Global Mass Transit organised a conference on ‘Transit Ticketing and Fare Collection APAC 2016’ on November 30-December 1, 2016 in Singapore. The conference was well attended by representatives from the government and the industry. The key takeaways from the conference are noted below.
Gopi Rengasamy, Director, Global Strategy Group, KPMG Singapore spoke on key trends and outlook for AFC systems in the Asia Pacific (APAC) region. There are advanced AFC systems in APAC with 18 cities adopting an entirely integrated ticketing system across transport modes and operators. Nearly 50 per cent have a hybrid fare collection system, including both paper tickets and smartcard-based AFC systems.
The total market size for AFC systems is expected to be in the range of USD2-2.7 billion per year from 2016 to 2019. The Asia Pacific region’s is estimated to have market size of USD0.6-09 billion in the same period.
Within Asia Pacific, the largest share of business is in fare system operations and maintenance and is estimated to be USD250-340 million per year between 2016 and 2019. In addition, the size of the of front-end hardware supply business is estimated to be between USD300-410 million in the same period.
Cities across APAC are world leaders in ticketing and fare systems. Moving beyond payment for public transportation, stored-value cards have allowed high levels of adoption in integrated ticketing and the way is paved for advanced systems such as account-based ticketing.
Prabhas Kumar, AFC Specialist, Ministry of Transport and Communication, Qatar spoke on the developer’s perspective towards the deployment of AFC systems. The various e-ticketing technologies include check-in-check-out, be-in-be-out, check-in-be-out and walk-in-walk-out. Advanced fare media include the dual-interface chip card, Apple Pay, Android Pay and Samsung Pay. Operational issues facing transit payments are related to transaction time, online transaction authorisation and risk management.
A transit authority needs a dedicated knowledgeable team to implement an advanced AFC system to ensure cost and reputation control, adopt open standards (to prevent vendor lock-in), support the required interoperability across transport modes and enhance fare system efficiency.
Catherine P. Lopez, Division Manager, Automated Fare Collection System Services, Light Rail Transit Authority (LRTA), Manila spoke on the issues and challenges that were faced in the deployment of AFC systems by the LRTA. On March 31, 2014, the contract to undertake an AFC common ticketing project for the three light-rail lines in Manila was awarded on a public-private partnership (PPP) basis. The deployment was completed at an investment of PHP1.72 billion on December 16, 2015.
The key issues and challenges faced in the deployment of advanced fare systems related to the development/design specification stage, the unstructured participation of players/stakeholders, change management (impact on employees), public communication and IT infrastructure.
The issues faced after the deployment of AFC systems included operational issues (user preferences, AFC devices and queuing), financial issues (new government expenses, loss of stored value and software bugs) and software fixes/patches/enhancements (continuous software upgrades and fixes to correct errors, enhance software features and functionalities for devices).
Sanjay Andani, Deputy Chief Financial Officer and Ashfaq Sayed, Senior Deputy General Manager, telecom, Mumbai Metro Rail Corporation (MMRC) Limited spoke on the upcoming Mumbai Metro Line-3 project, which will span 33.5 km and cover 27 stations. The project cost of INR23.13 billion will be funded by the Japan International Co-operation Agency (JICA), the Government of India and the Government of Maharashtra.
The line is expected to be commissioned in 2020. Contracts for the deployment of the AFC system are yet to be awarded. Ridership during peak hours is estimated at 39,000 passengers per hour per direction traffic (phpdt) in 2025 and 42,000 phpdt in 2031.
MMRC plans to keep the ticketing system simple so that it is easy to use/operate and maintain, allows use of multi-modal tickets (smartcards), accepts single/multiple journey/concessional tickets, adopts quick fare changes, requires less manpower, provides loyalty points and is interoperable and capable of being scaled up to implement new technologies such as near-field communication (NFC).
