in new users who may not be aware of its transit system.

Denver may not be top of mind in the world of transit, but the RTD is making major investments in its system. Denver’s Union Station underwent a $480 million renovation to make it the centerpiece of a dramatically expanded regional transit network. The expansion includes new stations and new commuter rail lines, including a line to Denver International Airport that opened in 2016.

Cities such as London have opened transit payment systems to serve travelers, and that’s the thinking behind the Denver deployment and similar projects in places such as Australia.

“It’s for people who aren’t familiar with the RTD, for travelers that may be using the Uber app,” said Laurie Huff, a specialist for RTD. “They open Uber, see the transit feature and can jump on a bus or a rail line if they find that easier.”

Denver has been gradually rolling Uber into its system, initially embedding information about routes in early January, and adding payments and ticketing over the past few weeks.

“When people are traveling, they want that end-to-end planning taken care of,” Huff said.

The airport line’s overall adoption has been faster than anticipated, leading the RTD to add more trains, creating more of a need for ticketing and payment flexibility.

“Like so many cities in the world, you land at the airport and open the Uber app so you don’t have to figure out how local travel schemes work,” said Jonathan Donovan, chief product officer at Masabi, adding that the expansive nature and relative newness of Denver’s transit system made it a good early market for offering ticketing and payments through Uber’s app. “This can make the phone a sort of ticket machine in someone’s pocket.”

Masabi has a software development kit that to enable ticketing and payments for transportation modes, providing the support for Uber’s transit payment feature. Masabi’s clients also include the Justride ticketing and trip planning app; and Jorudan, a trip planning app in Japan.

Uber did not make an executive available for comment on the record. Its PR office said transit is part of Uber’s vision to create a “single stop” for a variety of needs, including bike sharing and scooters as part of the company’s goal of “disaggregating” use cases for private automobiles. Uber’s transit feature is designed for riders that have never used those systems before, according to the company’s PR office. Beyond Denver, Uber has also deployed its trip planning feature in London as a prelude to a deeper ticketing and payment function.

Mastercard is among Masabi’s investors, providing potential exposure to the card network's strategy to pair transit payments to other use cases such as shopping at retailers near transit stations. Mastercard is also working with Apple on transit payment systems in cities across the U.S., including Denver, New York and Portland, Ore.

Writing for PaymentsSource, Myung-Hwa Calais, transport marketing director for FIME, argues that the challenge for payment companies and merchants is to implement systems that move transit systems and riders away from payment and ticketing modes that are distinct to those transit systems, without losing any brand benefit the transit authority may have. And Randy Vanderhoof, director of the U.S. Payments Forum, has said many transit systems are either expanding or nearing a replacement cycle for legacy payments and ticketing systems, creating an opportunity for fintechs and apps to approach those systems with payments innovation.

“This is a multichannel strategy to make it easy for people, especially when a good portion of riders have other choices,” Donovan said. “We want them to pay for rides with something they already have.”