SmartCard ticketing_FINAL.pdf

7/27/2019 SmartCard ticketing_FINAL.pdf

1/16

July 2010

Tourism & Transport Forum (TTF)

Position Paper

Smartcard ticketing

on public transport


2/16

Tourism&

Transport

Forum

(TTF)

is

anational,MemberfundedCEOforum,

advocatingthepublicpolicyinterestsofthe

200mostprestigiouscorporationsand

institutionsintheAustraliantourism,

transport,aviation&investmentsectors.

FORFURTHERINFORMATIONPLEASECONTACT:

CAROLINEWILKIE

NATIONALMANAGER,AVIATION&TRANSPORT

TOURISM&TRANSPORTFORUM(TTF)

P|0292402000

E|[email protected]

www.ttf.org.au

CONTENTS

OVERVIEW 2

SMARTCARDTECHNOLOGY 3

ADVANTAGESOFSMARTCARDTICKETING 3

CHALLENGESFORIMPLEMENTATION 6

SMARTCARDTICKETING

IN

AUSTRALIA

8

SMARTCARDTICKETINGINTERNATIONALLY 10

INNOVATIONINSMARTCARDTECHNOLOGY 12

LOOKINGAHEAD 14

CONCLUDINGREMARKS 14


3/16

2

In short:1. Smartcard ticketing provides convenience for commuters and

efficiencygainsfortransportserviceproviders.

2.

Smartcardsystems

have

been

introduced

in

Australian

cities

with

varying

degreesofsuccess.

3. International experience suggests that successful implementation may

takemanyyears,anddifficultiesarecommonplace.

4. Overall, the benefits of smartcard ticketing overwhelmingly

outweighthecostsandchallengesthatmayariseinimplementation.

Overview

Smartcard technology is being implemented around the world as a substitute for cash

transactions in various capacities. When applied to public transport fare collection,

smartcardseliminatetheneedforcommuterstoqueueforticketsandreducetheburdenon

transportproviderstoprocessfaretransactions.

In recent years, benefits such as decreased travel times and general convenience to

commutershave

driven

ashift

towards

smartcard

ticketing

systems

on

public

transport

systemsinAustraliaandaroundtheworld.

As well as providing more efficient transport services to commuters, smartcard ticketing

systemsenableserviceprovidersandtransitauthoritiestocollectcomprehensivedataonthe

travelbehaviourofcommuters.With this informationathandserviceprovidersareable to

catertotheneedsofcommuters,andallocateresourcesmoreefficiently.

In spite of thesebenefits,experiencehas shown smartcard ticketing systems are prone to

earlyimplementationproblems,ascommutersadapttothenewtechnology,anditistailored

tomeet

the

needs

of

unique

transport

systems.

While

it

is

widely

regarded

as

abest

practice

smartcard operation, Londons Oyster Card has also experienced such difficulties, and its

success is mostly attributable to the long term perseverance of transport authorities in

recognitionofthebroaderbenefitsitcanprovide.

These issues notwithstanding, TTF believes that the benefits of smartcard ticketing for

transportoperatorsandcommuters faroutweigh thecostsof thepotentialchallenges that

mayarise.


4/16

3

Smartcard technology

The smartcard is the technological successor to the magnetic stripe card. Smartcards are

typicallythesizeofacreditcard,andcontainamicrochipthatstoresandtransmitsdatausing

radio frequency identification (RFID), enabling it to communicatewith a devicewithin ten

centimetres of the card without physical contact. Smartcards are able to store enough

informationto

process

monetary

transactions

and

profile

acard

holders

details

for

security

purposes.

Smartcard technology is being used increasingly to perform the functions of credit cards,

security passes and, as this paper examines in detail, public transport tickets. Smartcard

ticketingiswellestablishedasthestandardbestpracticeinpublictransportticketing,andits

emergenceisindicativeofabroadertransitiontowardsacashlessglobaleconomy.

There are two categoriesof smartcards that canbeused forpublic transport ticketing a

singlepurposetransitpassandanelectronicpurse (epurse)cardwithmultipleapplications

beyondfare

payment,

such

as

small

retail

transactions

and

personal

identification.

Both

involveaprepaidaccountmanagedbythecardholder.

Recent innovations in smartcard technology have concentrated on developing epurse

applications to enhance the appeal and accessibility of smartcard ticketing to infrequent

commutersortourists.Thesearediscussedinmoredetaillaterinthepaper.

Advantages of smartcard ticketing

Convenience for commuters

Smartcardticketingsystemsenablecommuterstocarryonedurablecardforuseonalltransit

modes.Asinglemultipurposeticketmakesusingmultipletransportmodesmuchsimplerand

less time consuming. In turn, this facilitates the multimodal travel behaviour that is

encouragedbyoperatorsandtransportplanners. Inthisregard,smartcardticketingfacilitates

agenuinelyseamlessmultimodaltransportsystem.

Optionstoautomaticallytopupaprepaidaccountviadirectdebitorcreditpaymentsimilar

toetollingsystemsfortollroadsallowcommuterstopayfareswithouteverhavingtomake

facetofacetransactions.Thisreducesthetimespentcommutingascardholdersareableto

topup

their

account

balance

at

atime

that

is

most

convenient

to

them.

