7/27/2019 SmartCard ticketing_FINAL.pdf
1/16
July 2010
Tourism & Transport Forum (TTF)
Position Paper
Smartcard ticketing
on public transport
7/27/2019 SmartCard ticketing_FINAL.pdf
2/16
Tourism&
Transport
Forum
(TTF)
is
anational,MemberfundedCEOforum,
advocatingthepublicpolicyinterestsofthe
200mostprestigiouscorporationsand
institutionsintheAustraliantourism,
transport,aviation&investmentsectors.
FORFURTHERINFORMATIONPLEASECONTACT:
CAROLINEWILKIE
NATIONALMANAGER,AVIATION&TRANSPORT
TOURISM&TRANSPORTFORUM(TTF)
P|0292402000
www.ttf.org.au
CONTENTS
OVERVIEW 2
SMARTCARDTECHNOLOGY 3
ADVANTAGESOFSMARTCARDTICKETING 3
CHALLENGESFORIMPLEMENTATION 6
SMARTCARDTICKETING
IN
AUSTRALIA
8
SMARTCARDTICKETINGINTERNATIONALLY 10
INNOVATIONINSMARTCARDTECHNOLOGY 12
LOOKINGAHEAD 14
CONCLUDINGREMARKS 14
7/27/2019 SmartCard ticketing_FINAL.pdf
3/16
2
In short:1. Smartcard ticketing provides convenience for commuters and
efficiencygainsfortransportserviceproviders.
2.
Smartcardsystems
have
been
introduced
in
Australian
cities
with
varying
degreesofsuccess.
3. International experience suggests that successful implementation may
takemanyyears,anddifficultiesarecommonplace.
4. Overall, the benefits of smartcard ticketing overwhelmingly
outweighthecostsandchallengesthatmayariseinimplementation.
Overview
Smartcard technology is being implemented around the world as a substitute for cash
transactions in various capacities. When applied to public transport fare collection,
smartcardseliminatetheneedforcommuterstoqueueforticketsandreducetheburdenon
transportproviderstoprocessfaretransactions.
In recent years, benefits such as decreased travel times and general convenience to
commutershave
driven
ashift
towards
smartcard
ticketing
systems
on
public
transport
systemsinAustraliaandaroundtheworld.
As well as providing more efficient transport services to commuters, smartcard ticketing
systemsenableserviceprovidersandtransitauthoritiestocollectcomprehensivedataonthe
travelbehaviourofcommuters.With this informationathandserviceprovidersareable to
catertotheneedsofcommuters,andallocateresourcesmoreefficiently.
In spite of thesebenefits,experiencehas shown smartcard ticketing systems are prone to
earlyimplementationproblems,ascommutersadapttothenewtechnology,anditistailored
tomeet
the
needs
of
unique
transport
systems.
While
it
is
widely
regarded
as
abest
practice
smartcard operation, Londons Oyster Card has also experienced such difficulties, and its
success is mostly attributable to the long term perseverance of transport authorities in
recognitionofthebroaderbenefitsitcanprovide.
These issues notwithstanding, TTF believes that the benefits of smartcard ticketing for
transportoperatorsandcommuters faroutweigh thecostsof thepotentialchallenges that
mayarise.
7/27/2019 SmartCard ticketing_FINAL.pdf
4/16
3
Smartcard technology
The smartcard is the technological successor to the magnetic stripe card. Smartcards are
typicallythesizeofacreditcard,andcontainamicrochipthatstoresandtransmitsdatausing
radio frequency identification (RFID), enabling it to communicatewith a devicewithin ten
centimetres of the card without physical contact. Smartcards are able to store enough
informationto
process
monetary
transactions
and
profile
acard
holders
details
for
security
purposes.
Smartcard technology is being used increasingly to perform the functions of credit cards,
security passes and, as this paper examines in detail, public transport tickets. Smartcard
ticketingiswellestablishedasthestandardbestpracticeinpublictransportticketing,andits
emergenceisindicativeofabroadertransitiontowardsacashlessglobaleconomy.
There are two categoriesof smartcards that canbeused forpublic transport ticketing a
singlepurposetransitpassandanelectronicpurse (epurse)cardwithmultipleapplications
beyondfare
payment,
such
as
small
retail
transactions
and
personal
identification.
Both
involveaprepaidaccountmanagedbythecardholder.
Recent innovations in smartcard technology have concentrated on developing epurse
applications to enhance the appeal and accessibility of smartcard ticketing to infrequent
commutersortourists.Thesearediscussedinmoredetaillaterinthepaper.
Advantages of smartcard ticketing
Convenience for commuters
Smartcardticketingsystemsenablecommuterstocarryonedurablecardforuseonalltransit
modes.Asinglemultipurposeticketmakesusingmultipletransportmodesmuchsimplerand
less time consuming. In turn, this facilitates the multimodal travel behaviour that is
encouragedbyoperatorsandtransportplanners. Inthisregard,smartcardticketingfacilitates
agenuinelyseamlessmultimodaltransportsystem.
