Mobile ticketing services in the Northern Europe
Critical business model issues
Tatjana Apanasevic, Jan Markendahl
Communication Systems (CoS) department
ICT School, KTH Royal Institute of Technology
Kista, Sweden
tatjanaa@kth.se, janmar@kth.se
Abstract—Started as SMS ticketing, today, mobile ticketing
services become a platform for combined mobility solutions that
integrate mobile ticketing, bike renting, car sharing, and parking
payment services. Mobile ticketing services provide a number of
benefits for public transport companies and passengers, however,
in some Northern European countries, the share of mobile ticket
sales does not exceed 10 percent. In this paper, we analyse
business models of three types of mobile ticketing services (SMS,
in-app, and “Be-In Be-Out” (BIBO)) in order to identify factors
that negatively affect wider penetration of mobile ticketing. In
order to do so, we use STOF (Service, Technology, Organisation,
and Finance) model. The research reveals that there are a
number of challenges related to service, technology, and finance
domains of mobile ticketing. Due to this, with the help of price
policy, many public transport companies push choices of their
customers towards use of plastic travel card.
Keywords—mobile ticketing; business model; STOF
I. INTRODUCTION
Public transport is an important area that is highly affecting
everyday life of citizens. Mobile ticketing services contribute
to making public transport smarter and have a potential to
reach wide scale penetration, since many people use public
transport. Mobile ticketing started as premium SMS services
for single tickets. With wider smartphone penetration mobile
ticketing applications were introduced. The first apps did offer
single tickets only and targeted non-regular public transport
passengers having no travel card. Now, the majority of
ticketing apps offers almost a full range of available tickets for
all types of passengers. Notable trends in mobile ticketing are
introduction of “Be-In Be-Out” (BIBO) seamless ticketing
solutions, contactless payments, and combined mobility
solutions that integrate mobile ticketing services, bike renting,
car sharing, parking, etc.
In some Northern Europe countries mobile ticketing
solutions became available starting from 2009 and were
commonly used by public transport users. In addition,
different types of mobile ticketing and payment solutions have
been developed and used in these countries. For this reason, it
would be interesting to investigate if this successful
application of mobile services may have business model
978-1-5386-3197-3/17/$31.00
©2017 IEEE
challenges. With exception of a study by Juntunen et al. [1],
[2] focused on critical business model issues of Near Field
Communication (NFC) based mobile ticketing in Finland, to
the authors knowledge, there were no other studies addressing
similar questions. We address this research gap and explore
obstacles and challenges associated with business model (or
critical business model issues) of mobile ticketing services in
five Northern European countries (Sweden, Norway, Estonia,
Denmark, and Lithuania). This paper addresses the following
research question: What are the factors negatively affecting
the penetration of mobile ticketing services? In order to
answer this research question, we applied the STOF (Service,
Technology, Organisation, and Finance) model [25], [27] and
analysed issues related with each of its elements.
The major theoretical contributions of this study are (1)
application of the STOF framework for analysis of existing
business models in order to identify key challenges of mobile
ticketing services and (2) extension of knowledge about factors
that affect the scale of mobile ticketing penetration. In addition,
the research findings might be of interest for practitioners by
(1) providing generalised data on mobile ticketing service
challenges in a number of countries and (2) limitations of
existing mobile ticketing services.
Next we present a brief overview of related work. This is
followed by description of methodology and mobile ticketing
services. Then we present findings and perform a comparative
analysis. Finally, we discuss the results, research contributions
and limitations.
II. RELATED WORK
A. Mobile Ticketing
Academic literature on mobile ticketing can be divided in
three major themes: technology, business, and adoption. The
majority of studies covering technology aspects of mobile
ticketing are proposals of new system architectures [3], [4], [5],
[6], new system prototypes [7], enhanced solutions of security
protocols [8], [9], and comparison of different technologies
(Quick Response (QR) code, NFC, and Bluetooth Low Energy
(BLE)) used for mobile ticket validation [10].
