Archive | April, 2014

How Fast is TSA Pre Check?

23 Apr

We compared wait time values between regular lanes at TSA and TSA’s new PreCheck lanes. For a quick reminder, TSA PreCheck is an expedited screening experience for those deemed to be low risk travelers. While other countries and airports have been doing this for years, TSA finally realized that not every traveler – especially those crafty invalid military veterans, 85 year old seniors, and unaware toddlers – are armed to the teeth with explosives. In exchange for $85 and a prescreening at a physical TSA office, passengers can jump into the TSA PreCheck club. Benefits include keeping your shoes on, keeping your jackets on, and not having to remove liquids and electronics from your bags. You also get to use a metal detector instead of the cancer-fomenting back scanners.

TSA PreCheck works by “carving” out PreCheck lanes from the regular lanes. No new lanes are being built as most airports only have so much real estate available. So the same number of travelers are still processing through the same number of lanes: it’s just that the speed of the PreCheck lanes are *hopefully* faster.

And thus far, they are…. but, there’s a caveat! TSA developed the PreCheck program in October 2011. Since then, it’s been reported that a little over 1 million travelers have signed up, resulting in 30 million visits to PreCheck lanes. If you remember that the US receives 2 million daily travelers at its airports, 30 million is a trivial number. As of this post, there have been 1.86 billion travelers that have passed through US airports since PreCheck’s inception. 30 million thus represents 1.6% of the airport visits.

While admittedly a very slow going adoption curve for a “superior” service, what happens if more people sign up for PreCheck? It is possible that the PreCheck lines could become slower than the regular lines as more people sign up. Without active management of the queues, TSA could become a victim of its own success. More people would have been processed through the old, regular lane than are currently being processed in the new PreCheck lane. So actually, wait times have increased for the time being.

Now the data! We looked at a year’s worth of data across several airports. We examined the maximum wait time for PreCheck lanes against the maximum wait time for regular lanes during the same 30-minute periods. On average, here are the results:

- The waits at PreCheck lines are longer than the regular lines ~4% of the time

- The average wait for a PreCheck passenger is ~36% of the wait for a regular passenger

The deal with mobile payments

2 Apr

The tech world is moving rapidly towards mobile payments. It’s not that the market needs mobile payments: pulling out a credit card is quick, it’s secure, and it doesn’t run out of battery. But the reason for the mobile payments race is because of what’s being missed by not having mobile payments: data.

As of today, merchants are paying at least 3% of every transaction to the credit card companies. Visa and others earn this fee and need the money to fight fraud, sign up more merchants, and provide customer support. Don’t get me wrong, credit card companies have ridiculous margins: with gross margins of 80% and net margins often above 40%. Nobody ever said a data business can’t be sweet!

In a mobile transaction world merchants may pay less in payment fees. If someone with an already large balance sheet like Google steps in, the fees to the merchant could be 1% or even 0%, with advertisements subsidizing the fee. This sounds like a sweet deal to the merchant, especially if more and more consumers start paying with phone.

mobile-payments

But neither Visa – nor many of the proprietors, sadly – know what’s being sold. Visa knows that John Doe spent $151 at Caddyshack’s Golf Store on February 2… but they have no idea what John bought. Likewise unless the operator goes through the transaction data on the register, they don’t even know what was selling nor why it was selling.

In the world of ecommerce much of this data is being tracked already. Google, Amazon and Facebook have huge repositories on what people look at, what data is being added to shopping carts, and what people like on their profile pages. But in the offline world, that data is mainly inaccessible. Unless you can tap into those registers, that is.

The mobile payments solution would let Google know that John Doe bought a Reebok water bottle, Adidas cleats size 10, 2 packs of Nike golf balls, and a copy of Golf Digest. All this information would be added to Google’s digital file on John Doe so more relevant advertising could be pushed. This increases the odds that John wouldn’t view the ads as spam, and also ensures a higher CPC and CPM rate for its ad products.