Optionstoautomaticallytopupaprepaidaccountviadirectdebitorcreditpaymentsimilar
toetollingsystemsfortollroadsallowcommuterstopayfareswithouteverhavingtomake
facetofacetransactions.Thisreducesthetimespentcommutingascardholdersareableto
topup
their
account
balance
at
atime
that
is
most
convenient
to
them.
Consequently,
the
possibilityofmissingapublictransportservicewhilstqueuingforaticketiseliminated.
Payasyougo(PAYG)featuresalsoensurethatcommutersgetexactlywhattheypayfor,as
thecardisswipedatthestartandendofeveryjourney.Typically,commutersareguaranteed
the lowest possible fareswhen using a smartcard,which provides a considerable financial
incentiveforcommuterstotakeupsmartcardsandtousethemproperly.
With lessneed to carry cash, commutersusing smartcards canalsoenjoygreaterpersonal
security.Intheeventofacardbeinglostorstolen,accountscanbecancelledandanewcard
issued,
as
would
be
the
case
with
a
bank
card
or
credit
card.
By
the
same
measure,
cashless
transactionsbenefittransportagencies,asthesecurityrisktodriversandothercashhandling
employeesissignificantlyreduced.
7/27/2019 SmartCard ticketing_FINAL.pdf
5/16
4
"A go card can cut a passenger's
boardingtimefromabout11seconds
tothreeandthattranslatestoatime
savingofup to sevenminutesonan
average bus service." Queensland
Transport Minister Rachel Nolan
23/12/2009
Increased service efficiency
Atypicalsmartcardtransactiontakesjust150millisecondstocomplete,1andwithdriversand
other public transport employees no longer required to collect money and issue tickets,
smartcard ticketing systems deliver significant savings in boarding times. For example, in
London,asaresultof98percentofbuscommutersnowusingOysterCards,boardingrates
haveincreasedfrom10to40passengersperminute,substantiallycuttingtriptimes.2
The reduced boarding times for commuters
frees up capacity for operators to increase
service frequency, enhancing the utility of
transport assets both rolling stock and road
and rail infrastructure. Service providers also
stand to save considerably on operating costs
associated with fare collection and issuing
tickets.
Serviceefficiency
is
also
enhanced
by
savings
in
the
cost
of
maintaining
smartcard
systems,
relative to its technological predecessor.On average,magnetic stripe card readers require
servicingafterevery20,000cardsprocessed,whichcouldbeasfrequentasonceaweekfor
busier terminals.With complexmechanical parts required to process and oftenprintonto
cards,themaintenanceratio3ofthisoldertechnologyisaround12to15percent,compared
withjusteightpercentforsmartcardtechnology.4Moreover,theoneoffcostofdistributing
durableplasticcards issoonoffsetbythesavings(botheconomicandenvironmental) inthe
costassociatedwithprintingandissuingdisposablepaperorcardboardtickets.
Travel data collection
Traditionally, thedataused to inform transportpolicyand theplanningofserviceprovision
hasbeengathered fromsourcessuchasannual travelsurveysorABSdatadeveloped from
thecensus,conductedeveryfiveyears.Censusdataencompassesmostofthepopulation,but
onlycoversjourneystoworkona fiveyearlybasis.Annualtravelsurveysaremorespecific,
butare taken fromavery limitedsample.Forexample, theannualhousehold travelsurvey
conducted by Transport NSW samples approximately 8,500 people in 3,500 households.5
Whilethisinformationisusefultoanextent,itincursasignificantinformationlag.
Smartcardtechnologyiscapableofstoringandtransmittingmuchmoreinformationthanthe
magnetic stripe card, openingupnewpossibilities for transport agencies to collectprecise
dataonthetravelpatternsofindividuals.Thisenablesbetterplanningfortheentirenetwork.
Evenasmallpercentageofsmartcardusecanyieldsuperiordatafortransportoperatorsthan
thelimitedsampleandscopeofthetraditionaldatasourcesoutlinedabove.Forexample,in
Perthapproximately70percentofcommutersusetheSmartRiderticketingsystem6allowing
transportagencies tomapkeyperformance indicators,patronage,and travelpatternswith
1GlobalMassTransitReport:ContactlessSmartTicketing:Awinwindealforallstakeholders,November12009.Retrieved4/5/2010from:
http://www.globalmasstransit.net/archive.php?id=12912TheFinancialReview,1/4/2010:AnOystermaybejusttheticketforpublictransport.
3Percentageoftotalannualcapitalinvestmentcostrequiredformaintenance.
4International
Association
of
Public
Transport
(UITP),
Core
Brief:
Contactless
Ticketing,
March
2001.
Retrieved
7/4/2010
from:
www.uitp.org/mos/corebrief/CBrief%20Billeterieen.pdf5TransportNSW:HouseholdTravelSurveyData.Retrieved4/5/2010from:http://www.transport.nsw.gov.au/tdc/housesurvey.html
6PublicTransportAuthorityofWesternAustralia:AnnualReport20082009,p20.
7/27/2019 SmartCard ticketing_FINAL.pdf
6/16
5
greater accuracy than their counterparts inSydneywere traveldata isgatheredadhocby
eachoperatororthroughtheHouseholdTravelSurvey.