Consequently,

the

possibilityofmissingapublictransportservicewhilstqueuingforaticketiseliminated.

Payasyougo(PAYG)featuresalsoensurethatcommutersgetexactlywhattheypayfor,as

thecardisswipedatthestartandendofeveryjourney.Typically,commutersareguaranteed

the lowest possible fareswhen using a smartcard,which provides a considerable financial

incentiveforcommuterstotakeupsmartcardsandtousethemproperly.

With lessneed to carry cash, commutersusing smartcards canalsoenjoygreaterpersonal

security.Intheeventofacardbeinglostorstolen,accountscanbecancelledandanewcard

issued,

as

would

be

the

case

with

a

bank

card

or

credit

card.

By

the

same

measure,

cashless

transactionsbenefittransportagencies,asthesecurityrisktodriversandothercashhandling

employeesissignificantlyreduced.


5/16

4

"A go card can cut a passenger's

boardingtimefromabout11seconds

tothreeandthattranslatestoatime

savingofup to sevenminutesonan

average bus service." Queensland

Transport Minister Rachel Nolan

23/12/2009

Increased service efficiency

Atypicalsmartcardtransactiontakesjust150millisecondstocomplete,1andwithdriversand

other public transport employees no longer required to collect money and issue tickets,

smartcard ticketing systems deliver significant savings in boarding times. For example, in

London,asaresultof98percentofbuscommutersnowusingOysterCards,boardingrates

haveincreasedfrom10to40passengersperminute,substantiallycuttingtriptimes.2

The reduced boarding times for commuters

frees up capacity for operators to increase

service frequency, enhancing the utility of

transport assets both rolling stock and road

and rail infrastructure. Service providers also

stand to save considerably on operating costs

associated with fare collection and issuing

tickets.

Serviceefficiency

is

also

enhanced

by

savings

in

the

cost

of

maintaining

smartcard

systems,

relative to its technological predecessor.On average,magnetic stripe card readers require

servicingafterevery20,000cardsprocessed,whichcouldbeasfrequentasonceaweekfor

busier terminals.With complexmechanical parts required to process and oftenprintonto

cards,themaintenanceratio3ofthisoldertechnologyisaround12to15percent,compared

withjusteightpercentforsmartcardtechnology.4Moreover,theoneoffcostofdistributing

durableplasticcards issoonoffsetbythesavings(botheconomicandenvironmental) inthe

costassociatedwithprintingandissuingdisposablepaperorcardboardtickets.

Travel data collection

Traditionally, thedataused to inform transportpolicyand theplanningofserviceprovision

hasbeengathered fromsourcessuchasannual travelsurveysorABSdatadeveloped from

thecensus,conductedeveryfiveyears.Censusdataencompassesmostofthepopulation,but

onlycoversjourneystoworkona fiveyearlybasis.Annualtravelsurveysaremorespecific,

butare taken fromavery limitedsample.Forexample, theannualhousehold travelsurvey

conducted by Transport NSW samples approximately 8,500 people in 3,500 households.5

Whilethisinformationisusefultoanextent,itincursasignificantinformationlag.

Smartcardtechnologyiscapableofstoringandtransmittingmuchmoreinformationthanthe

magnetic stripe card, openingupnewpossibilities for transport agencies to collectprecise

dataonthetravelpatternsofindividuals.Thisenablesbetterplanningfortheentirenetwork.

Evenasmallpercentageofsmartcardusecanyieldsuperiordatafortransportoperatorsthan

thelimitedsampleandscopeofthetraditionaldatasourcesoutlinedabove.Forexample,in

Perthapproximately70percentofcommutersusetheSmartRiderticketingsystem6allowing

transportagencies tomapkeyperformance indicators,patronage,and travelpatternswith

1GlobalMassTransitReport:ContactlessSmartTicketing:Awinwindealforallstakeholders,November12009.Retrieved4/5/2010from:

http://www.globalmasstransit.net/archive.php?id=12912TheFinancialReview,1/4/2010:AnOystermaybejusttheticketforpublictransport.

3Percentageoftotalannualcapitalinvestmentcostrequiredformaintenance.

4International

Association

of

Public

Transport

(UITP),

Core

Brief:

Contactless

Ticketing,

March

2001.

Retrieved

7/4/2010

from:

www.uitp.org/mos/corebrief/CBrief%20Billeterieen.pdf5TransportNSW:HouseholdTravelSurveyData.Retrieved4/5/2010from:http://www.transport.nsw.gov.au/tdc/housesurvey.html

6PublicTransportAuthorityofWesternAustralia:AnnualReport20082009,p20.


6/16

5

greater accuracy than their counterparts inSydneywere traveldata isgatheredadhocby

eachoperatororthroughtheHouseholdTravelSurvey.