 A few studies are focused on the problem of mobile
ticketing adoption by customers. Factors that influence the
adoption of mobile ticketing solutions are: the use context,
increased service performance related usefulness, and mobility
that allows time and place independent service access and
reduced queuing [11]. Another study [12] examines difference
in adoption of mobile access for ticketing information inquires
and use of QR code for ticket payments and validation at gates.
Research on customer demand for mobile ticketing on
commuter rail in Boston estimates that about 26% of customers
are likely to adopt the service [13]. Researchers [14] propose a
theoretical adoption framework specifically tailored to study
specific mobile ticketing adoption factors.
There are just a few studies on business aspects of mobile
ticketing. A group of researchers [1], [2] analyse critical
business model issues of NFC-based mobile ticketing services
in Finland. One study explores cooperation issues between
different parties involved in Cityzi project in Nice [13].
The literature on business models represent a large number
of conceptual and empirical papers. This is discussed below.
B. Business Model Concept
The business model concept became a highly popular topic
of the research interest in the past decade. This can be
exemplified by the following figures: more than 1000 papers
were dedicated to business model since 1995 [16]. One of the
factors explaining popularity of this topic can be related to the
boom of e-commerce [17]. Despite a considerable amount of
research in the area, currently, there is no commonly accepted
definition of business model. As a consequence, numerous
definitions and elements of business model have been
proposed. This is discussed below.
1) Business Model: Definition
A review of literature on business models provides various
definitions. For example, business model is a “narrative
device” that defines context and links parties across the
network [18]. According to another definition, business model
interrelates elements of strategy, resource allocation,
organizational activities, and architecture [17].
A number of business model definitions are related to the
question of value provided both to consumers and market
actors. From a wider perspective, a business model can be
defined as “a blueprint for the way a business creates and
captures value from new services or products” [19]. In a
number of theoretical studies, the question of value creation
and proposition is considered as one of the most essential
questions any business model should address [20], [21], [22].
For example, a business model is a concept depicting how
value is created through transactions [20].
In summary, a business model describes value creation and
delivery aspects. In addition it incorporates elements of
corporate strategy, management of resource allocation, and
organizational management.
2) Business Model: The Main Components
The majority of business model definitions seek to define
its structural components. Different authors [17], [21], [23],
[24], [25] emphasise different components of business model.
Most of authors agree that important components are (1) a
service or a product and its value proposition; (2) target
customers; (3) value network of actors that provide this product
or service, relationships within the network, and core
competencies of actors; (4) financial aspects that include
revenue and cost models. Based on extensive literature review,
researchers [26] classify three groups of components: strategic,
customer and market, and value creation. Each of these
components is divided into three models that address different
component’s aspects.
C. Theoretical Framework
For the purpose of this research, we use the STOF model
(Fig. 1) [25], [27]. This model is specifically adapted for
analysis of mobile services that require collaboration of
different actors [25]. The STOF model was used in studies on
mobile payments [28], mobile ticketing services [1], [2],
location based services [29], and eHealth [30]. Below, we
discuss this model and its four components (service,
technology, organisation, and finance domains) in more details.
The analysis of the service domain is focused on the key
service aspects: mobile service offering, value proposition or
added value services, and the target market segment. Hence,
“value” of a service is the central concept. Value can be
defined as “the perceived benefits and total costs (or sacrifice)
of (obtaining) a product or service for customers in target
markets [27]. For mobile ticketing services, mobility “includes
time and place independent service access, reduced queuing,
and substituting for other services” [11].
The technology domain is focused on “the technical
functionality requited to realize the service offering” [25].
Functionality is related to technical systems and architectures,
applications, devices, service platforms and required
infrastructure, service security, quality, operability,
accessibility by customers [2], [25], [27].
The main focus of the organisation domain is on resources
and capabilities of a firm and value network created for service
provision. Other important aspects are division of roles among
business actors, relations between them, resources and
capabilities of actors, and value network governance [25], [27].
Fig. 1. The STOF business model [27].
Finally, the key aspects of the finance domain are related to
financial arrangements used in a value network [25]. This
includes investment decisions, revenue models, division of cost
and revenues, and pricing strategies [25], [27].