Through the analysis of this information, transport agencies are able to respond more
effectivelytofluctuationsindemandatdifferenttimesindifferentareas.Thetaskofplanning
publictransportservicesisthereforesimplifiedandsubsequently,theintegrationofservices
particularlyatmodalinterchangesgivesrisetoamoreefficientnetwork.Theabilitytoplan
service provision around such comprehensive travel data is one of the most empoweringbenefitsofsmartcardticketingfortransportagencies,asitenablesthemtotailorservicesto
thespecificneedsofdifferentmarkets.
Demand Management
Governmentspredominantlyaim topromotepublic transportpatronageby investing in the
supplyofnewinfrastructureandrollingstock.Implementingsmartcardticketing,ontheother
hand, presents an opportunity for governments to significantly influence the demand for
public transport.With access to comprehensive traveldata on thedemand side, transport
operatorsare
able
to
develop
and
improve
ticketing
as
aconsumer
product.
This
may
include
offeringdiscountsontraveltoandfromcertainareasatvarioustimestostimulatethespread
of demand across a network, maximising its revenue earning potential and encouraging
increasedpatronageinoffpeakperiods.
Individuals can also be offered discounts as an incentive for frequent travel, encouraging
more people to use public transport and rewarding sustainable transport choices. For
example,SouthEastQueenslandsgocardoffersa50percentdiscountforcommuterswho
usetheircardmorethantentimesinaweek,anda10percentdiscountforuseinoffpeak
periods.Airlinesandpetrolretailersarewellaheadofpublictransportprovidersintheareaof
customerloyalty
incentive
schemes,
and
provide
examples
of
the
potential
for
such
schemes
todrivedemandforaparticularproductinthiscase,publictransport.
Deterring fare evasion
Recordeddataontravelpatternsandcardusealsomeansauthoritiesarebetterequippedto
detect and deter fare evasion. Data that reveals each instance in which a smartcard is
registeredata farecollectionpointcanbeused to identify individualswithpatternsofuse
that suggest deliberate and sustained fare evasion. With the requirement for smartcard
holderstoregistertheirpersonaldetails,thetaskofprosecutingserialfareevaders ismade
considerablyeasier.Similarly,thedispatchoftransitinspectorscanbetargetedatareaswith
higher incidence of illegal or irregular card use, thus allowing for more efficient use of
resourcesinthisarea.
Expanding the use of smartcard payments
Further to thesuccessful implementationofsmartcardpayments forpublic transport fares,
andaspartofabroadermovementtowardsacashlesseconomy,theuseofsmartcardscan
be extended to other areas of the transport market such as car parking. As well as
incorporatingmeteredparking,Perths SmartRider system isusedasanexclusivepayment
method forselectedparkandride facilities.Expandingtheuseofsmartcards inthis fashion
ensuresthese
facilities
are
used
for
their
intended
purpose,
hence
encouraging
more
people
tousepublictransportinsteadofprivatevehicles.HongKongsOctopuscardexemplifiesthe
7/27/2019 SmartCard ticketing_FINAL.pdf
7/16
6
extent towhich the use of transport smartcards can be expanded to incorporate cashless
transactionsfortaxifaresandevenretailpurchases.
Challenges for implementation
Commuter behaviourSmartcard technology demands an element of public compliance to ensure successful
implementation. As such, smartcard ticketing systems are is prone to encountering early
implementationproblemsascommutersarerequiredtochangetheireverydaybehaviour in
orderforthesystemtosucceed.
For smartcard technology towork on transitmodes such as bus and light rail, commuters
mustswipeonwhenboarding,andoffwhenalightingthevehicle.Thiscancauseproblemsif
commutersforgettoswipeoff,andthepotentialarisesforpenaltyfarestobeissuedincases
of genuine human error. Melbournes Myki system imposes a default fare equal to the
maximumfare
applicable
for
the
zone
in
which
aservice
operates7
when
commuters
fail
to
touchoff.
Similarly,SouthEastQueenslandsgocardhasastandarddefaultfare($3forbus/ferryand$5
forrail)acrossthe23zonesitincorporates,butistypicallyhigherthantheaveragefareona
particularservice.Asisthecaseinmanysmartcardticketingsystems,themonetaryincentive
of guaranteeing a lower fare for successfully swiping off is the most effective means of
encouragingtherequiredbehaviouralshift.
Alternatively,asshowninLondon,thischallengecanbeovercomebychargingaflatfarerate
toall
commuters
on
particular
services,
thus
requiring
them
only
to
swipe
on.
Nonetheless,
to
minimise instancesofhumanerror, implementation strategiesmust includecomprehensive
educationalcampaignstoensurethatthetransactionprocessisunderstoodandcomplianceis
madeassimpleaspossible.
Technical faults
Just as smartcard systems on some transport modes are prone to problems arising from
human error, the technology itself is also susceptible to faults, as is the case with any
machinery. Anyminorglitchinthesoftwareorhardwarecancauseinaworstcasescenario
asystem
wide
break
down,
resulting
in
disrupted
services
and
fares
not
being
collected.
