London buses show us the way

[Dave Birch] The Mayor of London, Boris Johnson, has been talking about the next major revolution to come in London transit ticketing.

Public transport travellers will be able to swipe credit or debit cards in the same way as Oyster cards by 2012, Boris Johnson revealed. The Mayor said the phased scheme will start on buses in the run-up to the Olympics and then move on to the Tube. Prices will be the same as with Oyster. Mr Johnson has also pledged that a “next generation” Oyster card will be released by 2014.

[From Commuters will soon be able to use credit cards like Oyster by 2012 | News]

What this all means is that visitors to London — and, indeed, Londoners — will no longer need to get prepaid Oyster cards. They will be able to use their bank cards (such as, for example, the one of the ten million cards that Barclays has already issued with contactless interfaces) to tap-and-go their way around town.

Another option might be to use Oyster cards in shops. It does seem odd to me that when I’m on an Underground platform and dying of thirst, the Coke machine doesn’t take the one currency that every single person on the platform actually has: Oyster. In other regions, this is seen as being a natural development of widespread mass transit contactless systems. Taiwan is following Hong Kong and Singapore in allowing the transit e-purse to be extended out into retail.

The EasyCard, a contactless smartcard system for use on the Taipei MRT system, will soon become an electronic purse that can be used to purchase small-value items… The new payment system, which will allow up to NT$10,000 (US$312.50) to be stored in the card, will be put in place a year after the Legislative Yuan passed an amendment to the Act Governing the Issuance of Electronic Stored Value Cards that paved the way for the new payment vehicle.

[From Electronic purse expected to become operational in March – Taiwan News Online]

It’s clear that, as we all know, transit is the vanguard for electronic money and therefore it provides a unique opportunity to drive cashlessness. But that doesn’t necessarily mean that transport operators should get in to retail payments: the alternative path is to let retail payments systems operate in transport. This is the path that London has chosen, as noted above, and is true in many cities around the world. Transit operators see ticketing as not part of their core business, which is running public transport. If other people can provide the ticketing solution, then fine.

Toronto transit officials are not the only ones keen to get out of the business of collecting fares and phase out closed payment schemes. Their counterparts in London, New York, Chicago and some other cities are moving at varying speeds toward open-loop payment.

[From Canadian Transit Card Operator: Not So Fast to Open-Loop Payment | NFC Times – Near Field Communication and all contactless technology.]

There’s another reason, though, why I think that this trend is gathering momentum. It costs money to stay in the security arms race: the ticketing systems (especially as they move into the world of mobile phones) need to be sure that the activities of fraudsters do not impact revenue. When the transport operator has to spend money on continually upgrading and enhancing systems for revenue protection purposes, that’s money that could be better spent. It’s not always about counterfeiters and criminals, by the way, sometimes it’s just people gaming the system.

Determined token hoarders will have to buy their tokens one by one, at token vending machines, and that’s not the only step the Toronto transit bosses are taking to fight stockpiling. The Toronto Transit Commission (TTC) has now introduced adult paper tickets with an expiry date on them. “The TTC won this,” said Angela Leung, an Ontario College of Art and Design student who amassed over 100 tokens during the 2007 fare increase and had the same game plan for the new year.

[From Excalibur Web edition – Extinct bus tickets temporarily reappear to combat token hoarders]

If payment systems spend the money to develop fast, secure new payment mechanisms (using contactless cards, phones, stickers and who knows what else) then the transit operator doesn’t have to. This will be the sort of thing that will be discussed at the excellent Transport Ticketing 2011 conference in London on 25-27th Janaury 2011. I thought this was an excellent event back in January 2010 and so I was very happy to be invited to chair the panel on mobile devices at next year’s event.

In an act of unbridled charity, the wonderful people at Clarion have given me a two-day delegate pass for the conference — worth an amazing ONE THOUSAND THREE HUNDRED AND FORTY NINE POUNDS — to give away on this blog as a competition prize. So if you are going to be in London on those dates and you’d like to come along to meet some of the leaders in European transit sector, all you have to do is be the first person to respond to this post telling me which London bus route runs from Canada Water to Tottenham Court Road.

In the traditional fashion, this competition is open to all except for employees of Consult Hyperion and members of my immediate family, is void where prohibited and has been gritted for your safety. The prize must be claimed within three months. Oh, and no-one can win more than one of the Digital Money Blog prizes per calendar year.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]