Through the analysis of this information, transport agencies are able to respond more

effectivelytofluctuationsindemandatdifferenttimesindifferentareas.Thetaskofplanning

publictransportservicesisthereforesimplifiedandsubsequently,theintegrationofservices

particularlyatmodalinterchangesgivesrisetoamoreefficientnetwork.Theabilitytoplan

service provision around such comprehensive travel data is one of the most empoweringbenefitsofsmartcardticketingfortransportagencies,asitenablesthemtotailorservicesto

thespecificneedsofdifferentmarkets.

Demand Management

Governmentspredominantlyaim topromotepublic transportpatronageby investing in the

supplyofnewinfrastructureandrollingstock.Implementingsmartcardticketing,ontheother

hand, presents an opportunity for governments to significantly influence the demand for

public transport.With access to comprehensive traveldata on thedemand side, transport

operatorsare

able

to

develop

and

improve

ticketing

as

aconsumer

product.

This

may

include

offeringdiscountsontraveltoandfromcertainareasatvarioustimestostimulatethespread

of demand across a network, maximising its revenue earning potential and encouraging

increasedpatronageinoffpeakperiods.

Individuals can also be offered discounts as an incentive for frequent travel, encouraging

more people to use public transport and rewarding sustainable transport choices. For

example,SouthEastQueenslandsgocardoffersa50percentdiscountforcommuterswho

usetheircardmorethantentimesinaweek,anda10percentdiscountforuseinoffpeak

periods.Airlinesandpetrolretailersarewellaheadofpublictransportprovidersintheareaof

customerloyalty

incentive

schemes,

and

provide

examples

of

the

potential

for

such

schemes

todrivedemandforaparticularproductinthiscase,publictransport.

Deterring fare evasion

Recordeddataontravelpatternsandcardusealsomeansauthoritiesarebetterequippedto

detect and deter fare evasion. Data that reveals each instance in which a smartcard is

registeredata farecollectionpointcanbeused to identify individualswithpatternsofuse

that suggest deliberate and sustained fare evasion. With the requirement for smartcard

holderstoregistertheirpersonaldetails,thetaskofprosecutingserialfareevaders ismade

considerablyeasier.Similarly,thedispatchoftransitinspectorscanbetargetedatareaswith

higher incidence of illegal or irregular card use, thus allowing for more efficient use of

resourcesinthisarea.

Expanding the use of smartcard payments

Further to thesuccessful implementationofsmartcardpayments forpublic transport fares,

andaspartofabroadermovementtowardsacashlesseconomy,theuseofsmartcardscan

be extended to other areas of the transport market such as car parking. As well as

incorporatingmeteredparking,Perths SmartRider system isusedasanexclusivepayment

method forselectedparkandride facilities.Expandingtheuseofsmartcards inthis fashion

ensuresthese

facilities

are

used

for

their

intended

purpose,

hence

encouraging

more

people

tousepublictransportinsteadofprivatevehicles.HongKongsOctopuscardexemplifiesthe


7/16

6

extent towhich the use of transport smartcards can be expanded to incorporate cashless

transactionsfortaxifaresandevenretailpurchases.

Challenges for implementation

Commuter behaviourSmartcard technology demands an element of public compliance to ensure successful

implementation. As such, smartcard ticketing systems are is prone to encountering early

implementationproblemsascommutersarerequiredtochangetheireverydaybehaviour in

orderforthesystemtosucceed.

For smartcard technology towork on transitmodes such as bus and light rail, commuters

mustswipeonwhenboarding,andoffwhenalightingthevehicle.Thiscancauseproblemsif

commutersforgettoswipeoff,andthepotentialarisesforpenaltyfarestobeissuedincases

of genuine human error. Melbournes Myki system imposes a default fare equal to the

maximumfare

applicable

for

the

zone

in

which

aservice

operates7

when

commuters

fail

to

touchoff.

Similarly,SouthEastQueenslandsgocardhasastandarddefaultfare($3forbus/ferryand$5

forrail)acrossthe23zonesitincorporates,butistypicallyhigherthantheaveragefareona

particularservice.Asisthecaseinmanysmartcardticketingsystems,themonetaryincentive

of guaranteeing a lower fare for successfully swiping off is the most effective means of

encouragingtherequiredbehaviouralshift.

Alternatively,asshowninLondon,thischallengecanbeovercomebychargingaflatfarerate

toall

commuters

on

particular

services,

thus

requiring

them

only

to

swipe

on.

Nonetheless,

to

minimise instancesofhumanerror, implementation strategiesmust includecomprehensive

educationalcampaignstoensurethatthetransactionprocessisunderstoodandcomplianceis

madeassimpleaspossible.

Technical faults

Just as smartcard systems on some transport modes are prone to problems arising from

human error, the technology itself is also susceptible to faults, as is the case with any

machinery. Anyminorglitchinthesoftwareorhardwarecancauseinaworstcasescenario

asystem

wide

break

down,

resulting

in

disrupted

services

and

fares

not

being

collected.

