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So you want to do a smart ticketing project!
1. Burden Consulting
So you want to do a
Smart Ticketing project!
SOME THINGS TO THINK ABOUT
SARAJEVO, MAY 2016
2. Burden Consulting
Agenda
Introduction
Vision for an AFC System
Non Technical Issues
Raising Finance
Legal and Operational Structure
Fares Policy
The Business Case
Tender and Contracting Issues
Technical Issues
Ticketing Technologies
Standards
Integration of Multiple Technologies
Move to Account Based Solutions
Summary & Conclusions
4. Burden Consulting
Public transport faces several challenges
Low integration between national and regional transport networks
Missing integrated tariff and fare systems
Lack of funds to finance investment and operation
Low contributions of farebox revenue to cost coverage
Limited co-operation between transport companies
Variations in regulatory settings (Regulated / De-regulated)
Frequent political interference
Few incentives for operators to cut costs and increase revenues
5. Burden Consulting
Bus and Rail regulation can vary from city
to city and country to country
Public
Monopolies
Proactive
Planning with
Service
Contracts
Well Regulated
Franchises
Passive
Franchises
De-Regulation
Government takes
little or no
responsibility for
outcomes
Government
responsibility for
outcomes
Incompatible with
Integration
Compatible with
Ambitious
integration
(weak and little enforced service
obligations)
7. Burden Consulting
There needs to be a clear vision as to
what the system will achieve
The vision emerges from three sources
EXPERIENCE
Organisational – areas where
organisation want to improve
Staff – understand where areas
of improvement are needed
Global – experience from other
schemes that can be replicated
KNOWLEDGE
Market Business and Trends –
application of technology trends
to fare collection environment
Resources and Skills – need
skills across the whole
organisation to implement a
major change project
INSPIRATION
Pulling current facts into the
future
Need to understand long term
technology trends and the
impact they will have
8. Burden Consulting
Development of Vision for TfL
CURRENT TfL FARES &
TICKETING VISION
Reduce ticketing sales costs
Offer best value to customers
Simplify ticket options
Integrate TfL and National Rail
ticketing and fares
Eliminate queuing
Reduce ticketing fraud
WORLD-WIDE TRENDS
Multi-application and multi-use
smart cards
Streamlined smart card
distribution and sales
processes
Link fare payment processes to
fare policy
Improved customer service
levels
MODIFIED TfL FARES &
TICKETING VISION
Chipcard based fare payment
without using any cash
Easy to use
Pay for all travel in the greater
London area
Access to local government
services
Payment for low value goods
and services without using cash
9. Burden Consulting
What problem are you needing to solve?
Drive to increase revenues?
Reduce cash leakage and fraud?
Multi-modal difficulties?
Settlement issues with operators?
Improve the customer experience?
Civic vanity?
10. Burden Consulting
Practical Issues
Critical mass traveller numbers
Multi modal or single mode?
Emerging middle class
Bus/ tram/trolley fleet which will accept new technology
Rationalised and straightforward fares structure
11. Burden Consulting
So what do you need?
Clear definition of the problem
Technical solution – may not be AFC!
Appropriate Legal and Operational structure
Good business case
Type of Contract (DBOM, BOM, etc.)
Political support
Funding
Project structure and able project team
Soft skills and communication
13. Burden Consulting
Business Case
Must have one!
Need sound information – from financial systems and suppliers
Clear assumptions – passenger numbers, level of take up, revenues,
cost reductions
Consider savings and funding costs
14. Burden Consulting
Raising Finance
Various sources - EU, EBRD
May need structural changes to your transport
authority
Will insist on their procurement policy
Expect lenders to attach conditions
Need to manage and communicate with the lender
15. Burden Consulting
Fare policy affects all aspects of a transit
system
Administration – fare changes tend to be publicly scrutinised and debated
Finance – Fares are an important source of revenue
Customer Service - fare payment is the first aspect of a transit system a customer encounters;
complexity and ease of access to prepaid options are important customer service factors
Marketing – fares affect perception of the transit system in the community; fare changes or new
technology need to be marketed effectively
Operations – fare structure affects ridership levels and thus the amount of service needed; fare
structure / technology also affect boarding / dwell times and thus service reliability
Planning – fare structure and technology affect the accuracy of fare data
Drives Customer Behaviour – move customers away from cash
16. Burden Consulting
Tender and Contracting Issues
Tender Format:
One step?
Two step?
Evaluation process
Design Build Operate Maintain?
Design and Build
Operate and Maintain
Outsource all the work or retain some in house?
17. Burden Consulting
Soft skills
Very important - often overlooked
Good communication plan. Staff, customers,
lenders and political masters
Brand for own label card
Phased and managed roll out not Big Bang
approach
Need a good project team, mixture of skills
19. Burden Consulting
Ticketing technology has evolved
significantly over the last 100 years
Paper
Ticket
Smart Cards
& Tokens
2D
Barcodes
Cash
Magnetic
Tickets
Contactless
Payment
Cards
Public Service
Cards & Other ID
NFC
Biometrics?
Metal
Tokens
Mobile
20. Burden Consulting
There are two approaches to
implementing a smart ticketing system
Card Based Account Based
Closed systems
Agency issues and manages own media, can
be expensive
Proprietary systems and formats
Network of Add Value Machines
External re-valuing networks
Require special POS devices
Details stored on card
Fare changes require code changes on all
validators
Master account lives in the back office
Card is only a token to reference the account
Non payment cards can be used to identify
account (ID Card, Campus Card, Ski Pass)
(Little cost to transit operator)
Fare calculation rules exist only in the back
office
Assume card is OK unless it is on the hotlist
Updates must be frequent
No fare calculation at reader
21. Burden Consulting
Operating a card scheme is expensive
41%
13%
32%
8%
6%
0%
20%
40%
60%
80%
100%
Infrastructure &
management
Revenue
protection
Product sales Customer
information &
service
Smartcard
production &
distribution
100% = 14p per £ of fares collected
How much of this
could be
eliminated?