III. METODOLOGY
A. Research Approach
In this study, we apply an exploratory approach in order to
identify challenges related to business models of mobile
ticketing services. The research is qualitative. Based on used
technology, we specified three types of mobile ticketing
services: SMS, in-app, and BIBO. Description of these services
is generalised using empiric data from mobile ticketing cases in
five Northern European countries. Use of multiple case studies
is more beneficial than single case study because it enables
cross-case analysis and more accurate generalization of
findings [34], [35].
In order to perform multiple case study research, we
developed a case study protocol. The aim of this document is to
define general rules and procedures of the research [35]. This
allowed a unified approach in data collection.
B. Data Collection and Analysis
The primary data for case studies was collected using in-
depth semi-structured interviews with the representatives of
companies, which are involved in provision of mobile ticketing
services. First of all, an interview protocol with questions for
semi-structured interviews was designed. The questions
covered the following interview subjects: (1) the background of
the interviewee and the company; (2) the history of the mobile
payment ticketing service and service characteristics; (3)
description of the main partners and their roles; (4) advantages
and challenges of the service; and (5) general feedback from
the end-users. Contacted interviewees were middle- or top-
level managers that are directly involved in mobile ticketing
service management. Hence, interviewees’ expertise was
relevant to provided detailed information. The duration of
interviews was between one and two hours. The interviews
were recorded and later transcribed.
The interviews were implemented in two phases. In 2010-
2013, the main research focus was on Sweden. During these
years, more than 30 interviews were carried out with different
types of actors. This includes: (1) mobile network operators
(Telia and Tre); (2) Swedish major regional public transport
companies (SL, UL, Östgötatrafiken, Skånetrafiken,
Västtrafik); (3) payment processors (Accumulate, Payair,
Nets, PayEx, Seamless, WyWallet); (4) a bank (Swedbank);
and (5) providers of mobile ticket technology solutions
(UnWire, Mobill, and Samtrafiken). These results were
reported in [33].
In 2015-2016, the research was broadened to cover other
countries than Sweden. More than 20 interviews were
conducted. The list of interviewed actors involved: (1) mobile
network operators (in Lithuania: Bite Lietuva); (2) public
transport companies (in Sweden: SL, UL, Östgötatrafiken,
Skånetrafiken, Västtrafik, Blekingetrafiken, Länstrafiken
Kronaberg, Karlstadbuss; in Norway: Ruter and Skyss; in
Denmark: Copenhagen Metro and Movia; in Lithuania:
Susisiekimo Paslaugos); (3) payment processors (in Sweden:
PayEx and WyWallet); (4) banks (in Norway: DNB; in
Denmark: Danske Bank); (5) providers of ticketing solution for
transport companies (in Estonia: Jiffi and Ridango); and (6)
city administration (in Lithuania: Vilnius city administration).
We used secondary data in order to understand the
background situation in the market. The main used sources are
press releases, market analysis reports, websites, and online
publications.
As mentioned, descriptions of SMS, in-app, and BIBO
ticketing services are supported by empiric data from five
Northern European countries. When analysing data, the
empirical observations were classified using the STOF model.
This is, challenges and issues specified in the interviews were
classified into issues specifically related to service,
technology, organisation, and finance domains. We performed
comparative analysis in order to identify similarities and
differences across different mobile ticketing services.
IV. MOBILE TICKETING SERVICES
There are two main strategies for public transportation
ticketing and validation: (i) barrier ticketing, where customers
have to provide a ticket to someone or something (e.g. bus
driver or ticket reader in the subway), and (ii) an open system,
where passengers enter the underground, busses, trams, or
boats without validating the ticket, but they need to provide a
ticket during random ticket control inspections. Below, we
present different mobile ticketing services.
A. SMS ticketing service
1) Premium SMS based ticketing service
In order to describe the business model of SMS ticketing
services, we synthesised data based on interviews with public
transport companies operating in Sweden (Bleningetrafiken,
Karlstadsbuss, Skånetrafiken, SL, UL, Östgötatrafiken, and
Västtrafik) and in Copenhagen area and Zealand in Denmark (a
common solution used by Copenhagen Metro and Movia,
authority regulating bus service and local trains).