In2007,itwasfoundthatafaultintheElectronicPaymentSystems(EPS)8topupservicefor

Hong Kongs Octopus system had affected around 15,270 transactions dating back seven

years, costing commutersmore thanHK$3.7million.An independent report conducted by

PricewaterhouseCoopers found thatonly about0.06per centof EPS transactionsbetween

2000and2007hadbeenaffected,howeverfullrefundswereissued,andEPStopupservices

werediscontinuedduetotheinabilitytoguaranteesimilaroccurrencesinthefuture.9

7Mykidefaultfaresasat14/4/2010indicatethatafullfarecustomerwhofailstorepeatedlytouchoffandtravelsacrosszone1&2willnever

paymore

than

$9.92

on

aweekday

or

$3.00

on

aweekend

or

apublic

holiday.

8EPSisatransactionserviceinHongKongthatiscomparabletoEFTPOS.

9OctopusCardsLimited,pressrelease,27/7/2007:IndependentReviewofFailedOctopusEPSAddValueTransactionsCompleted,Octopusto

CarryOutImmediateReturnofPastUnclaimedFunds.


8/16

7

Asthisexampleshows,teethingproblemsinimplementingsmartcardsystemscanoccur,and

areoftenimpossibletopreventaseachnewsysteminvolvesuniqueengineeringandsoftware

development.

Security and privacy

Whilethe

ability

to

track

travel

behaviour

will

enable

transport

providers

to

optimise

services,

therearesomeconcernsoverintrusionstotheprivacyofcitizens.Inalmosteveryjurisdiction

wheresmartcardticketinghasbeenimplemented,policeandintelligenceagenciesareableto

accesstravelinformationonsmartcardsfortheinvestigationorpreventionofcrime.IntheUK,

policemakeover3,000requestsperyearfortravelinformationfromTransportforLondon.10

Whetherthis isbeneficialorintrusiveisamatterofopinion.Thepotentialforimprovingthe

detectionandinvestigationofcriminalactivityinvariablyinvolvesatradeoffintheprivacyof

citizens,andhaslongbeenthesubjectofconcernsraisedintheAustralianandBritishmedia.

Complexity of transport networks

Acommonproblem in the implementationof integratedsmartcard ticketingsystemsarises

from the need to encompass every fare rate possible for every service provider across an

entire network. One of the reasons for the failure of Sydneys TCard system was the

requirementforittoincorporateover500faretypesonallmodes.

While rationalising fare structuresmay simplify the implementation of smartcard systems,

international experience shows that it is not absolutely necessary, and fare structure has

certainlynotproven tobe thestumblingblockelsewhereas itwas inSydney.Forexample,

the

functionality

provided

by

Seouls

T

Money

smartcard

allowed

transport

operators

to

phaseoutzonalfaresandreintroducedistancebasedfares.Furthermore,thePAYGfunction

oftheLondonOystercardincorporatesupto5milliondifferentautomaticfarecalculations.11

Thelogisticandgeographiccharacteristicsofparticulartransportnetworkscanhindertheroll

out of smartcard ticketing. In Melbourne, problems have been encountered maintaining

remotecommunicationwithMyki facilitiesoncitytrams,whichhavebeenattributedtotall

city buildings and the heavy steel construction of the trams themselves.12

Similarly, the

geographicalsizeoftheTransLinknetwork inSouthEastQueenslandoneofthe largest in

theworldalsopresentsunique challenges to thenetworkof500 retailers reliedupon to

managethedistributionofgocardsforuseacrossanareaof10,000squarekilometres.

Everynetworkhasarangeofuniquecharacteristics,andassuch there isnooff theshelf

systemthatcaneasilybetransferredfromonenetworktoanother.Therealityforestablished,

olderpublictransportnetworkssuchasthose inSydneyandMelbourne isthatadopting

newticketingtechnology,inspiteofthesignificantbenefitsitmaybring,islikelytoencounter

teethingproblemsasnewsoftwareandhardwaremustbedevelopedtomeettheneedsof

eachcitystransportnetwork.

10TheAge,19/11/2009:Mykitrackingdevicewarning.Retrieved30/3/2010from:http://www.theage.com.au/national/mykitrackingdevice

warning20091118

imlj.html

11TransportforLondon,pressrelease,23/11/2009:OneticketforLondonasOysterisationofrailandriverconfirmed.Retrieved16/6/2010

from:http://www.tfl.gov.uk/corporate/media/newscentre/archive/13688.aspx12

TheAge,9/11/2010:Stillsmarting,Retrieved31/3/2010from:http://www.theage.com.au/national/stillsmarting20091106i0ew.html


9/16

8

Smartcard ticketing in AustraliaLaunch Contractor Cost

Compatible

modesTakeup

WesternAustralia:

SmartRider

April2007Downer

EDI

Limited$35m

Train,bus,ferry

andmetered

parkingin

Perth.

Busservicesin

Geraldtonand

Busselton.

230,800

cardsin

use.71%ofall

public

transport

trips.

Queensland:

gocard

January

2008

Cubic

Corporation

$200mfora

minimum10

yearperiod

TransLinktrain,

busandferry

servicesand

BrisbaneAirport

Airtrain.

750,000

cardsin

use.60%of

allpublic

transport

trips.