In2007,itwasfoundthatafaultintheElectronicPaymentSystems(EPS)8topupservicefor
Hong Kongs Octopus system had affected around 15,270 transactions dating back seven
years, costing commutersmore thanHK$3.7million.An independent report conducted by
PricewaterhouseCoopers found thatonly about0.06per centof EPS transactionsbetween
2000and2007hadbeenaffected,howeverfullrefundswereissued,andEPStopupservices
werediscontinuedduetotheinabilitytoguaranteesimilaroccurrencesinthefuture.9
7Mykidefaultfaresasat14/4/2010indicatethatafullfarecustomerwhofailstorepeatedlytouchoffandtravelsacrosszone1&2willnever
paymore
than
$9.92
on
aweekday
or
$3.00
on
aweekend
or
apublic
holiday.
8EPSisatransactionserviceinHongKongthatiscomparabletoEFTPOS.
9OctopusCardsLimited,pressrelease,27/7/2007:IndependentReviewofFailedOctopusEPSAddValueTransactionsCompleted,Octopusto
CarryOutImmediateReturnofPastUnclaimedFunds.
7/27/2019 SmartCard ticketing_FINAL.pdf
8/16
7
Asthisexampleshows,teethingproblemsinimplementingsmartcardsystemscanoccur,and
areoftenimpossibletopreventaseachnewsysteminvolvesuniqueengineeringandsoftware
development.
Security and privacy
Whilethe
ability
to
track
travel
behaviour
will
enable
transport
providers
to
optimise
services,
therearesomeconcernsoverintrusionstotheprivacyofcitizens.Inalmosteveryjurisdiction
wheresmartcardticketinghasbeenimplemented,policeandintelligenceagenciesareableto
accesstravelinformationonsmartcardsfortheinvestigationorpreventionofcrime.IntheUK,
policemakeover3,000requestsperyearfortravelinformationfromTransportforLondon.10
Whetherthis isbeneficialorintrusiveisamatterofopinion.Thepotentialforimprovingthe
detectionandinvestigationofcriminalactivityinvariablyinvolvesatradeoffintheprivacyof
citizens,andhaslongbeenthesubjectofconcernsraisedintheAustralianandBritishmedia.
Complexity of transport networks
Acommonproblem in the implementationof integratedsmartcard ticketingsystemsarises
from the need to encompass every fare rate possible for every service provider across an
entire network. One of the reasons for the failure of Sydneys TCard system was the
requirementforittoincorporateover500faretypesonallmodes.
While rationalising fare structuresmay simplify the implementation of smartcard systems,
international experience shows that it is not absolutely necessary, and fare structure has
certainlynotproven tobe thestumblingblockelsewhereas itwas inSydney.Forexample,
the
functionality
provided
by
Seouls
T
Money
smartcard
allowed
transport
operators
to
phaseoutzonalfaresandreintroducedistancebasedfares.Furthermore,thePAYGfunction
oftheLondonOystercardincorporatesupto5milliondifferentautomaticfarecalculations.11
Thelogisticandgeographiccharacteristicsofparticulartransportnetworkscanhindertheroll
out of smartcard ticketing. In Melbourne, problems have been encountered maintaining
remotecommunicationwithMyki facilitiesoncitytrams,whichhavebeenattributedtotall
city buildings and the heavy steel construction of the trams themselves.12
Similarly, the
geographicalsizeoftheTransLinknetwork inSouthEastQueenslandoneofthe largest in
theworldalsopresentsunique challenges to thenetworkof500 retailers reliedupon to
managethedistributionofgocardsforuseacrossanareaof10,000squarekilometres.
Everynetworkhasarangeofuniquecharacteristics,andassuch there isnooff theshelf
systemthatcaneasilybetransferredfromonenetworktoanother.Therealityforestablished,
olderpublictransportnetworkssuchasthose inSydneyandMelbourne isthatadopting
newticketingtechnology,inspiteofthesignificantbenefitsitmaybring,islikelytoencounter
teethingproblemsasnewsoftwareandhardwaremustbedevelopedtomeettheneedsof
eachcitystransportnetwork.
10TheAge,19/11/2009:Mykitrackingdevicewarning.Retrieved30/3/2010from:http://www.theage.com.au/national/mykitrackingdevice
warning20091118
imlj.html
11TransportforLondon,pressrelease,23/11/2009:OneticketforLondonasOysterisationofrailandriverconfirmed.Retrieved16/6/2010
from:http://www.tfl.gov.uk/corporate/media/newscentre/archive/13688.aspx12
TheAge,9/11/2010:Stillsmarting,Retrieved31/3/2010from:http://www.theage.com.au/national/stillsmarting20091106i0ew.html
7/27/2019 SmartCard ticketing_FINAL.pdf
9/16
8
Smartcard ticketing in AustraliaLaunch Contractor Cost
Compatible
modesTakeup
WesternAustralia:
SmartRider
April2007Downer
EDI
Limited$35m
Train,bus,ferry
andmetered
parkingin
Perth.
Busservicesin
Geraldtonand
Busselton.
230,800
cardsin
use.71%ofall
public
transport
trips.
Queensland:
gocard
January
2008
Cubic
Corporation
$200mfora
minimum10
yearperiod
TransLinktrain,
busandferry
servicesand
BrisbaneAirport
Airtrain.
