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Demystifying Ticketing and Payment in Public Transport

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Demystifying Ticketing and Payment in Public Transport REPORT DEMYSTIFYING TICKETING AND PAYMENT IN PUBLIC TRANSPORT NOVEMBER | 2020 © Andrea Piacquadio UITP and the editors would like to thank each one of the authors for their contribution and acknowledge the help of all the people involved in this project. Our sincere gratitude goes to those who gave up their time to attend numerous meetings and web-conferences as well as drafting content for this report. Without their expertise, this report would not have become a reality. Roberto Andreoli, ATM Audrey Delavarenne, Wizway Jarl Eliassen, Ruter Stenio Franco, Idea Partners Ralph Gambetta, Calypso Networks Association Philippe Vappereau, Calypso Networks Association Paul Gwynn, INIT Klaus Janke, INIT Helge Lorenz, TCAC Nicole Louvat, Wizway Lindsey Mancini, UITP Johan Van Ieperen, PTV Argo Verk, Ridango Nils Zeino, VDV René Zeller, HiTouch International Association of Public Transport (UITP) Rue Sainte-Marie, 6 | B-1080 Brussels | Belgium Tel: +32 2 673 61 00 [email protected] www.uitp.org © UITP – International Association of Public Transport, November 2020 All rights reserved / No part of this publication may be reproduced or transmitted in any form or by any means without the written permission of the International Association of Public Transport TABLE OF CONTENT — 2 — Introduction — 2 — A brief history of ticketing — 3 — The current landscape — 4 — Smart ticketing — 7 — Validation technologies and ticket carriers — 18 — Fare models and policies — 20 — Procurement models: Ownership vs SaaS — 22 — Adaptions to new public transport business models — 24 — Conclusion — 26 — Annexes 1 INTRODUCTION A BRIEF HISTORY OF PUBLIC TRANSPORT TICKETING Ticketing and payment systems are key elements of a public transport system. Technological advancement From the 1950s to the late 1980s, single medium sys- has helped systems evolve dramatically over recent tems such as tokens, paper or magnetic stripe tickets decades. However, things have gotten complicated were generally used. During the 1990s, ticketing started a transformation process made possible by the emer- for public transport operators and authorities. gence of new information and communication technolo- Twenty years ago, it was just a matter of choosing gies (ICT) such as location services, real-time passenger the tariff scheme, the technology, to design the information services as well as contactless smartcards. system depending on passenger flows and finally to This technological revolution in ticketing has been cre- choose the supplier. In other words, the ticketing ating significant improvements from a user experience integrator that would take charge of the whole perspective, and a new era of marketing opportunities project to deliver a turn-key system. Nowadays, for public transport authorities (PTAs) and operators: the contactless smartcards have supported in developing the challenge starts with trying to understand a strong relationship with customers, knowing them and about closed-loop versus open-loop, card-centric better understanding their needs. vs system-centric, prepaid vs post-paid, account- based ticketing, open payment, SIM-centric mobile ticketing, Secure Element, HCE, interoperability, multiservice, beacons, NFC, QR code…and so on. The objective of this report is to demystify these concepts by: Clarifying the current landscape of ticketing and payment in public transport Detailing the different technologies and solutions © Shutterstock on the market Well known smartcard schemes include Oyster (Lon- Describing the different systems and business don), Octopus (Hong Kong), Navigo (Paris) and Suica models (Japan). In these schemes, the travel information and the Looking ahead to relevant emerging trends in the rights to travel are stored physically within a chip em- mobility sector bedded in the card itself: memory size, microprocessor security and contactless performance are key to the suc- Ticketing exists due to the need to establish a con- cess of this technology. tract between passengers and transport operators but Thanks to the rapidly changing telecommunication tech- also because transport is not a good that can be pur- nologies, the next innovations centre around two main chased like any other good; ticketing is the gateway concepts: to mobility and the freedom for all to move about1. Leveraging existing ‘items’ already in the traveller’s pockets, ubiquitous enough not to be issued by the transport operator. The two main devices today are the contactless credit cards and the smartphone: this is often referred to as ‘Open Loop’, as opposed to ‘Closed Loop’ systems, where a proprietary media must be acquired. However, there are few exceptions like use smart phones also in closed loop configuration (e.g. Hong Kong). The launch of ‘account-based’ ticketing systems give a greater degree of flexibility, both from a traveller con- venience and operational performance perspectives: Transport rights are stored on a central system, not on © iStock a customer card. Software processing no longer takes 1 Inspired by article from Philippe Vappereau, Calypso Networks Association. 