Victoria:Myki

December

2008Kamco

$1.3bover

tenyears

Metropolitan

trainsand

regionalbuses.

Completestate

widerollouton

allmodes

expectedinlate

2010.

Tasmania:

Greencard

September

2009 INIT

(design

only) $6m Bus

ACT:MyWay

Late2010

(expected)

DownerEDI

Limited$8m Bus

NewSouthWales

2012

(expected)

Pearl

Consortium

(Cubic,Downer

EDI,Cwealth

Bank)

$1.2bover

fifteenyears

AllNSWtrains,

busesandferries

coveredby

the

MyZonefare

structure.

SouthAustralia

2013

(expected)

Affiliated

Computer

Services(ACS)

$30mAdelaidebuses,

trainsandtrams.


10/16

9

Western Australia: SmartRider

IntroducedtothepublicinApril2007,TransperthsSmartRiderwasAustraliasfirstsmartcard

ticketingsystem.SmartRiderisusedtopayfortrain,bus,ferryandmeteredparkinginPerth,

as well as bus services in the regional centres of Geraldton and Busselton. Transperth

overseestheoperationofSmartRider,whichwas implementedbyDownerEDILimited,ata

costof$35million.In2010therearemorethan230,800SmartRidercardsincirculationwhich

areused

to

pay

for

approximately

71

per

cent

of

all

public

transport

trips

on

Transperth

services.

Queensland: go card

Used on South East Queenslands public transport network, the go card was launched in

January2008.ThegocardwasdeliveredbytheCubicCorporation,underacontractwiththe

QueenslandGovernmentworthapproximately$200millionoveraminimum10yearperiod.It

canbeusedacrossallTransLinknetworktrain,busandferryservicesaswellastheprivately

ownedAirtraintoBrisbaneAirport.Therolloutofgocardswascarriedoutinregionalstages

over

a

five

month

period

with

discounted

fares

of

20

to

25

per

cent

offered

from

August

2008.

InJanuary2010,thegocard farebecamethebase fare forcalculatingallother faresacross

the TransLink network go card fares were set at 2007 levels,making them 30 per cent

cheaper thanpaper ticket fares.Thisboostedgocarduse from30 to60percentbetween

January andMarch2010. Inaddition400,000 free go cards, loadedwith$10 creditwillbe

distributed in 2010, which is expected to further increase the use of go card, as the

QueenslandGovernmentaimstophaseoutpaperticketinginthenearfuture.

Victoria: Myki

In June 2003, the Victorian government established the Transport Ticketing Authority to

procureand

manage

anew

integrated

smartcard

ticket

to

replace

the

Metcard

and

V/Line

systemsinmetropolitanMelbourneandregionalVictoria.InJuly2005atenyear$494million

contractwasawardedtoKamcotodeliverMykiwhichwasgradually introducedtoregional

and suburban bus services from December 2008, following a lengthy trial period. From

December 2009, Myki was rolled out across metropolitan train services, and trials on

Melbournestramsandbusesareongoing.Aseriesofteethingproblemsattributablemainly

totheuniquelogisticalchallengesofMelbournestransportnetworkposedadditionalcosts

nowestimatedat$1.3billionoverthetermofthecontractanddelayedthecompleteroll

outofMykionalltramandbusservices.Mykiwillbethefirstsmartcardticketingsystem in

Australiatocoverallpublictransportmodesacrossanentirestate.

Tasmania: Greencard

TasmaniasGreencardwas launched inSeptember2009,andwasdesignedbyGerman firm

INIT.AstheMetronetworkcomprisesonly221buses,therolloutofsmartcardtechnologyin

Tasmania was relatively simple, costing approximately $6 million.13

One of the keys to its

success has been theGreencard systems ability to charge correct fareswithout requiring

patronstoswipeoffattheirdestination,afeaturethatisenabledbyasmallnetworkwitha

simplefarestructure.

13TheAge,9/11/2009:Stillsmarting.Retrieved31/3/2010from:http://www.theage.com.au/national/stillsmarting20091106i0ew.html


11/16

10

ACT: MyWay

TheACTgovernmentaims tohavesmartcard ticketingsystem rolledoutonCanberrasbus

networkbytheendof2010,withtrialstobegininAugust.The$8millionMyWaysystemwill

be modelled on Perths SmartRider system and will also be implemented by Downer EDI

Limited.14

Like Tasmanias Greencard, the simplicity and single mode (bus) of the ACTs

transportnetworkmakestherolloutofsmartcardticketing intheACTrelativelysimpleand

considerablycheaper

than

may

be

the

case

in

larger

cities

with

multiple

modes

in

operation.

New South Wales

TheNSWgovernmentannouncedplanstocreatewhatwas tobeAustralias firstsmartcard

ticketingsystemin1996,withtheTCardsystemplannedtobefullyoperationalbythe2000

Olympics. A dispute arising from the tendering process delayed the development of the

system until 2002, and a series of problems during the development and trial stages

culminated intheterminationofthecontractbetweentheNSWgovernmentandcontractor

ERGinJanuary2008.Thefailedprojecthascostthegovernmentapproximately$100million15

whichcould

be

more,

pending

the

outcome

of

legal

proceedings

that

continue

to

this

day.

