“The buzzword is mobility and it is expected to move to mobility-as-a-service.”

At a recent conference on Urban Rail Systems in APAC organised by Global Mass Transit and India Infrastructure, Silvester Prakasam, Advisor, Fare Systems, Singapore, Land Transport Authority (LTA) delivered a presentation and spoke about the requirements regarding fare systems, opportunities in the installation of advanced fare systems, the deployment of smart ticketing (bank cards, NFC, mobile wallets, etc.), and the issues and challenges facing the industry. Excerpts . . .

Transit ticketing in Singapore

Around 59 per cent of all journeys in Singapore are made by public transport, and the total number of journeys stand at about 8.2 million. As per the Land Transport Master Plan 2013, by 2030, 80 per cent of all households will be within a 10- minute walk from a train station and 75 per cent of all peak-hour journeys will be made by public transport in Singapore. This can be achieved partly by the carrot method and partly by policies that discourage the use of private transport. Private transport in Singapore is very expensive and the chances are that it will get more expensive in future.

The types of tickets we sell are contactless stored-value cards, bank cards, and concession passes.

Transit fares in Singapore are distance-based. For multimodal journeys, the best fare options are automatically calculated. 

Transformation in ticketing over time

The key requirements of transport ticketing include customer convenience, ease of speed, efficiency of the transit operator, and a sustainable business model. So no matter what people say about open payments, a closed payment system is still attractive where generally the transport operator’s payment provider is in full control.

The smartcard carries all the relevant information. And, of course, the big benefits that people see are fluid retention and penetration and non-transit, but these have not always been realised. On the whole, unless there is some government intervention, it is very hard to persuade operators who are not owned by transit authorities to go into any other method, like open payments. A case in point in Asia is Bangkok, where the transit operators are really resisting going into an open-payment system because they fear losing control.

Initially, when people went in for magnetic-paper tickets and stored-value cards, there were significant savings, on an average about 8 per cent. At that point in time, people were not paying much attention to the cost of the top-up. And, of course, bear in mind that public transport is either subsidised or is a very marginal business case. So the cost of manufacturing and distributing tickets is a significant cost. So it is really something that the transit operator has got to pay attention to.

Lately, many methods of lowering the cost of ticketing have been initiated. Right from the beginning, Hong Kong, Korea, and Japan went very aggressively into non-transit, and I think generally their non-transit is very well recognised, especially in Hong Kong. But actually Japan I think has got a much bigger non-transit base and that does, to a large extent, offset the cost of ticketing in public transport. Then the other one is to really franchise the entire ticketing business to someone else.

I think it is happening in some places in India, but I think the well-defined case I have seen is in Manila. Of course, the one that is really now being promoted in most parts of world is EMV, because you have ready media there. These are Mastercard or any other credit cards. So it is quite easy to penetrate the market.

Account-based ticketing (ABT)

So the problems across the stored-value cards are being solved by using ABT. Over the past three years, we have found many evangelists for this. In Singapore, we started our journey in 2012, but, like in all things, we are very cautious. We did several trials and went into revenue service in April last year and have achieved about 30 million transactions.

ABT can be implemented in both methods, and it could be actually a part of your telephone bill or a part of your utilities bill. And I think it is only a matter of time before this will be implemented somewhere in the world. And basically, your transit card can be used in two ways in an account-based scheme. Either it is a token or it carries a ticket product. And generally, you can check for the history online in most places. So why didn’t we go in for ABT earlier, since it seems such an obvious thing to do?

Basically, because the credit card schemes have much higher security and the sorts of chips they use are slower, it took us a long time to get ticket chips in the banks which are much faster and more widely accepted in transit, and, of course, correspondingly a more powerful back-office system to support blacklisting in loyalty programmes, etc. Since the touch point only validates a card, this eliminates a lot of complications. But it has its challenges, including lack of sufficient funds.

The bigger problem with ABT is that people have multiple cards in their wallet and the risk is that multiple cards can be charged for a single transaction. And now we come to the concession card; there is no solution yet for ABT. Moreover, running both open- and closed-loop systems together is an added cost. And if you are looking at ABT, you must always bear in mind that your network has to be very reliable. Because the moment your network is down, you cannot download your blacklist. In this context, I know that Chicago spent something like USD100 million to improve their network reliability.

So essentially the key thing about ABT is risk management because your funds are in the backend. And basically your card has got to be read by the reader and you have to ensure that it is valid and that it has sufficient funds. In order to ensure sufficient funds, an authorisation from the backend is needed. So there is a window where your commuter can travel within the system and his card potentially could be blacklisted. It takes, on an average, about 15 minutes for the card to be blacklisted.

Key issues and challenges in using different types of fare media  

The bottom line in any ticketing system is that the commuter journey must be smooth. We cannot put in measures wherein his journey gets interrupted. Then after a certain number or rate of error codes, we lift the blacklist and allow the commuter to travel. And if there is no response, for example, if the communication network is down, again we allow the commuter to travel. According to Transport for London, on an average, these issues constitute something like 0.01 per cent of their risks.

