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March 28-30, 2011

PRESTO eFare System

APTA Fare Collection WorkshopSession 102

March 2011

Tap into an easier commute. Tap into

Outline

PRESTO Status Update

PRESTO’s 2020 Vision: A Future of True Mobility

Client Choice & Convenience

Getting There: PRESTO Next Generation

PRESTO Point of View on Open Payments

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Device and vehicle installations:

3600 devices/ 1600 buses/ 220 sites

12 TTC subway stations

Municipal Service Provider Rollout:

7 regional municipal transit agencies (May 2011)

Regional rail lines (April 2011)

Regional commuter buses (June 2011)

Ottawa/Carleton (OC Transpo) including 1200 buses

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PRESTO Deployment Status

In revenue operations since October 2009

A ‘passive’ approach to card adoption during rollout

$14M total in e-purse loads

$12.5M total in fare payments

26,000 cards in active use (growing by 1500 per week)

High customer satisfaction with PRESTO:

91% felt that PRESTO is beneficial to them

90% would recommend PRESTO to fellow transit users

TTC ridership will increase as more 905 Service Providers go-live with PRESTO in coming weeks

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PRESTO Current Operations

PRESTO’s 2020 Vision: A Future of True Mobility

True Mobility

True Customer

Choice

True Value to Providers

Social & Economic

Policy

Commercialization

Information Management

True Mobility means more than just commuting. Analysis of local issues and industry trends

demonstrates that Commercialization, Information Management and Social Policy will drive change

and create True Customer Choice and True Value to Providers

“PRESTO Vision 2020 White Paper”

True mobility providing true choice

Integrated service model delivering a holistic and convenient travel experience to customers

Open and flexible system

Progressive technology roadmap

New opportunities for revenue management to providers

Achieving strong economic returns through the smart useof technology and commercial partnerships

Embedded information management capability

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PRESTO’s 2020 Vision A Future of True Mobility

As of March 2011

Choice of Integrated

Transit

Choice of Payment Channels

Choice of Product &

Service

Choice of Access to

Information

Use PRESTO services across transport modes/ and operators (public/private)

Supporting Client Choice & Convenience

PRESTO’s Vision of True Mobility will provide expanded choice and convenience to customers who

have different needs and preferences

Access information from multiple interfaces

Anytime; anywhere; anyplace

Solutions that are low-cost and affordable

Single or multi-ride, pass, stored value

Options on how to pay and use transit

Credit card, debit card, mobile, PRESTO card

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Key principles that PRESTO has outlined for its transit fare system which also shape

PRESTO’s approach for PNG and open payments

Flexible

Cost

Leading Edge

Customer Focus

Choosing a solution that is financially attractive in the long term and which is cognizant of the payment industry financial model

Developing a solution that is flexible and can be changed and upgraded over time

Developing a solution the transit provider has control over the system and which doesn’t cede control

Developing a solution that leverages the latest technological advances in payment technology and which develop commercial partnerships

Developing a solution that focuses on the customer and provides choice, convenience and access to all

PRESTO Key Principles

Control

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PNG is open architecture using industry-standard tools and products, to create an open and non-

proprietary system

PRESTO Next Generation

PRESTO Next Generation (PNG)

PNG challenges farecard industry single vendor proprietary fare systems (both closed or open payment system)

Standard tools not proprietary or closed software solutions

Open architecture (open, flexible, non-proprietary design)

Abstraction layers providing open & flexible design

Delivers multiple payment types and open for future innovations – open payments, mobile, cloud-based accounts

Multi-vendor sourcing –multiple vendors and device types

Does not cede control to the payments industry or vendors

Progressive technology roadmap

Built from existing Central System assets that are compatible (e.g. interfaces, settlement, clearing, back office), replace those which are not

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Transit Operators

Benefits PNG Provides

Support new business requirements

Faster and lower-cost changes

New products and services (e.g. Smog day)

New revenue (transit/non transit)

Choice and convenience on how to pay for transit – e.g. mobile, open payment

Choice of fare products & services

Access to information anytime, anywhere

Meet expectations for service enhancements

Integrate transit & transportation investments

Promote regional interoperability

Accessibility

Prudent fiscal management

Technology refresh strategy

Operations and Service Delivery

Customers

Public/private partnerships – e.g. city cards, retailers, telcos

Improved information management and analytics

Flexible cost effective changes

Focus on holistic travel experience

Complementary products & services

Universal accessibility

Cost effective services

Build on existing PRESTO investment

Build on PRESTO managed service operations

Permit public/private partnerships

Public & private revenue generation

PNG supports these common TTC/City/Province/Metrolinx outcomes through an open, flexible,

scalable non-proprietary design

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PRESTO’s decision to support open payments within PRESTO is based on the following

Open payments should be another choice for customer - it should not be the only choice

Subscribing to a full open payment model would cede control from the transit operator and fare collection agency

Supporting open payments on terms which make sense for customers and operators

The need for an open, flexible and non-proprietary back-end system is critically important for open and closed e-fare transit system

Payment Industry is going through rapid transformation (both business and technology led). Transit payment solutions need to be flexible to adopt to this change

Realities of the payment industry (see next slide)

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PRESTO and Open Payments

Payment industry context for proposed open payment solutions

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Only ~5% of the cards today in Canada have contactless payment capability - this is expected to grow to nearly 80%, but over 10 years, by 2020

Consumer preference studies have shown 55% of transit commuters prefer using a dedicated transit card; 30% prefer open payment bank cards; 15% prefer conventional tickets and passes.

The payment rate for credit cards in Canada is 30%. This means that 70% of Canadians carry balances on their credit card. In US the payment rate is 15% (or 85% carry balances)

Consumer debt in Canada is at an all time high with rising debt-to-income ratios

Card companies make 99% (62% from revolvers (only carry balance) and 37% from transvolvers (carry balances and transact) of their profit from customers who carry balances and only 1% from consumers who pay their bills on time

Debit Cards have fees for the consumer (typically $0.35 / transaction - charged by the bank) and merchant (typically $0.12 / transaction charged by Interac). Credit Cards have fees only for the merchant (typically 2 - 3% of transaction value). Consumers would hence prefer using credit, while merchants prefer debit.

The use of general purpose reloadable cards has many hidden fees which can make these solutions expensive for transit users when compared to PRESTO. Also the GPR market is immature in Canada, and in the US regulatory issues are still being resolved

PRESTO and Open Payments

Evaluation payment systems must evaluate equivalent capital and operating costs and the

total cost of ownership. Typically a COTS solution may appear less expensive, but have

higher long term costs for operations and inevitable changes

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Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10Year 11Year 12Year 13Year 14Year 15Year 16Year 17Year 18Year 19Year 20

Illustrative

PRESTO’s PNG Approach

Full open payment system

There is higher Capital Cost for a self developed transit

payment system

Higher Ongoing costs make an outsourced transit system more

expensive in the future

Total Cost of Ownership

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