FollowingtheabandonmentoftheTCardsystem,theNSWgovernmenthasrecommittedto

smartcard ticketing,withanewprocurementcontractworth$1.2billionover fifteenyears

awarded to the Pearl Consortium consisting of Cubic Corporation, Downer EDI and the

Commonwealth Bank. The establishment of Transport NSW and the MyZone fare

rationalisationprovides thenecessaryconditions for the fully integratedsmartcard ticketing

tobe implementedsuccessfully.Therolloutofthenewsystem isexpectedtocommence in

2012.

South AustraliaInFebruary2010,TheSouthAustraliangovernmentissueda$30millioncontracttoAffiliated

ComputerServices(ACS)tosupplyitsATLASsmartcardticketingsystemforuseonAdelaides

buses, trains and trams.16

ACS is the current operator of Adelaides Crouzet automated

ticketingsystem,andhasexperienceoperatingtheATLASsmartcardsystem incitiessuchas

Montreal,HoustonandToulouse.17

Thesystemwillbe inplace in2013,coincidingwith the

completionofrailupgradeprojectsthatarecurrentlyunderway.

Smartcard ticketing internationally

Hong Kong: Octopus

TheOctopuscard isusedby95per centofpeople inHongKong

aged between16 and 6518

and is regarded as oneof theworlds

most successfulandadvanced smartcard systems foruse inmass

transit. In addition to fare payments for bus, taxi, subway, train,

tram,andferryservicesinHongKong,Octopushasbeenexpanded

14ACTGovernmentMediaRelease:RolloutofACTION'sSmartcardtechnologybegins,28/4/2010.

15NSWParliament,Hansardtranscript:30/3/2010,5:04pm.

16Government

of

South

Australia,

News

release,

8/2/2010:

Smartcard

The

next

big

ticket

item

for

public

transport.

17Ibid.

18OctopusCorporateProfile:ServicesinHongKong.Retrieved7/4/2010from:http://www.octopus.com.hk/aboutus/corporate

profile/servicesinhongkong/en/index.html


12/16

11

for use on smallvalue payments in the retail sector, access control for residential and

commercial buildings and support for various facilities in schools.19

Every day, more than

$HK100millionworthoftransactionsaremadeusingOctopuscards,andaround2.3million

peoplehave registered for theOctopus rewards scheme,20

which is similar to retail reward

schemes such as Flybuys, but built into the one card. Octopus Cards Limited has also

integratedcompatiblesmartchipsintowatches,keyringsandmobilephonecovers.

Chicago: Chicago Card

The Chicago Transit Authority (CTA) launched the Chicago Card

system in 2002. The system is operated by Cubic Corporation,

whichalso installedandoperated thecityspredecessormagnetic

stripe ticketing system.CTA issuesboth storedvalueandaccount

basedcards.InJuly2006,increasesincashfarespromptedasurge

in demand for the cards, over 700,000 ofwhich are currently in

circulation.CTAhasannouncedplanstophaseouttheChicagoCard inthenearfuture,with

farepaymentstobemadewithcontactlesscreditcards,debitcardsandprepaidcardsissued

bybanks

and

other

external

financial

service

providers.

The

transition

to

next

generation

fare

paymentsissettocommenceinmid2010.21

Singapore: EZ-Link

The Singapore Land Transport Authority (LTA) launched the EZ

Linksmartcardsystem in2002,andhas issued10millionEZLink

cards since. Every day approximately 8 million transactions are

made on the system,22

primarily for public transport fares. An

importantcharacteristicoftheEZLinkcard isthat,since2008, it

has

been

designed

under

a

unique

standard

for

contactless

payment technology in Singapore, in accordance with a conscious transition towards a

cashlesssociety.Consequently,thecardsarethickerandmoredurablewhichallowsthemto

performadditionalfunctionssuchasetollingforprivatecars.23

Case study: Londons Oyster Card

LondonsOystercardwas first issuedtothepublic inJuly2003, followingtrialsandproduct

developmentdatingbackto1998.Atfirst,Oysterhadlimitedfeaturesandfunctionsbutthis

hasgraduallyexpandedandcontinuestodoso.By2010,anestimated28millionOystershad

beendistributed,witharoundsevenmillioncardsinregularusetopayformorethan80per

centof

daily

trips

on

Transport

for

London

(TfL)

services.

In

2009,

more

than

three

billion

passengerjourneyswerepaidforusingOystercards.24

Oyster is valid to use on all public transport modes across London including London

Underground,buses,theDocklandsLightRailway(DLR),LondonOverground,trams,Thames

RiverferriesandmostNationalRailserviceswithinLondonfarezones.

19Ibid.

20Ibid.

21ChicagoTransitAuthority,8/12/2009:CTAOutlinesNextGenerationFareCollectionProject.Retrieved19/5/2010from:

http://www.transitchicago.com/news/default.aspx?ArticleId=243122

EZ

Link

Corporate

Information:

Company

Profile.