SMS ticketing was commercially launched by local public
transport companies in Sweden and Copenhagen around 2009.
In order to get the ticket customers need to send a premium
SMS with a service code. The service can be used for both pre-
paid mobile phone accounts and mobile phone subscriptions.
Local mobile network operators include payments for SMS
tickets in their customers’ mobile phone subscription bills. The
service is simple and highly popular among public transport
passengers. The majority of sold SMS tickets are single tickets.
For service provision, two types of actors are needed: SMS
aggregators and ticket providers (e.g. Plusdial, UnWire,
Mobill, and IPX in different regions of Sweden, and UnWire in
Copenhagen) that provide technology solution, and mobile
network operators that act as payment processors.
In Sweden, SMS ticketing was available until February
2013. In Copenhagen, the SMS tickets are still available today.
2) “New” SMS ticketing service in Sweden
In Sweden, the SMS ticketing service was affected by
changes in regulation: (1) a license became mandatory in order
to handle digital payments, and (2) payment service providers
were required to know the identity of persons making
payments to prevent “money laundry” [34]. In 2010, the
Swedish Financial Inspection warned mobile operators either
to stop providing payment services to customers or to become
payment providers. In order to address this challenge, mobile
payment providers established a joint venture 4T Sweden
providing WyWallet, a mobile payment service. The mobile
operators expected that WyWallet would take over SMS
payments. At the same time, new mobile payment solutions
were launched in the market by new actors like Accumulate,
iZettle, Infospread, Klarna, Payair, PayEx, and Seamless.
In 2012, the majority of local public transport companies
started the procurement for the “new” SMS tickets that would
fit new requirements. Any payment provider could submit a
tender. In the result, sets of new actors were awarded the
contract. In many cases that were two types of contracts [33]:
• One with technology solution providers and these were
the same actors (e.g. Plusdial, UnWire, Mobill, and
IPX in different regions of Sweden).
• Another with payment solution providers. In most
cases, 4T Sweden was not involved in the procurement
process. This way, new payment service providers
replaced mobile operators.
The major change related to “new” SMS ticketing solutions
was a need for customer to register and open an account with
payment service providers. Service users accepted this
negatively and volumes of SMS ticket sales dramatically
decreased. Possible billing options were monthly invoices or
credit/debit card payments. In a few years, the “new” SMS
ticketing got a form of mobile app. Majority of public transport
companies closed this solution during 2016.
B. In-app mobile ticketing service
Description of in-app mobile ticketing service is
generalised based on interviews with public transport
companies operating in Sweden (Bleningetrafiken,
Karlstadsbuss, Länstrafiken Kronaberg, Skånetrafiken, SL, UL,
Östgötatrafiken, and Västtrafik), Norway (Ruter and Skyss),
Copenhagen area and Zealand in Denmark (DOT
Mobilbilletter, an app for single tickets, short period tickets,
and 10-trips cards, and Mobilperiodekort, an app for long
period passes, two common solutions used by Copenhagen
Metro and Movia), Estonia (Ridango), and Lithuania (mTicket
app by Susisiekimo Paslaugos).
Around 2013–2014 public transport companies started
introduction of mobile ticketing apps. First, only single tickets
were available in these apps. Currently (by 2017), the majority
of apps offer partial or almost full range of period tickets
(Karlsradsbuss, Skånetrafiken, UL, Västtrafik, Ruter, Skyss,
DOT Mobilbilletter, Mobilperiodekort, and mTicket), while a
few companies (Bleningetrafiken, Länstrafiken Kronaberg,
Östgötatrafiken, SL, and Ridango) still provide only single
tickets in the app. Available payment options are card
payments, invoices (mainly in Sweden), mobile network
operator billing (Norway, Denmark, and Estonia), mobile
payment services (Sweden, Norway, and Denmark), and
online payment solution “Bank Link” offered by local banks
(Estonia and Lithuania).
Majority of mobile ticketing apps are created for Android
and iPhone phones. The segment of Windows phone users is
very small, and in the majority of cases this group of
customers is not considered.