Source: TfL Fares and Ticketing Directorate
22. Burden Consulting
There is a trend away from card based
schemes to account basedSmartNon-Smart
AccountCard
23. Burden Consulting
Why do we need standards?
Safety and reliability – Users perceive standardised products and services as more dependable – this in
turn raises user confidence, increasing the take-up of new technologies
Support of government policies and legislation – Frequently referenced by regulators and legislators for
protecting user and business interests, and to support government policies. Standards play a central role in
the European Union’s policy for a Single Market
Interoperability – the ability of devices to work together relies on products and services complying with
standards
Business benefits – provide a solid foundation upon which to develop new technologies and to enhance
existing practices. Specifically standards:
Open up market access
Provide economies of scale
Encourage innovation
Increase awareness of technical developments and initiatives.
Source European Telecommunications Standards Institute (ETSI): http://www.etsi.org/standards/why-we-need-standards
24. Burden Consulting
Transport Smartcards are currently governed by the following
International (ISO) and European (CEN) Standards
Contactless Cards – ISO/IEC 14443
File Structure - ISO/IEC 7816-4
Architecture - EN ISO 24014-1 (IFM)
Applications - EN 15320 (IOPTA)
Data Elements - EN 1545
Security - ISO 15408 (Common
Criteria)
In addition to these smart card
specific standards there are also
relevant standards for:
Communications
Ticket Vending Machines User
Interfaces
Data Protection
Payments (EMV, PCI DSS)
Banking
Near Field Communications
25. Burden Consulting
Summary of European Ticketing Applications
ITSO (UK) Calypso (F) VDV (D) OV-Chipkaart (NL)
Scope Developed a common
specification to enable the
use of interoperable smart
cards and other media in
transport
Calypso is a set of technical
specifications describing a
fast and secure contactless
transaction between a
terminal and a
portable device.
Verband Deutscher
Verkehrsunternehmen
(VDV) is responsible for the
development of the
standard for eTicketing in
Germany
TransLink Systems operates
and maintains a national
standard for end to end
smart ticketing in the
Netherlands
Users 9% of all public transport
journeys in Great Britain
are made using ITSO-
compliant smartcards
>52 million Calypso cards and
260,000 readers at the
beginning of 2010
10 billion trips/year
€ 11 billion revenues
75% of all trips made by
season ticket holders
4-5 million transactions per
day when in full operation.
NS gates were closed in
2014
Website http://www.itso.org.uk/ http://www.calypsonet-
asso.org/
http://www.vdv.de/en/inde
x.html
https://www.translink.nl/en
-GB/Home
26. Burden Consulting
Evolution of standards as schemes move
to account based ticketing
AFC Standards were developed for card based solutions
Movement towards mobile and wearable technology
Adaption of existing standards and specifications from other sectors to work in transit e.g. EMV
Standards will evolve over medium term
28. Burden Consulting
What do Future Transit Readers look
like?
Three Readers in One
Maintain proprietary technology
Include existing National or Regional schemes
Accept Payment cards
Accept new form factors
29. Burden Consulting
A lot of functionality moves to the Back
Office
Aggregation
Pricing
List Management
Tokenisation
Authorisation and Settlement
Travel Plan
Employer Programs
Free travel
Communications
Creates greater system flexibility
31. Burden Consulting
Smart card schemes are highly complex
Partnership is very important
Have a clear strategic goal
The business needs to change
Standards
Business rules and fare principles
Marketing and Training
Source: Accenture Survey 2005
32. Burden Consulting
Distribution of fare products is evolving from a
station centric approach to a mobile solution
The majority still buy their tickets from a
station
It is possible to buy advance products on-
line, but they are still fulfilled physically
Mobile plays a big part in future solutions:
Purchase
CPC’s
Tokens
2D-Bar Codes
NFC
33. Burden Consulting
Sales and distribution are moving to
lower cost models
Reduction in Ticket Sales from Oyster PAYG
(Source: TfL Fares and Ticketing Directorate)
Assumed Cost of Sale based on % of revenue TOC
Own STOs 11%
Own web 4%
Own mobile 4%
Own TVMs 2%
Third-party retailer 5%
Corporate/TMC 3%
Other TOC stations 9%
Other TOC websites 5%
(Source: UK TOC)
35. Burden Consulting
User Acceptance
Users like the convenience of smart cards
Best value products are always well received
Contactless bank cards are not as widely used in retail as anticipated
Users like NFC, will Apple Pay change the game?
Contactless security concerns
37. Burden Consulting
Ticketing projects are about more than technology,
they are strongly influenced by their political and
commercial environment
AFC projects can be complex. They touch all aspects of
an organisation
Will take a good deal of time and effort to do properly
Technical aspects are important but not the only
considerations
Communication is key
38. Mike Burden | Director
Burden Consulting
E: mike.burden@burdenconsulting.co.uk
M: +44 (0)7850 348134
Skype: mjjburden
John Stout | Director
Mogul Associates
E: johnstout@mogulassociates.co.uk
M: +44 (0)7790 492714
Skype: johnstout53