Challenges with MaaS brokers
For the urban dwellers, the introduction of Uber and Lyft, car-sharing and carpooling technologies like Turo and Waze Carpool, public bike-sharing systems, and a sudden boom in electric scooters and e-bikes meant that they can find many ways to travel—short, medium, or long distances—without a private car and the hassles of owning one. However, navigating this many options and figuring out how to locate, pay, and connect different modes made the process of going from point A to point B more complicated.
Then, enter mobility-as-a-service (MaaS) brokers. MaaS brokers bundle transport services from multiple operators into a single mobile app, and allows the passengers to plan, book, and pay for their door-to-door multi-modal journeys, with public transit as the backbone. The killer app is an all-you-can-travel Netflix or Amazon Prime-style monthly subscription. And, similarly to Netflix and Amazon, the MaaS app is predictive in nature—it knows your behavior, where you need to go, what modes you prefer, and recommends the best route for you.
In the last 5 years, all-in-one MaaS broker apps gained significant attention from the public and private sector with the expectation that this is a game-changer for urban transportation. What cities had hoped that MaaS brokers will help them achieve is shifting urban mobility to be more sustainable and reduce car dependency by making shared and active modes more accessible and “‘a no-brainer” for the user.
But, after several years of hype, MaaS broker apps have not scaled to the extent we expected and have not transitioned us away from a regime dominated by private car ownership.
So, what are the challenges when it comes to MaaS brokers meeting their promises?
1) Lack of ticketing and payments integration
There are many MaaS broker apps out there with sleek user interfaces for multi-modal journey planning—Moovit, Transit App, Citymapper. These apps provide value to customers in the form of information, but ubiquitously lack the ability for the passenger to reserve, pay, and validate a ticket for a ride. Thus, these apps help reduce the cognitive load on the user, but they do not eliminate it completely.
For the MaaS broker to scale, mobile ticketing is a must. However, the tech to enable this is difficult. To simply display information and enable journey planning, these apps can leverage open APIs to integrate data. To take it to the next level and enable mobile ticketing and payments with public transit systems, these apps need to connect to ticketing machines, gates, validation machines, which are often monolithic, antiquated, and proprietary infrastructure. Integrating with such infrastructure and creating an exceptionally seamless experience is a massive challenge. Not to mention, this is combined with a complicated reselling and billing process in the backend.
Nonetheless, MaaS broker apps are just starting to provide mobile ticketing. Moovit has integrated with 13 transit agencies; Uber and Masabi partnered together to allow users to pay for rides on the Denver Regional Transportation District (RTD) using the Uber app; and Google Maps is integrating payments on Androids with 80 agencies.
2) The business model is not plug-and-play
Technology aside, there are also business model challenges ahead for MaaS. Each city may define MaaS and its value proposition in different ways. Each city’s MaaS ecosystem partners (public transit agencies, private operators, 3rd party integrators, payment technology contractors, and more) will share different views around how they should participate in this ecosystem:
Who should be the MaaS broker that’s responsible for systems integration across multiple transportation operators and infrastructures?
Who owns the customer relationships?
If another party provides the app, am I going to lose my customer?
How does everyone get a fair piece of the pie? If a customer is paying $200 for a monthly MaaS subscription, how much of that should go to transit, to bike share, to ridehailing, and to the MaaS broker?
The shape that MaaS takes then becomes highly context-dependent, and there isn’t a plug-and-play model. A few ways that the market could evolve include:
Private sector as the MaaS broker
Public transportation as the MaaS broker
Perceived as being able to achieve the highest increase in sustainable mobility, be socially inclusive, and align with public policy goals. However, their apps are likely less user-friendly than those provided by private players.
Example: Louisville, Kentucky
MaaS broker is an open platform
Public and private mobility operators open their APIs and connect to an open backend platform. Then, different actors build MaaS frontends. It likely offers a customer-oriented and unbiased service. However, financing this backend platform is a key hurdle for this model.
We haven’t found good examples of the open platform model. If you’ve come across any, please share in the comments.