Mobile ticketing allows additional services. Route planning
and real-time travel information are the most common. Unique
additional services are monthly pass renewal reminder
(Mobileperiodekort app), digital ticket sharing (Västtrafik
app), and city map (mTicket).
The provision of mobile ticketing requires a technical
solution integrated with public transport system and payment
service provider. In different countries different market actors
perform a role of payment service provider. This could be
payment processors handling invoice, card, and mobile
payment service transactions (Sweden, Norway, and
Denmark), mobile operators (Norway, Denmark, and Estonia),
and banks (Estonia and Lithuania).
In closed public transport systems (e.g. Sweden), mobile
ticket validation requires optical readers. In open public
transport system (in Sweden it is only Gothenburg (operated by
Västtrafik), Norway, Denmark, Estonia, and Lithuania) mobile
tickets are validated by ticket inspectors during random ticket
control, and no service infrastructure is needed.
C. BIBO ticketing service
Description of BIBO ticketing service is generalised based
on interviews with Ruter in Norway and Jiffi in Estonia. This
is as innovative approach to ticketing. It represents an
automated fare collection system based on BLE beacons and
micro-location technology. This technology detects when
passengers enter and exit the public transit vehicle and
seamlessly starts the ticket on the ticketing app, and stops when
the customer leaves the bus. Customer billing happens
automatically according to the actual use of the public
transport.
Ruter runs a pilot tests on one of bus lines in Oslo, and Jiffi
pilots are running in Tallinn and Tartu. The major advantage of
such system is a clear data about passenger travels that would
help to improve and optimise route planning. Another
advantage is smarter pricing.
V. FINDINGS
Findings are generalised based on interviews with all
interviewees. This is presented below.
A. Business Model challenges: SMS and “new” SMS ticketing
1) Service domain.
Small mobile ticket assortment. SMS tickets were mainly
single tickets (in Sweden and in the beginning in Denmark).
SMS tickets are not available for foreigners. SMS tickets
can only be bought by people having subscription with local
mobile operators. People with mobile phone subscription in
other countries (e.g. tourists) cannot buy these tickets.
 Inconvenient service. The “new” SMS tickets were
complicated for users to sign-up and were not convenient to
use.
2) Technology domain.
Service reliability is high, but not 100 percent. Visitors
arriving to Copenhagen can buy a Travel Pass or a City Pass
before they arrive. However, sometimes the tourists or the
delegates of the congress do not get the SMS ticket.
Worse travelling statistics. In both open and closed
ticketing systems, SMS ticketing solution does not provide
travel data as is some cases they are just shown to the driver
when entering a bus, to personnel at gates, or to the ticket
inspectors. And travelling statistics is important for public
transport companies in order to optimise the routes.
Ticket security issues. SMS ticket are easy to falsify. In
addition, these tickets look different from phone to phone.
3) Organisation domain.
Change of value network actors. In Sweden, the unified
SMS ticketing solution was provided in collaboration with
national mobile network operators, which are large, established
market actors. After launch of “new” SMS ticketing, unified
solution was replaced by different scattered solutions, and
mobile network operators were replaced by small technology
companies. This implies weaker relationships between business
parties.
However, in all cases, roles of actors are clearly defined.
These actors are contracted through procurement process.
4) Financial domain.
Service cost. The mobile operators’ service fee is
considered as quite high (about 15–30%) and SMS tickets are
referred as more expensive compared to the mobile app
tickets.
B. Business Model challenges: In-app ticketing
1) Service domain.
Small mobile ticket assortment. In the beginning, majority
of mobile ticket apps only allowed purchase of single tickets
(e.g. SL, Skånetrafiken, Länstrafiken Kronoberg). This is
related to a lack of automatic mobile ticket validation.
With installation of mobile ticket readers, recently updated
apps of some companies (Karlstadbuss, Skånetrafiken, and
Västtrafik) started offering longer period tickets, for example,
24h and 72h tickets, 30- and 90-day.
Some groups of customers can be excluded. The SMS
ticketing was accessible for people with both smartphones and
feature phones. Customers using feature phones cannot buy an
app ticket. Majority of companies do not provide apps for
Windows phone users due to small share of these phones in the
market.