Ashish Chandra, Associate Director, Capital Projects & Infrastructure, PwC spoke about the focus on core customer experience, which is central to developing a smart and effective service model. According to him, smart ticketing should provide discounts on all travel compared to paper tickets, charge the lowest possible fare, accept a common ticket on multiple forms of transport, give loyalty points redeemable for travel discounts and retail vouchers, and provide customised real-time travel information.
PwC has supported Axis Bank in the delivery of a revenue enhancement programme for the Kochi Metro Rail Limited (KMRL) in India through innovation in AFC architecture and innovative business models. An EMV smartcard and mobile payment system will be deployed for Kochi Metro, which will also allow fare payments for city bus and ferry systems, value-added/third-party services and retail payments. The issuing bank (Axis Bank) will pay fixed royalties and 0.2 per cent share on every non-transit transaction to KMRL. PwC estimates that KMRL will earn a net premium of USD58 million, receive a net benefit of USD31 million in CAPEX savings and gain alternate revenue of USD42 million.
Christopher Wong, Deloitte & Touche Enterprise Risk Services spoke about focus on customer experience. The key highlights of the presentation were the following:
- Fare media – Elimination of legacy fare media (cash, paper tickets and tokens) provides a unique opportunity to introduce fare incentives for consumers. The new media is available for purchase at ticket counters, convenience stores, tourist centres and pop-up stores. It can be loaded at ticket vending machines, through mobile applications (apps), and at customer care counters.
- User friendly – Ticket validators and ticketing machines should be easy to locate and use. The turnstiles should allow high through-flow rate to meet high traffic demand.
- Synchronised – Single fare media should be deployed across different transport modes. It should also be synchronised for other uses such as e-wallet/e-payments.
- Secure – Concerns with e-payment and open loop payments must be resolved. Commuter support must be extended in case of loss of ticket.
- Customer – Loyalty programmes must be introduced. Personalised cards can also be issued.
Silvester Prakasam, Director, Fare System, Land Transport Authority, Singapore spoke about the fully franchised model for ticketing deployed in Manila, the account-based ticketing (ABT) business proposition for transit operators, risk management, front-end security, and mobile ticketing for emerging markets.
The Philippines Department of Transportation and Communications (DOTC) awarded the ticketing system contract to a private company, AFPI, in March 2014. The scope of work included delivery of the AFC system, including single journey tickets (SJT), and system maintenance for a period of 10 years.
It was a unique concessionaire agreement, wherein AFPI paid USD20 million for the concession in addition to the ticketing equipment. The entire ticketing function was outsourced to the retailing industry at no cost to the transit service provider. The concessionaire is expected to generate their revenue from non-transit applications. AFPI awarded the USD28-million sub-contract agreement for the supply of fare collection equipment to MSI in April 2014. The concessionaire operates the clearing house system and issues the stored value card (Beep card), which can be extended to non-transit uses for a period of 10 years, after which the system is to be handed over to the DOTC. The AFC system was commissioned on December 16, 2015, and 2 million cards had been issued as of end-November 2016.
In the case of closed payment systems such as Octopus cards, T-Money and Suica, the transit operator is the payment provider and is in full control. The system provides opportunity for float retention and penetration into non-transit. The Singapore experience has shown that penetration into non-transit is quite expensive and not viable for non-financial institutions. Besides, competition is high from single purpose cards. Float retention remains the real attraction.
In the case of open payments, compliant media (EMV/token) is used for fare payment at entry and exit points. Seamless usage of transport services is possible as it allows accepting travel tokens from multiple entities. In case of ABT, a backend system, where fare calculation and transaction are performed against an account in the back office, is deployed. ABT offers, among others, the following benefits:
- all complexities of ticketing validation shifted to backend
- front-end just authenticates the validity card
- no top-up infrastructure required
- media/token provided by three parties
- more competitive transaction fee
The players in the transit transactions model include:
- Transit acquirer and operator: Manages commuters travel enquiries, negotiates rates with acquiring banks and scheme owner in capacity as merchant in retail model
- Issuing banks: Manages relationship with cardholders, manages card configuration, and undertakes the risk of bad debt.