3) Questions on data privacy and ownership
On the data point above: MaaS produces massive amounts of data that is highly valuable for cities, allowing urban and transportation planners to understand how people move and the system bottlenecks. This data is the foundation for informed decision-making on how to redesign and improve mobility services for the public. To make the best use of data, many cities embraced the Mobility Data Specification (MDS) that institutes a standard data reporting procedure and makes it easy to analyze different sources of data on travel behavior. But, when private companies take part in developing MaaS solutions, there are often strenuous debates around data privacy and data ownership.
4) Self-interest and bias from the private sector
On the bias point above: Private sector companies who build the MaaS platform will want to reap the rewards of their investment by prioritizing transport options according to their own interests. David Pickeral, the co-founder and Chief Strategy Officer for Sheeva.AI and previously the Global Smart Transportation Lead at IBM, says that:
“MaaS brokerage platforms will likely be necessary on some basis in large complicated urban environments or to assist travelers with specific needs. I likewise have some concerns about those platforms operated by private entities and am especially wary of ones that use proprietary technology or expect exclusivity. It is one reason I myself prefer the term Collaborative Mobility over Mobility-as-a-Service because it is more about working together to ensure access rather than a third party attempting to assert itself as effectively a reseller. It is for that reason that my own company Sheeva.AI is both open standards and tech and platform agnostic, such that we can interoperate with tolling, parking, and other systems and will eventually be able to work with transit, carsharing, and other modes.”
5) Unclear who will fund the marketplace
Following the analogy between the Amazon marketplace and the MaaS marketplace, a key consideration becomes how the building of the MaaS marketplace along with the customer acquisition and marketing will be funded.
In the first 17 years of its operations, Amazon lost a combined $2.8 billion to scale the business. Investors believed so much in the power of the marketplace and the ability to drive adoption that they willingly invested despite the losses.
Will someone invest in MaaS despite losses (in R&D and building the platform)? Have we proven out that there is a need for such a marketplace? What is the defensible technology or business model to own the marketplace and make this product investable?
6) No incentives for choosing sustainable modes
A key objective for MaaS is to present travelers with alternatives to private car ownership that are more sustainable, thereby helping cities meet climate goals. Even with these options offered and accessible, travelers still may not be incentivized to choose transit or active modes because these modes can inherently take more time and are perceived to be less convenient. MaaS apps do not provide travelers incentives for choosing sustainable modes in a way that shifts their behavior.
There are a few apps like Miles that can reward travelers for taking greener transportation modes, in a similar model as airline reward miles. However, these apps are highly underutilized because they either require users to manually log their trips (poor user experience), or track the user’s location 24/7 (we don’t like that anymore).
What next for MaaS?
For the next iterations of MaaS companies and their apps, we’ll likely see the existing players continuing to solve these key challenges of MaaS and build out:
Integrated ticketing and payments: Travelers pay and validate their tickets for a multi-modal journey through a unifying app.
Framework for data sharing and business model: Cities impose data regulations that make data (could be anonymized and aggregated) accessible and plug-and-play. MaaS integrator proposing fair business rules for the reselling of the transport services.
Incentives and disincentives: MaaS broker apps test out various types of gamification, reward, and nudging schemes to drive riders toward sustainable modes. Meanwhile, cities should stop providing the wrong incentives like free parking, in addition to control car usage such as access restrictions, congestion pricing, etc.
Enhanced personalization: Personalize the journey planning for the traveler based on their personal preferences, such as how they prioritize mode, cost, and duration.
Integration of new AV and EV modes: As autonomous vehicles start to become more prominent and the cost of transportation goes down to $0.20/mile, as well as when shared electric vehicles and their charging infrastructure comes online, MaaS will need to incorporate these new modes and redevelop the algorithms for how to optimize travel experience, cost, and sustainability.
It will still take much time and energy for cities and their operators to implement MaaS at its most advanced level. But with an ever-increasing number of urban mobility options and technologies that bring transportation services online, a MaaS app has high promises to change traveler behaviors to meet cities’ sustainability, equitable mobility, and congestion goals.