750,000
cardsin
use.60%of
allpublic
transport
trips.
Victoria:Myki
December
2008Kamco
$1.3bover
tenyears
Metropolitan
trainsand
regionalbuses.
Completestate
widerollouton
allmodes
expectedinlate
2010.
Tasmania:
Greencard
September
2009 INIT
(design
only) $6m Bus
ACT:MyWay
Late2010
(expected)
DownerEDI
Limited$8m Bus
NewSouthWales
2012
(expected)
Pearl
Consortium
(Cubic,Downer
EDI,Cwealth
Bank)
$1.2bover
fifteenyears
AllNSWtrains,
busesandferries
coveredby
the
MyZonefare
structure.
SouthAustralia
2013
(expected)
Affiliated
Computer
Services(ACS)
$30mAdelaidebuses,
trainsandtrams.
7/27/2019 SmartCard ticketing_FINAL.pdf
10/16
9
Western Australia: SmartRider
IntroducedtothepublicinApril2007,TransperthsSmartRiderwasAustraliasfirstsmartcard
ticketingsystem.SmartRiderisusedtopayfortrain,bus,ferryandmeteredparkinginPerth,
as well as bus services in the regional centres of Geraldton and Busselton. Transperth
overseestheoperationofSmartRider,whichwas implementedbyDownerEDILimited,ata
costof$35million.In2010therearemorethan230,800SmartRidercardsincirculationwhich
areused
to
pay
for
approximately
71
per
cent
of
all
public
transport
trips
on
Transperth
services.
Queensland: go card
Used on South East Queenslands public transport network, the go card was launched in
January2008.ThegocardwasdeliveredbytheCubicCorporation,underacontractwiththe
QueenslandGovernmentworthapproximately$200millionoveraminimum10yearperiod.It
canbeusedacrossallTransLinknetworktrain,busandferryservicesaswellastheprivately
ownedAirtraintoBrisbaneAirport.Therolloutofgocardswascarriedoutinregionalstages
over
a
five
month
period
with
discounted
fares
of
20
to
25
per
cent
offered
from
August
2008.
InJanuary2010,thegocard farebecamethebase fare forcalculatingallother faresacross
the TransLink network go card fares were set at 2007 levels,making them 30 per cent
cheaper thanpaper ticket fares.Thisboostedgocarduse from30 to60percentbetween
January andMarch2010. Inaddition400,000 free go cards, loadedwith$10 creditwillbe
distributed in 2010, which is expected to further increase the use of go card, as the
QueenslandGovernmentaimstophaseoutpaperticketinginthenearfuture.
Victoria: Myki
In June 2003, the Victorian government established the Transport Ticketing Authority to
procureand
manage
anew
integrated
smartcard
ticket
to
replace
the
Metcard
and
V/Line
systemsinmetropolitanMelbourneandregionalVictoria.InJuly2005atenyear$494million
contractwasawardedtoKamcotodeliverMykiwhichwasgradually introducedtoregional
and suburban bus services from December 2008, following a lengthy trial period. From
December 2009, Myki was rolled out across metropolitan train services, and trials on
Melbournestramsandbusesareongoing.Aseriesofteethingproblemsattributablemainly
totheuniquelogisticalchallengesofMelbournestransportnetworkposedadditionalcosts
nowestimatedat$1.3billionoverthetermofthecontractanddelayedthecompleteroll
outofMykionalltramandbusservices.Mykiwillbethefirstsmartcardticketingsystem in
Australiatocoverallpublictransportmodesacrossanentirestate.
Tasmania: Greencard
TasmaniasGreencardwas launched inSeptember2009,andwasdesignedbyGerman firm
INIT.AstheMetronetworkcomprisesonly221buses,therolloutofsmartcardtechnologyin
Tasmania was relatively simple, costing approximately $6 million.13
One of the keys to its
success has been theGreencard systems ability to charge correct fareswithout requiring
patronstoswipeoffattheirdestination,afeaturethatisenabledbyasmallnetworkwitha
simplefarestructure.
13TheAge,9/11/2009:Stillsmarting.Retrieved31/3/2010from:http://www.theage.com.au/national/stillsmarting20091106i0ew.html
7/27/2019 SmartCard ticketing_FINAL.pdf
11/16
10
ACT: MyWay
TheACTgovernmentaims tohavesmartcard ticketingsystem rolledoutonCanberrasbus
networkbytheendof2010,withtrialstobegininAugust.The$8millionMyWaysystemwill
be modelled on Perths SmartRider system and will also be implemented by Downer EDI
Limited.14
Like Tasmanias Greencard, the simplicity and single mode (bus) of the ACTs
transportnetworkmakestherolloutofsmartcardticketing intheACTrelativelysimpleand
considerablycheaper
than
may
be
the
case
in
larger
cities
with
multiple
modes
in
operation.
New South Wales
TheNSWgovernmentannouncedplanstocreatewhatwas tobeAustralias firstsmartcard
ticketingsystemin1996,withtheTCardsystemplannedtobefullyoperationalbythe2000
Olympics. A dispute arising from the tendering process delayed the development of the
system until 2002, and a series of problems during the development and trial stages
culminated intheterminationofthecontractbetweentheNSWgovernmentandcontractor
ERGinJanuary2008.Thefailedprojecthascostthegovernmentapproximately$100million15
whichcould
be
more,
pending
the
outcome
of
legal
proceedings
that
continue
to
this
day.