Small market share. In Sweden, after not successful
experience of “new” SMS ticketing, the share of mobile
ticketing remains rather low, for example, 3% of all sales at
SL, 5% at Skånetrafiken, 7% at Västtrafik (in 2016). Due to
limited payment options, the market share of mTicket in
Lithuania is 3%.
Some groups of customers do not want to use mobile app.
Customers may not want to use mobile app due to different
reasons. They may not want to change or be afraid that the
phone will run out of battery. Additionally, in some countries
(e.g. Sweden and Norway) travel cards are not personalised
and can be shared between several people. These groups of
people want to continue using plastic cards.
2) Technology domain.
Transaction speed. The speed of payment validation is
critical for transportation in large cities where big numbers of
people pass through the subway gates. NFC-enabled travel
cards can ensure this speed (it is about 400 milliseconds).
Payments taking longer time and requiring PIN-code entering
are not acceptable at gates.
Need for infrastructure. In Sweden, most of the apps only
offered single tickets, and some still offer single tickets today
(e.g. SL, Bleningetrafiken, Östgötatrafiken, Länstrafiken
Kronaberg). Due to closed ticketing system, an infrastructure
for automatic mobile ticket validation is needed. It would also
provide statistics on customer travels. Companies are installing
or have plans to install optical readers in the near future.
Worse travelling statistics. In both open and closed
ticketing systems, in-app mobile ticketing solutions do not
provide travel data for the same reasons as SMS tickets. As
mentioned, installation of mobile ticket readers will improve
the situation. Another option is introduction of buses with
passengers’ counting systems (Vilnius City Councilor).
Special challenge for a large city (only SL issue). The
ticketing system in Stockholm is closed: a ticket is validated at
the gates in the underground or showing a ticket to a driver.
Ticketing system based on card is a stable offline system. The
mobile ticketing system is based on online connection and it
requires a system able to validate the tickets online. It is
challenging to build a reliable online system, there might be
moment when the system will be offline, payments information
will not be handled, and this will result in issues validating the
tickets at the gates. At this moment, the company cannot
handle large numbers of mobile tickets. This issue will be
solves when new validation equipment is installed.
Security of user accounts. The ticketing system or its part
(e.g. user accounts) can be hacked (as happened to Skyss).
Discharging phone battery. One of the biggest
disadvantages of mobile ticketing is a quickly discharging
battery. This is a reason preventing some people from using in-
app mobile ticketing (19% according to Ruter’s survey). The
public transport companies consider that it is the customer
responsibility to have charged phone and to be able to show the
ticket. However, in order to help their customers, in some cases
ticket control inspectors have portable charges, but their
experience shows that the phones are charging too slow and
this practice is not successful. One way to solve this problem is
to have the opportunity to charge phones on-board.
3) Organisation domain.
There were no challenges identified. Roles of actors are
clearly defined. These actors are contracted through
procurement process.
 4) Financial domain. VI. COMPARATIVE ANALYSIS
Service cost. Some respondents (SL, Skyss, Jiffi) specified The summary of most common challenges related to
mobile tickets in the app as having a higher cost. Generalising, business model of different mobile ticketing services is
the major sources of costs for in app ticketing are: (i) higher provided in Table I. It is possible to notice some similarities:
percentage of commissions; and (ii) service fees set by
payment service providers and/or technical solution providers.