Retrieved

9/6/2010

from:

http://www.ezlink.com.sg/corporate/corp_companyprofile.jsp

23Ibid.

24TransportforLondon,23/11/2009:OneticketforLondonasOysterisationofrailandriverconfirmed,mediabriefingnote.Retrieved

7/4/2010from:http://www.tfl.gov.uk/corporate/media/newscentre/archive/13688.aspx


13/16

12

While theOystercard isoneof theworld'smostrenownedsmartcard ticketingsystems, its

implementation has been fraught with technical problems25

and ongoing costs26

that have

posedseriouschallengestoTfLandTranSystheconsortiumresponsibleforestablishingand

operatingtheOystersystem.

In2008TfLusedabreakconditioninitscontractwith

Transysandsubsequentlyissuedarevisedcontracttothe consortium. Under the new arrangement, TfL

gainedownershipof theOysterbrandbypayingout

Transys financiers,and in theprocess saved around

4million in interestpayments.27

The initial contract

worth 100 million per year over 17 years was

replacedwitha three yearcontract,which is said to

deliver considerable public savings in addition to

allowingforcompetitioninthetenderforfuturecontracts.

Boththe

renegotiated

contract

and

the

existence

of

abreak

condition

in

the

original

contract

representprudentadministrationand longtermplanningonthepartofTfL.Whenthenew

contract comes into effect in August 2010, the capitalintensive period of implementing

Oysterwillbelargelycompleted.TfLhasindicatedthatfutureexpansionoftheOystersystem

willbefocussedondeveloping its interoperabilityandepurseapplications,28

involvingmore

privatesectorinnovationratherthanheavyinvestmentinnewinfrastructure.

ThesuccessofOystershouldbeasourceofencouragement forotherjurisdictions thatare

currently implementing smartcard ticketing systems. The complexity and size of the TfL

networkhasrequiredagradualandstrategicapproachtotherolloutofOysteroverthelast

sevenyears,

which

has

not

been

without

controversy

or

criticism.

The

perseverance

of

TfL

in

implementingOyster, inspiteof thesedifficulties, istestamentto thebroaderbenefitsthat

smartcardticketingcanprovide.

Innovation in smartcard technology

Asmentionedpreviously, theemergenceof smartcard ticketing is symptomaticofa global

trend toward cashless transactions.Driving this shift,major credit card companies such as

VisaandMasterCardareembedding smartchips incards thatenable them toperform the

functionsofapublictransportticketaswellasregularfunctions.Thisconcepthasalsobeen

extended tomobilephone technology,with theavailabilityofapplications forsmartphones

thatenablethephoneitselftoperformticketingandcardpaymentfunctions.

Credit card products

Smartchipsarenowastandard feature inmostnewcreditcardsand inmanypartsof the

world,transportagenciesandthefinancialsectorareworkingoncompatiblepaymentmedia

25TheDailyMail,14/7/2008:ThousandsofpassengerstravelfreeasOystercardsuffersmasssystemfailure.Retrieved30/3/2010from:

http://www.dailymail.co.uk/news/article1034844/ThousandspassengerstravelfreeOystercardsuffersmassfailure.html#ixzz0jcmTISkI26

BBCNews,10/3/2005:'50,000lost'inOysterfailure.Retrieved30/3/2010from:

http://news.bbc.co.uk/2/hi/uk_news/england/london/4335291.stm27

TransportforLondon,12/4/2010:TfLsecuresownershipandcontrolofOysterbrandandticketingsystem.Retrieved19/4/2010from:

http://www.tfl.gov.uk/corporate/media/newscentre/15260.aspx28

Ibid.


14/16

13

to complement and even replace single purpose smartcard tickets. Visas PayWave and

MasterCards PayPass are alreadyprominent in small retail paymentsworldwide and have

beenadaptedforpublictransportuseinmanycitiesincludingLosAngeles,Paris29

andRiode

Janeiro.30

PayPass payment systems for taxis have been particularly successful inUS cities

including Philadelphia, Las Vegas and New York City where approximately 28% of total

PayPassuseoccursintaxis.31

Thedistributionoftheseproductspresentsopportunitiesforbanksandotherfinancesectorplayers to become involved in transport ticketing. For example in theUK, Barclaycard has

recently releasedOnePulse, aVisa credit cardwhich doubles as anOyster card and offers

customers a 5 per cent cashback incentive for spending onOyster fares.32

InHong Kong,

CitibankhasdevelopedanOctopusenabledVisacreditcard,offering incentivessuchaszero

annualfees.33

Thedevelopmentof integratedepursepayments forpublic transport faresandsmallvalue

purchasesraisesopportunitiesfornewrevenuestreamsforretailers,thefinancialsectorand

transport serviceproviders.34

Employing thepayment systemsexpertiseof financial service

providersdelivers

cost

savings

to

all

stakeholders,

enabling

transport

agencies

to

focus

more

resourceson serviceprovision.With theCommonwealthBankbeingapartner to theNSW

smartcardcontract,TTFanticipatesthenewsystemand itsuserswillbewellplacedtotake

fulladvantageofthesebenefits.

