Smartcards were developed in Europe, but for some time remained a solution in need of a problem. Credit and debit card security requirements offered a marketplace for these new smartcards, and, as we know today, all new payment cards now contain a smartcard chip.
The development of contactless smartcards opened up a new marketplace – public transport ticketing and automated fare collection (‘AFC’). This combated fraud, sped-up boarding, reduced cash use, and provided much needed information for analysis, revenue apportionment, network planning, and service improvements.
The early implementations in public transport were, as expected, in Europe – London’s ‘Oystercard’ is a prime example. New solutions were also rolled-out in south east Asia; Octopus in Hong Kong, and similar systems in Singapore and Seoul.
The result has been that over the years smart ticketing and AFC systems have sprung up around the world, mainly in the larger cities where the high cost of infrastructure can be justified. In the US, these systems developed mainly in major cities such as New York, Chicago, and San Francisco. However, the high costs involved for the original card based systems made affordability a key challenge for many mid-range cities which, whilst aspiring to smart ticketing, are compelled to remain with magnetic stripe systems.
The arrival of account-based smart ticketing and AFC systems has significantly reduced costs and increased flexibility; such that smaller cities can now justify a move towards a smartcard-based system. In addition, an account-based system allows for a much simpler (and more user-friendly) access ‘token’, essentially a secure identification token. The use of such tokens (i.e. bank cards, smartphones) is proving popular with both operators (who no longer have to manage a large bespoke card population) and passengers (who no longer need a special card to travel which has to be loaded with value or product).
In much of the world outside the US, payment cards follow the Europay, MasterCard, Visa (‘EMV’) standard, which among other things allows cards and terminals to mutually authenticate themselves offline – removing the need for an online validation of bank cards which can slow down access to the public transport network, often unacceptably.
In general, the US banking sector is moving somewhat slowly and cautiously to EMV and to some extent this is hindering the growth of smart ticketing schemes, although the use of smartphones is beginning to counter this issue. The overall result is that smart ticketing and AFC systems activity in the US is rising sharply; with larger cities migrating from their existing implementations to account-based systems, and smaller cities migrating from magnetic stripe.
However, although this is creating a heavy demand on suppliers of these systems, most are not yet in a position where their products can confidently be classed as being well-developed, mature, and in widespread use. The effect is that customers wishing to implement account-based smart ticketing and AFC systems cannot rely on their supplier alone to deliver what they want – on time, on budget, to specification, and with few, if any, variations during development.
ALCO Consulting is a small, UK-based consulting organisation specialising in public transport support systems, in particular smart ticketing and AFC. We have clients in Australia, New Zealand, Canada, the UK, Ireland, Asia, mainland Europe, and California. Much of our work is concerned with the design and implementation of account-based systems, with an increasing emphasis on contactless payment card and smartphone support. We are ideally placed to act as ‘client-side advisors’, providing day-to-day advice and implementation oversight.
New technology and the innovation services based around it (e.g. ticketing-as-a-service) are arriving at an increasing rate, including technology that will enable new transport services and operating models. Since ticketing systems should last at least a decade, it is clear that these service advances will occur within the lifetime of the ticketing system.
Therefore, it is important that designs of new smart ticketing systems take account of what is coming if it is to be long-lasting and future-proofed. ALCO Consulting has carried out a number of futures studies for its clients, building a targeted roadmap and enabling them to take the right decisions to meet the requirements of both the short- and long-term in a way that is appropriate and achievable for each client’s budget and aspirations.
We would be delighted to have the opportunity to discuss any of these topics with you.