So I think there is something that they can put into their transaction fee. But the commuter has also got to be educated because, as I said, they put many cards in their wallet. It must be impressed upon them that they should not present more than one card, and this has been a challenge, even for us. Even we find that, on an average, about more than 2 per cent of commuters present multiple cards, and we have whole branded cards. Then you have to make a decision about which card you want to use. Otherwise, by default, the store value would be deducted. Some of the cards issued before certain dates cannot be used in transport because they are actually meant for online transactions.

So another of the things we do is, we push notification to the phones and there is a web portal also available. Now besides talking about, you know, basically savings in time and giving options, the beauty of ABT is that you are able to provide for diverse needs because everything is done at the backend now like travel demand, social needs, and compensation.

So for travel demand, you can actually push. You can push your peak period by 7 per cent by adjusting your fares. And this can be accentuated even more if on a monthly basis you show the commuter that if he changes the travel pattern just by a few minutes, he is going to save a few dollars. This is not possible in a normal stored-value card, when it just goes through a system and you just see his fare. But if you look at his fare, the amount he has spent over a month, then I think he is more easily convinced that he should shift his travel pattern. And social needs, I mean today I know of one city at least—Bangkok—where they give the benefits of lower fares to the back office through an account-based system which they provide mainly to the poorer people, including senior citizens.

So essentially, on a monthly basis, they put some money in the backend, but it is not that they cannot roll over. And at the end of the month, if you have not used it, then you have to reapply to get the same amount the following month. But it is a very simple way of giving benefits to the people. Compensation, again, in Singapore is paid from time to time. We had to give compensation for disruption or for wrong fares, and now with ABT we have just adjusted the backend processes.

To commuters, using EMV contactless cards is different from using stored-value card. No-fare display has also surfaced as a matter of concern. The right token, security requirements, the support role of  cryptographic keys are some of the other key elements. Then, of course, we must sign in the data. That means it must be authenticated and we have to store at least seven days’ worth of data.

So all these are the requirements that we must be aware of when we are looking at the reader. And, of course, EMV certification is never straightforward, because it is no longer an internal certification. It has to be done by an external body and this external body will be working with a number of operators and international organisations, and quite often they may not really be attuned to what is required locally. And therefore special care adaptation is required and, of course, updates on scheme specification, which may be for retail, and have nothing to do with transit gates needs to be a condition.

So far, we have managed to resist requirements that are meant for the retail industry. Getting multiple schemes in a single reader right—this is a challenge to your course base, and one scheme may potentially affect another, but to have all these, there are test tools. So, going from a closed system to something like a card-based scheme, which is actually issued by others, will have a separate set of challenges that we must be aware of.

As for EMV, they are proposing a second-generation EMV which will overcome some other problems that we have. As I stated, now they have standardized all the schemes up to the corner level; then you will also allow a certain space for reading. I think this is already available—a contactless device evaluation kit which is available for the detection of potential chip-acceptance problems. So this will go a long way in solving the current issues.

By allowing the usage of all EMV bank passes, 5 million hours of transit users can be saved annually. An economic value of USD50 million (USD10 per hour economic value) will eliminate the need for top-up. Besides, USD20 million in operational costs can be saved annually. The reduced use of stored-value cards can not only decrease the value locked up in the cards but can have a positive environmental effect as well.

A significant amount of value is locked up in stored-value cards. In 2018, USD177 million amount of value was locked up in closed-loop stored-value cards. Additionally, in the case of a lost stored-value card, the stored value is lost with the card. Over 30 million cards have been issued, which means that an incremental carbon dioxide footprint of 357,000 tons and an additional 85,000 tons of PET needs to be recycled.

The way forward

So where do we go from here as far as ticketing is concerned? Of course, if you look at the way technology has been adopted over the years, the time taken to reach 50 million users has decreased from 75 years to 19 days today. Besides mobile phones, there are many places, at least in the United States, that deploy facial recognition to use the facilities. Will facial recognition become so fast, so cheap that we do not need a mobile phone? It is very hard to say so. The only major payments categories that the banks still dominate are shopping, meals, etc. Now the problem with mobile transactions is that the mobile digital ID has got to be very secure. Today, we use what we call the RSA key. This is already about 2,000 bit. Later on, we are to go on to 3,000 bit. So the performance of our phones has got to keep up with the requirement of security.

Unfortunately, today mobile phones are not that fast because we don’t have a dedicated chip. And various handsets have different kinds of performances. So the observations we had from mobile—we have been trialling mobile for nearly four years now—is that certain phones have a very short transaction distance, resulting in high error rates. In this context, the QR code is rapidly filling the vacuum, like NFC. And that is not only for single trips. I think the hand phone suppliers have missed the opportunity in really promoting NFC. But the irony is that the QR code has moved in, and I think it looks like NFC may have lost the battle. So, for us, as I said, the future possibility is mobility, which is fast evolving. And in Singapore, we have already integrated the public transport system, so there are many benefits that we can bring to our commuters, and with ABT we hope the current experience will only be enhanced. And overall, we still expect at least a 5 to 6 per cent drop in the life-cycle cost. So the buzzword is mobility and it is expected to move to mobility-as-a-service, which, of course, will remain elusive in most countries.