The future of fare collection
BUSRide spoke with a select group of thought leaders in the transit fare collection industry for a roundtable discussion on the future of fare collection – open architecture, mobile payments and the developing infrastructure that will make it all possible.
The panelists for the discussion were:
Darren Dickson, president, Genfare
Sanford Weinberg, vice president, fare collection / Chris Marconi, solution architect, Xerox Corporation
Why is account-based ticketing becoming such a sought-after solution at major transit agencies? Is it scalable and realistic for agencies of all sizes?
Darren Dickson: Account-based ticketing is a sought- after solution due to the enhanced level of security it offers a transit agency and its rider base. An account is established for a rider where a number of payment models can apply. What makes this so attractive is its ability to expand as new media is introduced in the marketplace. What an agency needs to ask is what serves their ridership best based on media costs, convenience and an agency’s ability to manage and maintain the full system of both the software and hardware.
Sanford Weinberg / Chris Marconi From our perspective, account-based ticketing gives agencies ability to do real-time management of business rules and fare policy in the back office, rather than having that logic reside out on the bus. Administration is also much easier and reliable because all of that logic is centralized in one place. Shifting some of that processing to the back office, away from the front end, should enable the ability to acquire a commercial, off-the-shelf product as a point-of-sale terminal or validator – which is very interesting for agencies.
Account-based ticketing is definitely scalable with smaller agencies – in fact, in some ways it’s ideal for that application.
How are fare collection providers reducing financial liability for transit agencies?
Dickson: This is a great question. There are so many moving parts within a fare collection system. Within each moving part special attention needs to be applied to ensure liability is reduced at each step.
1. Processes and procedures: by far the most important step is an agency’s ability to set up reliable processes and procedures that are audited regularly is one of the quickest ways to reduce liability.
2. Media: depending on your suite of media options each form of media needs to be secured physically in some cases or added as part of reporting and viewed regularly.
3. Software and reporting: review of routes, revenue and ridership records on a consistent basis will allow an agency to see changes or gaps within the system and provide valuable insight.
4. Equipment: security of equipment, key management, cash collection (if needed), data processing on each piece of equipment, and proper preventative maintenance ensures reliability for the life of each piece of equipment.
Weinberg / Marconi EMV (Europay, MasterCard and Visa) is probably one of the biggest topics of conversation around financial liability today, because of the liability shift that went into effect in October of last year. It puts agencies on the hook for counterfeit and lost and stolen fraud if they don’t accept EMV cards today.
Another benefit of next-generation fare collection systems is real-time authentication and no-batch processing, where a system can perform authorizations in real time, rather than batching transactions or processing. The sooner that your fare system can get an acknowledgement from the bank that the customer’s credit or debit account is going to be approved, the risk that someone can game the system is smaller. Real-time authentication seriously reduces financial liability for transit agencies.
“Account-based ticketing is definitely scalable with smaller agencies. In some ways it’s ideal.”
What’s the next step for next-generation fare collection systems – beyond account-based or even mobile ticketing?
Dickson: Scalability will continue to be a very large driver for fare collection systems of the future. Scalability determines the capability of a system to handle a growing amount of work and understanding the potential of each system to be enlarged to accommodate that growth. Fare collection systems designed with this in mind will allow a transit agency to phase in new functionality with minimal engineering and resource which makes it more affordable for agencies of all sizes.
Weinberg / Marconi There’s a lot of opportunity for evolution in mobile payments. I think that many of the ticketing platforms that today are based on QR code will start to migrate to NFC if Apple is willing to grant access to the NFC interface on iOS devices. I think fare collection will start to incorporate Bluetooth – making transit access with mobile device simpler, easier.
There’s a lot of opportunity to make the transit experience a lot easier and frictionless for users.
How does system integration affect or guide the future of fare collection?
Dickson: Transit agency clients are looking for integration at nearly every level of their operations. Agencies want to avoid working with several organizations with customized software and move towards solutions that communicate with one another efficiently and effectively. As Genfare designs the next generation of scalable software, we are creating platforms with API technology that allows us to work in cooperation with other software platforms and equipment.
“Agencies are looking for integration at nearly every level of their operations.”
Weinberg / Marconi Open architecture, because it uses open standards, allows for easier migration between different vendors. It allows agencies to use off-the-shelf equipment. It’s also easier to integrate with legacy software systems.
Xerox is very pro-open-architecture, especially in the fare collection area. If I’m an agency, it’s hard to imagine going to one provider for every single thing. Considering that fare payment systems have such long lifecycles, it would be foolish to think that we could completely future-proof it – but how do we best design it in a way so that agencies can take advantage of new technologies as they’re coming around? That’s the key.
How prevalent will open payments – as distinct from open architecture – be in “tomorrow’s” average transit systems?
Dickson: Open payment systems thus far have been primarily introduced in the top 1 percent of transit agencies. The systems are currently costly, customer specific and may be outside of an average transit systems available budget. As more transactions are processed in real time via credit cards not tied back to an account, agencies will have to find a cost-effective way of not only processing the transactions quickly to reduce dwell times but to work together with credit card companies to reduce the fees and risks associated with real-time or batch processing. There will have to be a scalable solution designed in a manner that will allow for these variables to be answered economically.
Weinberg / Marconi I think it’s certainly going to vary by market. We’ve seen that on the retail side. Markets like Australia, parts of Europe and Canada, where contactless payments are very heavily saturated, have a high degree of adoption. Those areas see a lot of open payments in transit.
In the U.S., we definitely see agencies as to open payments but, until the cards and the devices are in the hands of more cardholders and it’s more widely accepted on the retail side, it’s going to be little depressed or less adopted. We’ll see adoption over time.