- Acquiring banks: Processes payment on behalf of merchant, negotiates agreement with issuing banks, and acts as the interface payment gateway with merchant.
- Scheme owners: Owner of financial switch network and sets common standards with foreign banks including Visa and MasterCard.
The drivers for ABT include the need for more payment options, avoiding queuing for top-ups, convenience for tourists, ability to check transaction history online, and provision of cost savings through reduced cash top-ups.
Singapore’s ABT pilot: With a pilot of about 100,000 credit cards, Singapore LTA aims to demonstrate that transit fares can be collected using contactless credit and debit cards with minimum revenue leakage and that the system has the ability to authenticate a bank card in real-time from the point of entry. This is expected to validate the view that performance of contactless readers with bank cards in a transit environment is comparable to stored value cards. LTA will also acquire and evaluate customer feedback.
Transit readers have stringent performance requirements such as processing of transaction within 400 ms, use of both stored value and multiple tokens, and integration with existing infrastructure and systems.
ABT allows travel demand management (by differential pricing, discounts, surcharge, etc.), enables management of social needs (assistance to social groups through discounts, passes, fixed price, period fare cap, etc), and swift compensation in case of train disruption and claim settlement.
Rick van Barneveld, Project Director, National Ticketing Programme, New Zealand Transport Agency: New Zealand’s population of 4.5 million generates some 150 million ticketed passenger trips per annum. Almost half of those trips are made in Auckland (largest city in the country) and 25 per cent in Wellington (national capital). Moreover, Auckland and Wellington are the only cities to have multi-modal transport (rail, bus and ferry).
Public transport is delivered by 16 transport authorities but is financially assisted from a dedicated National Land Transport Fund at an average of 51 per cent of the total cost net of fares with the balance met regionally from property taxes.
Since 2007, the New Zealand Transport Agency has proactively supported a co-ordinated approach to smartcard ticketing.
Figure 1 outlines the timeline for the deployment of a national ticketing system in New Zealand in Phase I. Focus will be on the Greater Wellington Regional Council, Environment Canterbury, and a regional consortium of nine authorities.
Figure 1: National Ticketing Programme Roadmap for New Zealand
Source: New Zealand Transport Agency
Several challenges have been identified for Phase II (brining in the rest of New Zealand under one ticketing framework). These relate to the following:
Amin Sarvestani, Chief Strategy Officer, SC Soft spoke about open standards and interoperability. Open standard has been the key driver for innovation for many industries. Transport ticketing systems have localised requirements; so proprietary solutions still dominate the industry and limit innovation.
There is a significant opportunity to deploy secure banking and universal payment technologies in transit ticketing and rid authorities of their micro-payments tasks.
Interoperability at a global level can be only achieved by addressing the two main aspects of an AFC system: technology and business.
He also laid emphasis on mobile ticketing and stated that mobile tickets are expected to account for more than 50 per cent of digital ticket transactions by 2019. Figure 2 reflects mobile penetration.
Figure 2: Mobile penetration
Source: Ericson Mobility Report June 2016
Figure 3 indicates the future of mobile ticketing.
Figure 3: Future of mobile ticketing
Source: Future of Fare Collection in Transportation, Mass Transit Journal, James Gooch, Masabi, November 2016
Dr. Joerg Schmidt, 1st Co-Chair Transport SIG, NFC Forum spoke about the mission of the NFC forum, their key activities and achievements. In order to establish interoperability between the mobile sector and public transport sector, the RF-interface specifications for NFC mobile devices and public transport devices as well as the testing/certification process should be synchronised.
NFC forum-driven work on interoperability has allowed:
This has led to the following benefits:
Paul Gwynn, Managing Director, INIT Asia-Pacific, Singapore spoke about INIT’s deployment of AFC system in Turku, Finland. The Turku region consists of six municipalities with a population of 285,000 inhabitants. It has 260 buses and 300,000 cards, and records 24.4 million trips a year. The project components were ID-based ticketing system, ITCS and traffic signal priority (TSP) system. The project, called Föli, began in 2014 and was completed in 2016.