Mobile phone applications

The use ofmobile phones for public transport ticketing is already prevalent in Japan and

SouthKorea.Phoneswithinbuiltnearfieldcommunication(NFC)chipshavebeenavailablein

thesemarkets forsome timenowwhich,withsupportingapplications,arecompatiblewith

mostsmartcard

hardware

systems.

In

effect,

the

phone

replaces

the

card

in

the

contactless

transactionandalsoprovidesadigitalinterfacefromwhichausercanmanagetheiraccount.

The use of mobile phones in this capacity will ultimately reduce supply chain costs and

increase convenience for commuters. Importantly, this technology brings further private

sectorexpertiseand innovation intothetransportticketingmarket,reducingtheburdenon

transport agencies to issue tickets and manage transactions and accounts. To date, this

technology has been most successful in countries (such as Japan) where credit card

penetration is relatively low.Ultimately, TTF believes the involvement of the financial and

mobile communications sectors in transport ticketing will yield considerable benefits to

transportoperators

and

commuters.

29VisaMediaCentre,4/11/2008:VisatoimprovepaymentexperienceforcommutersinLosAngelesandParis.Retrieved7/4/2010from:

http://corporate.visa.com/mediacenter/pressreleases/press871.jsp30

MasterCardNewsCentre,4/11/2009:MasterCardPayPassforPublicTransportation ArrivesinRiodeJaneiro,FirstinLatinAmerica.

Retrieved7/4/2010from:http://www.mastercard.com/us/company/en/newsroom/brazil_paypass_press_release.html31

MasterCardTransactionData,2009.32

BarclaycardOnePulse,cardinformation.Retrieved7/4/2010from:http://www.barclaycardonepulse.co.uk/cardDetail.html33

Octopus,

Hong

Kong:

Octopus

Citibank

Credit

Card.

Retrieved

9/6/2010

from:

http://www.octopus.com.hk/get

your

octopus/choose

your

octopus/bankissuedoctopus/citibank/en/index.html34

GlobalMassTransit,1/11/2009:ContactlessSmartTicketing:Awinwindealforallstakeholders.Retrieved21/4/2010from:

http://www.globalmasstransit.net/archive.php?id=1291


15/16

14

Looking ahead

Continualinnovationinsmartcardticketingsystemswillundoubtedlyincreasetheirappeal,as

consumersopt for the convenienceofusingone card formultipleapplications.Oneof the

majorbeneficiariesofthistechnologywillbeinternationaltouristswhopotentiallycoulduse

onecreditcardonpublictransportservicesindifferentcitiesaroundtheworld.

Smartcard technology is fast becoming a standard feature of the consumer experience in

moderncities, integrated intomostnewcreditcardsand takingonnoncard formssuchas

mobilephones.Astheexamplesinthispaper(andcountlessotherexamplesworldwide)show,

Australian cities are onlyjust catching upwith the rest of theworld in terms of ticketing

technology.Withmanyglobal citiesnowmoving towardsnextgenerationmultiapplication

cards,thetakeupandinnovationinAustraliassmartcardsystemsmustberapidifweareto

keeppacewiththerestoftheworld.

Withthisinmind,andgiventhelongimplementationprocessthatcanbeexpectedformore

complextransport

networks,

it

is

important

that

governments

seeking

to

introduce

smartcard

ticketingdonotadoptredundanttechnology.Bythesamemeasure,thepotentialforprivate

sector investment and alternative revenue streams to flow from interoperability and

integrationwiththecreditcardmarketalsowarrantsseriousconsiderationintheearlystages

ofimplementation.

Concluding remarks

Aswellassimplifyingfarepayments,thesmartcardscapacitytotrackandrecordtraveldata

hasthepotentialtorevolutionisepublictransportdelivery.Withvirtualrealtimeinformation

onthe

demand

side

of

the

transport

market,

service

providers

can

optimise

the

supply

of

services and fare prices to ensure optimum asset utilisation. TTF believes that innovations

suchassmartcardticketingareimperativetoprovidingmodern,efficientandappealingpublic

transportsystems.

Almost every smartcard ticketing system has encountered teething problems in the early

stagesofimplementation.Whileitisdesirabletominimisethepubliccostofimplementation,

theabsenceofaonesizefitsallticketingsystemmakesitdifficulttoanticipatetheextentof

theongoingcoststhatimplementationmayincur.

Aswas

the

case

with

Londons

Oyster

card,

phasing

in

smartcard

technology

is

very

much

a

long term process, and authorities should not be perturbed byminor difficulties thatmay

arise.Rather,contractarrangementsshouldbemadecarefullyandrevisedwherecostscanbe

saved,competitionpromoted,andinnovationexploited.


16/16

TOURISM&TRANSPORTFORUM(TTF)

8thFLOOR

810LOFTUSSTREET

SYDNEYNSW2000

T|+61

29240

2000

F|+61292402020

www.ttf.org.au

SmartCard ticketing_FINAL.pdf

Documents

Transcript of SmartCard ticketing_FINAL.pdf