FollowingtheabandonmentoftheTCardsystem,theNSWgovernmenthasrecommittedto
smartcard ticketing,withanewprocurementcontractworth$1.2billionover fifteenyears
awarded to the Pearl Consortium consisting of Cubic Corporation, Downer EDI and the
Commonwealth Bank. The establishment of Transport NSW and the MyZone fare
rationalisationprovides thenecessaryconditions for the fully integratedsmartcard ticketing
tobe implementedsuccessfully.Therolloutofthenewsystem isexpectedtocommence in
2012.
South AustraliaInFebruary2010,TheSouthAustraliangovernmentissueda$30millioncontracttoAffiliated
ComputerServices(ACS)tosupplyitsATLASsmartcardticketingsystemforuseonAdelaides
buses, trains and trams.16
ACS is the current operator of Adelaides Crouzet automated
ticketingsystem,andhasexperienceoperatingtheATLASsmartcardsystem incitiessuchas
Montreal,HoustonandToulouse.17
Thesystemwillbe inplace in2013,coincidingwith the
completionofrailupgradeprojectsthatarecurrentlyunderway.
Smartcard ticketing internationally
Hong Kong: Octopus
TheOctopuscard isusedby95per centofpeople inHongKong
aged between16 and 6518
and is regarded as oneof theworlds
most successfulandadvanced smartcard systems foruse inmass
transit. In addition to fare payments for bus, taxi, subway, train,
tram,andferryservicesinHongKong,Octopushasbeenexpanded
14ACTGovernmentMediaRelease:RolloutofACTION'sSmartcardtechnologybegins,28/4/2010.
15NSWParliament,Hansardtranscript:30/3/2010,5:04pm.
16Government
of
South
Australia,
News
release,
8/2/2010:
Smartcard
The
next
big
ticket
item
for
public
transport.
17Ibid.
18OctopusCorporateProfile:ServicesinHongKong.Retrieved7/4/2010from:http://www.octopus.com.hk/aboutus/corporate
profile/servicesinhongkong/en/index.html
7/27/2019 SmartCard ticketing_FINAL.pdf
12/16
11
for use on smallvalue payments in the retail sector, access control for residential and
commercial buildings and support for various facilities in schools.19
Every day, more than
$HK100millionworthoftransactionsaremadeusingOctopuscards,andaround2.3million
peoplehave registered for theOctopus rewards scheme,20
which is similar to retail reward
schemes such as Flybuys, but built into the one card. Octopus Cards Limited has also
integratedcompatiblesmartchipsintowatches,keyringsandmobilephonecovers.
Chicago: Chicago Card
The Chicago Transit Authority (CTA) launched the Chicago Card
system in 2002. The system is operated by Cubic Corporation,
whichalso installedandoperated thecityspredecessormagnetic
stripe ticketing system.CTA issuesboth storedvalueandaccount
basedcards.InJuly2006,increasesincashfarespromptedasurge
in demand for the cards, over 700,000 ofwhich are currently in
circulation.CTAhasannouncedplanstophaseouttheChicagoCard inthenearfuture,with
farepaymentstobemadewithcontactlesscreditcards,debitcardsandprepaidcardsissued
bybanks
and
other
external
financial
service
providers.
The
transition
to
next
generation
fare
paymentsissettocommenceinmid2010.21
Singapore: EZ-Link
The Singapore Land Transport Authority (LTA) launched the EZ
Linksmartcardsystem in2002,andhas issued10millionEZLink
cards since. Every day approximately 8 million transactions are
made on the system,22
primarily for public transport fares. An
importantcharacteristicoftheEZLinkcard isthat,since2008, it
has
been
designed
under
a
unique
standard
for
contactless
payment technology in Singapore, in accordance with a conscious transition towards a
cashlesssociety.Consequently,thecardsarethickerandmoredurablewhichallowsthemto
performadditionalfunctionssuchasetollingforprivatecars.23
Case study: Londons Oyster Card
LondonsOystercardwas first issuedtothepublic inJuly2003, followingtrialsandproduct
developmentdatingbackto1998.Atfirst,Oysterhadlimitedfeaturesandfunctionsbutthis
hasgraduallyexpandedandcontinuestodoso.By2010,anestimated28millionOystershad
beendistributed,witharoundsevenmillioncardsinregularusetopayformorethan80per
centof
daily
trips
on
Transport
for
London
(TfL)
services.
In
2009,
more
than
three
billion
passengerjourneyswerepaidforusingOystercards.24
Oyster is valid to use on all public transport modes across London including London
Underground,buses,theDocklandsLightRailway(DLR),LondonOverground,trams,Thames
RiverferriesandmostNationalRailserviceswithinLondonfarezones.
19Ibid.
20Ibid.
21ChicagoTransitAuthority,8/12/2009:CTAOutlinesNextGenerationFareCollectionProject.Retrieved19/5/2010from:
http://www.transitchicago.com/news/default.aspx?ArticleId=243122
EZ
Link
Corporate
Information:
Company
Profile.
