Burden Consulting

So you want to do a Smart Ticketing project!SOME THINGS TO THINK ABOUT

SARAJEVO, MAY 2016

Burden Consulting

AgendaIntroductionVision 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

Introduction

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

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)

Developing a Vision

Burden Consulting

There needs to be a clear vision as to what the system will achieveThe 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

Burden Consulting

Development of Vision for TfLCURRENT 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

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?

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

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

Non-Technical IssuesThe Business Case

Raising Finance

Fare Policy

Tender and Contracting Issues

Soft Skills

Burden Consulting

Business CaseMust 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

Burden Consulting

Raising FinanceVarious 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

Burden Consulting

Fare policy affects all aspects of a transit systemAdministration – 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

Burden Consulting

Tender and Contracting IssuesTender 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?

Burden Consulting

Soft skillsVery 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

Technical IssuesTicketing Technologies

Standards

Integration of Multiple Technologies

Move to Account Based Solutions

Burden Consulting

Ticketing technology has evolved significantly over the last 100 years

Paper Ticket

Smart Cards & Tokens

2D Barcodes

Cash

Magnetic Tickets

ContactlessPayment Cards

Public Service Cards & Other ID

NFC

Biometrics?

Metal Tokens

Mobile

Burden Consulting

There are two approaches to implementing a smart ticketing system

Card Based Account BasedClosed systems

Agency issues and manages own media, can be expensive

Proprietary systems and formats

Network of Add Value MachinesExternal re-valuing networksRequire 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

Burden Consulting

Operating a card scheme is expensive

41%

13%

32%

8%6%

0%

20%

40%

60%

80%

100%

Infrastructure &management

Revenueprotection

Product sales Customerinformation &

service

Smartcardproduction &distribution

100% = 14p per £ of fares collected

How much of this could be

eliminated?

Source: TfL Fares and Ticketing Directorate

Burden Consulting

There is a trend away from card based schemes to account based

Smar

tN

on-S

mar

t

AccountCard

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

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

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 DeutscherVerkehrsunternehmen

(VDV) is responsible for the development of the

standard for eTicketing inGermany

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/index.html

https://www.translink.nl/en-GB/Home

http://www.itso.org.uk/http://www.calypsonet-asso.org/http://www.vdv.de/en/index.htmlhttps://www.translink.nl/en-GB/Home

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

Smart Ticketing Systems

Technology Developments

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

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

Smart Ticketing

Lessons Learned

30

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

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

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)

Burden Consulting

There are several options available apart from transferring legacy systems to smart cards

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

Smart Ticketing

Summary & Conclusions

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

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

mailto:mike.burden@burdenconsulting.co.uk

So you want to do a Smart Ticketing project!AgendaIntroductionPublic transport faces several challengesBus and Rail regulation can vary from city to city and country to countryDeveloping a VisionThere needs to be a clear vision as to what the system will achieveDevelopment of Vision for TfLWhat problem are you needing to solve?Practical IssuesSo what do you need?Non-Technical IssuesBusiness CaseRaising FinanceFare policy affects all aspects of a transit systemTender and Contracting IssuesSoft skillsTechnical IssuesTicketing technology has evolved significantly over the last 100 yearsThere are two approaches to implementing a smart ticketing systemOperating a card scheme is expensiveThere is a trend away from card based schemes to account basedWhy do we need standards?Transport Smartcards are currently governed by the following International (ISO) and European (CEN) StandardsSummary of European Ticketing ApplicationsEvolution of standards as schemes move to account based ticketingSmart Ticketing SystemsWhat do Future Transit Readers look like?A lot of functionality moves to the Back OfficeSmart TicketingSmart card schemes are highly complexDistribution of fare products is evolving from a station centric approach to a mobile solution Sales and distribution are moving to lower cost models There are several options available apart from transferring legacy systems to smart cardsUser AcceptanceSmart TicketingTicketing projects are about more than technology, they are strongly influenced by their political and commercial environmentMike Burden | Director �Burden Consulting