With the help of price policy, most of public transport TABLE I. SUMMARY OF CHALLENGES
companies in Sweden direct the customer choice towards use BIBO
Domain SMS ticketing In-app ticketing
of pre-paid smart cards (e.g. single ticket in Stockholm bought ticketing
with a card costs 30 SEK, and 43 SEK with mobile app, - Small ticket
Blekingetrafiken and Länstrafiken Kronaberg offer 20% and - Small ticket assortment
assortment - Some groups are
Skånetrafiken offers 10% discount if buying single tickets with - Some groups excluded - Some groups
pre-paid card). Similar approach is in Copenhagen (about 40% Service
are excluded -Small market are excluded
discount buying 10 trip card using pre-paid card). It is also - Inconvenient share
considered that customers who have loaded money to the card service (SE only) - Some do not
will be returning public transportation customers. want to use it
- Transaction
Credit card fraud. Credit card fraud is another problem of - Not 100%
speed
mobile ticketing. In some cases 3D card security does not work - Need for - Smartphone
reliable
infrastructure characteristics
in the app and public transport companies endure financial Techno- - Worse
- Worse travelling - Lack of
risks, which can be rather high in the case of longer period logy travelling
statistics common BLE
tickets (e.g. 90 days or yearly passes). From this perspective, statistics
- Security issues standard
- Security issues
plastic travel cards have better security and no fraud. - Discharging
phone battery
Organi- - Change of
C. Business Model challenges: BIBO ticketing sation actors (SE only)
- -
1) Service domain. Finance
- High service - Service cost
- Service cost
Some groups of customers can be excluded. Currently, cost - Credit card fraud
BIBO systems are in the phase of pilot tests, however, since
they are designed for smartphones, customers using feature • When comparing service domain related challenges,
phones will not be able to use this system. each type of mobile ticketing excludes certain groups
2) Technology domain. of customers. Both SMS and some of in-app mobile
Smartphone characteristics. Smartphones are not under tickets offer small assortment of tickets.
control of public transport companies (e.g. NFC used in • Similar challenges related to technology domain are: a
iPhone’s can only be used through Apple Pay system). This lack of travel statistics when using SMS or in-app
means that new phones may have systems or settings that cause tickets and some security issues. In-app ticketing
issues to mobile ticketing. Hence, public transport companies causes more challenges to public transport companies
prefer means that they can control themselves (i.e. NFC or in the case of barrier ticketing system because it
RFID (Radio-Frequency Identification) travel cards). requires additional investment in infrastructure.
3) Organisation domain. • Major finance domain’s challenges are high service
There were no challenges identified. cost.
4) Financial domain. Each type of mobile ticketing has its specific challenges:
Service cost. This challenge remains relevant.
• Service domain’s related challenges of “new” SMS
Summing up, analysis of business model of each type of ticketing in Sweden is inconvenience. In-app tickets
mobile ticketing reveals a number of factors that have a have a small market share in Sweden, Estonia, and
negative effect on wider penetration of these services. In Lithuania. In addition, some customers do not want to
service domain, small assortment of tickets, exclusion of some use it because of different reasons.
groups of customers, and as a result, small market share, are
the major challenges. A lack of travel statistics, need for • Regarding technology, SMS tickets are less reliable
infrastructure, security issues, and discharging smartphone than in-app tickets. In-app ticketing systems can be
battery are the key issues of technology domain. The major hacked. Another important issue is quickly discharging
challenges of finance domain are higher cost of mobile tickets smartphone battery. BIBO ticketing is challenged by
and credit card fraud. And this leads to more detailed smartphone characteristics and a lack of common
comparative analysis of key challenges across SMS, in-app, standards.
and BIBO ticketing services. • Organisation challenge is identifies in Sweden, where
mobile operators are excluded from provision of SMS
and mobile ticketing services.
 • Major finance domain’s challenges of in-app ticketing
are related to card fraud. In the case of expensive yearly
tickets this may be a considerable cost for public
transport companies.
VII. DISCUSSION AND CONCLUSIONS
Mobile ticketing services provide a number of advantages
to different service stakeholders. Some examples of advantages
for public transport companies are reduced amount of cash,
convenient ticketing integrated with added value services. In
the case of open ticketing system, mobile ticketing is much
cheaper to maintain since there is no need for infrastructure.
For customers, mobile ticketing means a fast and convenient
way to get a ticket anytime avoiding queues to ticket vending
machines.
Despite mentioned advantages, the use of mobile ticketing
services sets different challenges for public transport
companies. We used the STOF model to analyse key business
model elements and to reveal the major challenges associated
with service, technology, organization, and finance, and
affecting penetration of mobile ticketing. Based on empiric
data, major factors that are preventing wider spread and use of
mobile ticketing are related to service, technology, and
finance. Organisation domain causes less problems, because
there are clearly defined roles for actors in each type of mobile
ticketing service. These actors are contracted through
procurement process.