The ticketing system comprises card or other media used as identifier and mobile ticketing. It integrates a travel planner, mobile ticketing and top-up, real time passenger information, travel information and marketing. INIT has implemented an existing card-based solution to guarantee smooth migration to an ID-based solution.
The system is flexible and integrated. There is different pricing for the various sales channels (website, points of sale or mobile sales channels). It is a multi-client capable system with full readiness for different tariff zones. Various operators and stake holders can use the system without disturbing each other.
Figure 4 reflects Turku’s open architecture.
Figure 4: Turku’s open architecture
Turku’s open architecture provides:
With the introduction of Föli, ridership has increased by 20 per cent and 98 per cent of the passengers consider the system more attractive. The region has recorded 9 per cent new public transport users, with some locations witnessing a 15 per cent increase in new passengers. A total of 42 per cent of passengers have reported that they could have travelled by car but chose public transport.
Shubhrendu Koche, Vice President, Senior Business Leader, Enterprise Partnerships, MasterCard Asia Pacific: MasterCard has developed standards for transit merchants to enable open payments migration at their fare gates while retaining the benefits of closed loop processing. These benefits include quick processing speeds (less than 400 ms), reduction in processing costs for low value transactions, and risk and liability management.
The global transit transaction models are:
There are strong benefits from open loop payments. These are:
- Reduced use of higher cost sales channel: Auto top-up has lower costs but has low adoption. For example, only 7 per cent of the passengers were using it in London by 2009.
- Reducing cash in system: Cost of cash collection and processing was estimated at 20-22 per cent of fare revenue in the US in 2006.
- Fewer ticket offices and self-service machines: Cost of fare collection using vending machines in Budapest in 2011 was estimated at 50 per cent of fare sales using that channel.
- Grow additional usage: Convenience and time saving leads to 1-2 per cent increase in ridership on its own.
- More revenue from advertising and partners: More retail space is available in and near stations for rental and partnerships with digital and relevant advertising entities.
- More flexible fare business rules: Since the system is more centralised at the back-end, campaigns to target specific commuters can be launched.
Dr. Padet Praditphet, Director of Common Ticketing Administration Office, Office of Transport and Traffic Policy and Planning (OTP), Ministry of Transport, Thailand spoke about improvement in revenue collection and ridership with the use of single cards in Thailand.
Figure 5 illustrates the broad functions of the Bangkok central clearing house and groups them into three main functional areas:
- Clearinghouse, relating to financial and settlement services;
- Issuer, relating to issuing and tracking cards and cardholders; and
- Central Authority, relating to centralised administrative functions such as security and data flows.
Figure 5: Functions of the Bangkok central clearing house
Source: MRTA, Thailand
Antoine Sambin, Head of Commercial and Corporate Affairs, Hong Kong Tramways: Hong Kong Tramways is the busiest tramline in the world, with an average daily ridership of 190,000 passengers. Public transport has a 90 per cent modal share.
There are two main sources of revenue – farebox and advertising. The Hong Kong Octopus Card was launched in September 1997 and has 32 million cards in circulation today. On the Hong Kong Tramways, nearly 80 per cent of fare payments are through the Octopus Cards. Almost 99 per cent of the population in the age group of 15-64 years has a card. There are 75,000 Octopus readers in Hong Kong and 14 million transactions are made daily. More than 60 per cent of the Octopus card use is for transport and 40 per cent for retail.
The Transit Ticketing & Fare Collection APAC 2016 conference provided a platform to discuss the current status and future outlook of public transport ticketing in Asia-Pacific. Asia Pacific is one of the biggest markets for upcoming public transit projects including metro rail, light-rail and BRT. These cities are directly adopting off-the-shelf products for the deployment of electronic ticketing. In addition, cities with well developed systems are opting for advanced and integrated fare systems. These market trends offer many opportunities for technology providers; system integrators; ticketing and validation equipment suppliers; smartcard, mobile phone and chip manufacturers; financiers; consultants; workforce development organisations; etc.