Retrieved
9/6/2010
from:
http://www.ezlink.com.sg/corporate/corp_companyprofile.jsp
23Ibid.
24TransportforLondon,23/11/2009:OneticketforLondonasOysterisationofrailandriverconfirmed,mediabriefingnote.Retrieved
7/4/2010from:http://www.tfl.gov.uk/corporate/media/newscentre/archive/13688.aspx
7/27/2019 SmartCard ticketing_FINAL.pdf
13/16
12
While theOystercard isoneof theworld'smostrenownedsmartcard ticketingsystems, its
implementation has been fraught with technical problems25
and ongoing costs26
that have
posedseriouschallengestoTfLandTranSystheconsortiumresponsibleforestablishingand
operatingtheOystersystem.
In2008TfLusedabreakconditioninitscontractwith
Transysandsubsequentlyissuedarevisedcontracttothe consortium. Under the new arrangement, TfL
gainedownershipof theOysterbrandbypayingout
Transys financiers,and in theprocess saved around
4million in interestpayments.27
The initial contract
worth 100 million per year over 17 years was
replacedwitha three yearcontract,which is said to
deliver considerable public savings in addition to
allowingforcompetitioninthetenderforfuturecontracts.
Boththe
renegotiated
contract
and
the
existence
of
abreak
condition
in
the
original
contract
representprudentadministrationand longtermplanningonthepartofTfL.Whenthenew
contract comes into effect in August 2010, the capitalintensive period of implementing
Oysterwillbelargelycompleted.TfLhasindicatedthatfutureexpansionoftheOystersystem
willbefocussedondeveloping its interoperabilityandepurseapplications,28
involvingmore
privatesectorinnovationratherthanheavyinvestmentinnewinfrastructure.
ThesuccessofOystershouldbeasourceofencouragement forotherjurisdictions thatare
currently implementing smartcard ticketing systems. The complexity and size of the TfL
networkhasrequiredagradualandstrategicapproachtotherolloutofOysteroverthelast
sevenyears,
which
has
not
been
without
controversy
or
criticism.
The
perseverance
of
TfL
in
implementingOyster, inspiteof thesedifficulties, istestamentto thebroaderbenefitsthat
smartcardticketingcanprovide.
Innovation in smartcard technology
Asmentionedpreviously, theemergenceof smartcard ticketing is symptomaticofa global
trend toward cashless transactions.Driving this shift,major credit card companies such as
VisaandMasterCardareembedding smartchips incards thatenable them toperform the
functionsofapublictransportticketaswellasregularfunctions.Thisconcepthasalsobeen
extended tomobilephone technology,with theavailabilityofapplications forsmartphones
thatenablethephoneitselftoperformticketingandcardpaymentfunctions.
Credit card products
Smartchipsarenowastandard feature inmostnewcreditcardsand inmanypartsof the
world,transportagenciesandthefinancialsectorareworkingoncompatiblepaymentmedia
25TheDailyMail,14/7/2008:ThousandsofpassengerstravelfreeasOystercardsuffersmasssystemfailure.Retrieved30/3/2010from:
http://www.dailymail.co.uk/news/article1034844/ThousandspassengerstravelfreeOystercardsuffersmassfailure.html#ixzz0jcmTISkI26
BBCNews,10/3/2005:'50,000lost'inOysterfailure.Retrieved30/3/2010from:
http://news.bbc.co.uk/2/hi/uk_news/england/london/4335291.stm27
TransportforLondon,12/4/2010:TfLsecuresownershipandcontrolofOysterbrandandticketingsystem.Retrieved19/4/2010from:
http://www.tfl.gov.uk/corporate/media/newscentre/15260.aspx28
Ibid.
7/27/2019 SmartCard ticketing_FINAL.pdf
14/16
13
to complement and even replace single purpose smartcard tickets. Visas PayWave and
MasterCards PayPass are alreadyprominent in small retail paymentsworldwide and have
beenadaptedforpublictransportuseinmanycitiesincludingLosAngeles,Paris29
andRiode
Janeiro.30
PayPass payment systems for taxis have been particularly successful inUS cities
including Philadelphia, Las Vegas and New York City where approximately 28% of total
PayPassuseoccursintaxis.31
Thedistributionoftheseproductspresentsopportunitiesforbanksandotherfinancesectorplayers to become involved in transport ticketing. For example in theUK, Barclaycard has
recently releasedOnePulse, aVisa credit cardwhich doubles as anOyster card and offers
customers a 5 per cent cashback incentive for spending onOyster fares.32
InHong Kong,
CitibankhasdevelopedanOctopusenabledVisacreditcard,offering incentivessuchaszero
annualfees.33
Thedevelopmentof integratedepursepayments forpublic transport faresandsmallvalue
purchasesraisesopportunitiesfornewrevenuestreamsforretailers,thefinancialsectorand
transport serviceproviders.34
Employing thepayment systemsexpertiseof financial service
providersdelivers
cost
savings
to
all
stakeholders,
enabling
transport
agencies
to
focus
more
resourceson serviceprovision.With theCommonwealthBankbeingapartner to theNSW
smartcardcontract,TTFanticipatesthenewsystemand itsuserswillbewellplacedtotake
fulladvantageofthesebenefits.