A. Business model related challenges
With exception of Ruter and Skyss in Norway and mobile
tickets used in Copenhagen in Denmark, the use of mobile
ticketing in other countries does not exceed 10%. Ruter is
extremely successful with mobile ticketing in Oslo. The share
of mobile tickets is more than 40%, and it is constantly
growing. However, there still are customers who do not want to
use mobile ticketing due to one or another reason. However,
for public transport companies it is important to provide tickets
to all types of passengers. This means that different ticketing
systems and payment options must be offered in parallel.
The major source of hesitation for customers is discharging
phone battery. Practices to provide passengers with chargers or
“power banks” failed, because phones need time to charge.
Public transport companies are looking into new transport
vehicles providing phone charging opportunity on-board.
From technology point, SMS and in-app ticketing do not
provide travel statistics. Different types of ticketing systems
(open or barrier) put different challenges. The use of mobile
ticketing is more advantageous in open system, while barrier
system requires investment in infrastructure for mobile
ticketing. There are technological limits related to security and
use of fraudulent payment cards in the apps. Additionally, it is
more expensive to issue mobile tickets.
There are a few competing technologies used at the same
time. Due to challenges related to mobile ticketing, majority of
public transport companies prefer their customers to use plastic
travel cards. Cards are perceived cheaper in use, having higher
security, no fraud, and providing a better travel statistics. In the
case of barrier ticketing system, needed infrastructure already
is in place. Customers who have loaded money to the card are
considered to be returning public transportation customers.
Finally, bank transaction fee is lower when uploading bigger
amount of money to pre-paid wallet on the travel card and later
using these money for single trips, than paying a fixed fee from
each micro-transaction for single ticket (e.g. about 7–8% from
10 or 30 SEK). With the help of price policy, customer choices
are directed towards use of plastic cards. Majority of public
transport companies offer discounts for tickets bought with the
travel card. And these are the key issues negatively affecting
penetration of mobile ticketing services. Development of new
generation mobile ticketing solutions (e.g. BIBO) may help to
overcome some technology challenges (i.e. lack of travel
statistics) and reduce the cost of ticketing service infrastructure,
however, a number of service, technology, and finance
domains’ issues remain open.
Mobile ticketing is one of use cases of mobile payments.
The major obstacles negatively affecting spread of mobile
payments in developed countries are associated with: (1)
consumer and merchant behavior that are selecting between
numerous payment instruments; (2) a range of competing
technologies; (3) the mobile payment ecosystem that is stable
and slowly changing, banks remain the main actors that handle
transactions, and mobile payment services are linked to bank
accounts or bank cards of users; and (4) regulation of financial
domain sets certain requirements to payment service providers
[35]. It is possible to track similarities in mobile ticketing:
public transport customers can select different payment
options: cash, payment card, mobile payment, invoices. There
are different competing ticketing solutions running in parallel
paper tickets, smart travel cards, mobile tickets (sometimes
both SMS and in-app). Customer choice between these options
might be directed according to public transport company’s
preferences. Mobile payment ecosystem mainly relies on card
payments, and public transport companies face high transaction
cost for single tickets. Finally, due to regulation, there can be a
change of business network actors.
B. Contribution and limitations
The results of this study contribute to academic research.
We applied the STOF framework in order to analyse existing
business models [1], [2]. However, we specifically focused on
key challenges. The STOF model allows structured approach in
research and analysis of business models. Secondly, the
research results extend knowledge about complexity of
interrelated factors that affect the penetration scale of mobile
ticketing.
The study provides important guidelines for practitioners.
The most significant research insight is that plastic smart card
currently is a more preferred ticketing solution for a majority of
public transport companies. This means that existing mobile
ticketing services do not fully address all needs of public
transport companies. Hence, the results might be useful for
mobile ticketing service developers and providers giving the
direction how the service could be improved. At the same time,
some challenges (e.g. high transaction cost, lack of unified
standards, smartphone characteristics) cannot be solved locally
and require global agreements.
 The major limitation of this research is focus on mobile
ticketing services in five countries. Widening the scope of
research could provide more reliable and generalisable results.
That could be the future research direction.
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