2 place on front office equipment (validators, vend- providers have emerged making seamless ticketing even ing machines, ticketing inspection devices) but on the more difficult across the public and private divide. This central system instead. The customer ‘device’ becomes creates opportunity for new approaches to coordination simply a means of identification where no data is stored. but willingness to forgo any part of individual control of that ecosystem is a difficult proposition. YEARS OF CURRENT DEMANDS 100 TICKETING Growing urbanisation, rising consumer expectations, and changing demographics together with declining gov- PHYSICAL PAPER ernment funding streams have created a perfect storm COINS TOKENS TICKET in the traditional provision of service for public trans- PAID port. Private innovation lead by venture capital funding S hasH AbroughtT DOE D? new focus to the value of mobility. Public CONTACTLESS MAGNETIC W RE HOL THE FUTU g SMART CARD STRIPE TICKET -trans.or transportwww.it was traditionally, and in some places still is, a 4800256 function of government, sometimes offered through CONTACTLESS MOBILE contract service to private providers, but is receiving new CREDIT CARD (EMV) TICKETING (NFC) attention as technology creates potential business mod- As ticketing media evolve, so do new els attractive to new players. While adding complexity to BUY ticketing concepts theS system,ource: Ridango private mobility service providers offer new alternatives that could expand the user base of public PAYG ABT BIBO transport. The potential danger in this is that the role of government to make decisions in favour of the public AGGREGATED ACCOUNT BASED BEIN-BEOUT PAY AS YOU GO TICKETING good should not be abdicated in favour of capital mar- ket opportunities. Impacts on environment, congestion, Source: UITP & Messe Karlsruhe for IT TRANS health, and quality of life must be considered as part of a Interestingly, the whole spectrum of medium and sys- holistic, people-centred solution. tems can be found simultaneously in the market: Tech- nological innovation in ticketing does not necessarily lead to the most basic systems being made obsolete. Tokens, paper and magnetic stripe tickets continue to be de- ployed and it will be many years before they are phased out. The same is true for contactless equipment or cards, as the PTA investments are not yet written off. One in- novation does not replace the previous one! THE CURRENT LANDSCAPE KEY CHALLENGES © Johannes Krupinski The chasm between city and suburban or rural life Within this array of challenges lies hope in a future that continues to widen as the technological revolution improves on the lives of all citizens. Ticketing is no longer focuses on maximising outcomes for dense communities. a simple part of the public transport experience, it is what To ensure no citizens are left behind, solutions must scale enables freedom of movement across modes and bor- in either direction. Ensuring equitable experiences across ders. With emerging models such as Mobility as a Service age, demographic, and personal choice is difficult but a (MaaS), account-based systems can connect move- necessary ingredient as we move toward new standards for ment in a region with new opportunities for reward pro- interoperability and data sharing. Considerations of data grammes, loyalty toward preferred modes, and access to for privacy, confidentiality, and Personally Identifiable recreation, entertainment, commerce, and employment. Information (PII) are expected by users but are not well Shifting ‘service-consumed’ business models among defined in any universal standard. Currently, decisions providers does not currently align to types of available are made in siloed organisations across government but funding options. However, with every challenge there is increasingly touch multiple facets of the value chain of equal opportunity, the specifics of which are further ex- government services. At the same time, private mobility plored in this Report. 3 SMART TICKETING In many cases the customers are forced to use dedicated hardware for top-up or ticket purchase, making the whole process slow and inconvenient. There are also significant CARD-CENTRIC OR MEDIA-BASED costs for issuance and management of proprietary TICKETING travel cards. Nowadays, MBT is adapting to the digital experience, expected by the customers, and mobile add- A card-centric scheme is a fare collection system in ons
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