Mobile phone applications
The use ofmobile phones for public transport ticketing is already prevalent in Japan and
SouthKorea.Phoneswithinbuiltnearfieldcommunication(NFC)chipshavebeenavailablein
thesemarkets forsome timenowwhich,withsupportingapplications,arecompatiblewith
mostsmartcard
hardware
systems.
In
effect,
the
phone
replaces
the
card
in
the
contactless
transactionandalsoprovidesadigitalinterfacefromwhichausercanmanagetheiraccount.
The use of mobile phones in this capacity will ultimately reduce supply chain costs and
increase convenience for commuters. Importantly, this technology brings further private
sectorexpertiseand innovation intothetransportticketingmarket,reducingtheburdenon
transport agencies to issue tickets and manage transactions and accounts. To date, this
technology has been most successful in countries (such as Japan) where credit card
penetration is relatively low.Ultimately, TTF believes the involvement of the financial and
mobile communications sectors in transport ticketing will yield considerable benefits to
transportoperators
and
commuters.
29VisaMediaCentre,4/11/2008:VisatoimprovepaymentexperienceforcommutersinLosAngelesandParis.Retrieved7/4/2010from:
http://corporate.visa.com/mediacenter/pressreleases/press871.jsp30
MasterCardNewsCentre,4/11/2009:MasterCardPayPassforPublicTransportation ArrivesinRiodeJaneiro,FirstinLatinAmerica.
Retrieved7/4/2010from:http://www.mastercard.com/us/company/en/newsroom/brazil_paypass_press_release.html31
MasterCardTransactionData,2009.32
BarclaycardOnePulse,cardinformation.Retrieved7/4/2010from:http://www.barclaycardonepulse.co.uk/cardDetail.html33
Octopus,
Hong
Kong:
Octopus
Citibank
Credit
Card.
Retrieved
9/6/2010
from:
http://www.octopus.com.hk/get
your
octopus/choose
your
octopus/bankissuedoctopus/citibank/en/index.html34
GlobalMassTransit,1/11/2009:ContactlessSmartTicketing:Awinwindealforallstakeholders.Retrieved21/4/2010from:
http://www.globalmasstransit.net/archive.php?id=1291
7/27/2019 SmartCard ticketing_FINAL.pdf
15/16
14
Looking ahead
Continualinnovationinsmartcardticketingsystemswillundoubtedlyincreasetheirappeal,as
consumersopt for the convenienceofusingone card formultipleapplications.Oneof the
majorbeneficiariesofthistechnologywillbeinternationaltouristswhopotentiallycoulduse
onecreditcardonpublictransportservicesindifferentcitiesaroundtheworld.
Smartcard technology is fast becoming a standard feature of the consumer experience in
moderncities, integrated intomostnewcreditcardsand takingonnoncard formssuchas
mobilephones.Astheexamplesinthispaper(andcountlessotherexamplesworldwide)show,
Australian cities are onlyjust catching upwith the rest of theworld in terms of ticketing
technology.Withmanyglobal citiesnowmoving towardsnextgenerationmultiapplication
cards,thetakeupandinnovationinAustraliassmartcardsystemsmustberapidifweareto
keeppacewiththerestoftheworld.
Withthisinmind,andgiventhelongimplementationprocessthatcanbeexpectedformore
complextransport
networks,
it
is
important
that
governments
seeking
to
introduce
smartcard
ticketingdonotadoptredundanttechnology.Bythesamemeasure,thepotentialforprivate
sector investment and alternative revenue streams to flow from interoperability and
integrationwiththecreditcardmarketalsowarrantsseriousconsiderationintheearlystages
ofimplementation.
Concluding remarks
Aswellassimplifyingfarepayments,thesmartcardscapacitytotrackandrecordtraveldata
hasthepotentialtorevolutionisepublictransportdelivery.Withvirtualrealtimeinformation
onthe
demand
side
of
the
transport
market,
service
providers
can
optimise
the
supply
of
services and fare prices to ensure optimum asset utilisation. TTF believes that innovations
suchassmartcardticketingareimperativetoprovidingmodern,efficientandappealingpublic
transportsystems.
Almost every smartcard ticketing system has encountered teething problems in the early
stagesofimplementation.Whileitisdesirabletominimisethepubliccostofimplementation,
theabsenceofaonesizefitsallticketingsystemmakesitdifficulttoanticipatetheextentof
theongoingcoststhatimplementationmayincur.
Aswas
the
case
with
Londons
Oyster
card,
phasing
in
smartcard
technology
is
very
much
a
long term process, and authorities should not be perturbed byminor difficulties thatmay
arise.Rather,contractarrangementsshouldbemadecarefullyandrevisedwherecostscanbe
saved,competitionpromoted,andinnovationexploited.
7/27/2019 SmartCard ticketing_FINAL.pdf
16/16
TOURISM&TRANSPORTFORUM(TTF)
8thFLOOR
810LOFTUSSTREET
SYDNEYNSW2000
T|+61
29240
2000
F|+61292402020
www.ttf.org.au