[Dave Birch] Today is a rather special anniversary. A hundred years ago today, the London General Omnibus Company (LGOC, a precursor of London Transport) took the last horse-drawn bus out of service in London. The motor had won.

The last LGOC horse-drawn bus ran on 25 October 1911.

[From Buses in London – Wikipedia, the free encyclopedia]

When engines were first introduced, there was an explosion of variety. Steam, electric, hybrid (yes, one of the first motorised London buses used a generator to power an electric motor – I’m told this was to avoid using gears, which the drivers didn’t understand having come straight from horses) and petrol. The first buses merely replaced the horses with an engine, but they didn’t redesign the rest of the bus.

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(Photograph: London Transport Museum)

It takes a while for a new technology that improves on one part of a system to embed in a redesigned system. It’s a well-known phenomenon that the first electric motors were used to replace steam engines, and it took a while for factories to be redesigned so that there were lots of motors where they were needed rather than a big motor in the middle transmitting power via belts and drives. When the modern “one man” buses were first introduced, there was a similar dynamic. The buses were fitted with turnstiles and machines that you had to drop money into in order to get a paper ticket, just as you would have done with the human conductor.

Things stayed this way — handing over cash to get a paper ticket — until the contactless smart card came along (although magnetic stripe tickets were introduced on the tube starting in 1964). When the first smart cards with contactless interfaces arrived in London, the “Oyster” cards, they were used to simulate the complex cardboard tickets: weekly and monthly tickets, annual season tickets, staff passes, children and old persons concessions and so on. The real revolution arrived a little later, when they began the “capping” system so that you could ride around on your pay-as-you-go (PAYG) Oyster card but your charges would be capped at the cost of a one-day “travel card”. Now, to all intents and purposes, everyone in London has an Oyster card.

TfL spent a lot of money developing the Oyster scheme because one thing hadn’t changed from the days of the horse-drawn LCOG buses to today: the banks didn’t provide a payment mechanism that was quick enough and convenient enough for public transport, so the public transport operators had to sort things out from themselves. Well, now they do. Since the banks decided to roll out contactless payments, TfL have decided to institute a major programme to accept these bank products for travel in London. Starting next year with the buses, TfL are rolling out new readers so that customers will be able to use their bank cards to travel. No need to buy an Oyster card any more.

Contactless credit and debit card payment will be rolled out across the London transport network by the end of 2012, making the capital the first in the world to embrace the system so comprehensively.

[From TfL’s Oyster to accept contactless bank card payments by 2012 (Wired UK)]

At Consult Hyperion’s recent workshop on Open Payments in Transport, Matthew Hudson from TfL explained to the delegates why TfL is moving to accept these “open” (i.e., Visa, MasterCard and Amex) contactless payment cards on the buses and tube starting next year. Given the thousands of acceptance points, millions of users and zillions of transactions this will involve, it’s quite a big deal in our neck of the secure electronic transactions woods. Nick Deere from Consult Hyperion explained how the system will work and the complexity of the reader development.

The Tri-Reader® 3 supports multiple card schemes – for example, with Oyster in the UK, ITSO and contactless EMV cards can now be read concurrently on the same contactless reader. The Tri-Reader 3 was developed by Cubic on behalf of Transport for London and the company has a worldwide licence for its use for open payments.

[From Cubic receives contactless EMV bank Card type approval for next-generation Tri-Reader® 3 | Eurotransport Magazine]

Oyster is a fantastic product and has been a huge success. But Oyster costs money to run and TfL is under significant pressure to reduce costs. As Forum friend Shashi Verma (TfL’s Director, Customer Experience), has frequently observed about this before, they see they their job as running a transit system, not a ticketing system. TfL reckon that their overall ticketing system costs them about 14p per £1 collected in fares. Some of this is ripe for reinvention. Product sales alone account for almost a third of costs, and this could easily be halved: monthly and yearly season tickets won’t go away for a long time, and since they are efficient products to sell, there’s no reason to stop them, but most of the ad hoc non-commuter trips could be shifted to open products. According to a “leaked document” quoted in last night’s Evening Standard,

The move would mean mass ticket office closures and the loss of more than 1,500 jobs. The Operational Strategy Discussion Paper says £2 billion could be saved by 2018.

[From Driverless trains on the Tube by 2021 | News]

That’s serious money and an obvious driver for change in the ticketing system. There’s another issue as well. While Oyster is a great customer experience that is much appreciated in London, it’s not a perfect customer experience. Just to give one example: because the data is stored on the card, it’s difficult to give consumers a good customer experience online. With the shift toward multi-channel sales and servicing underway, this is now important.

As I’m sure many of you know, Consult Hyperion has been advising TfL on this project for some time so we share their excitement about it going live in the not-too-distant future. The experience that we have gained in the prototyping, design and certification of card and phone EMV products in a demanding transit environment is literally unique, so we are hardly impartial observers. But I’m sure you’ll agree that TfL’s decision to set a high bar in terms of functionality and performance has paid off for them and for the industry as a whole.

While I appreciate the history of transport in London (see above!), I’m looking toward the future. Another change that will come with open payments is the arrival of mobile payments and ticketing. Since the gates will accept bank contactless card they will also accept Visa, MasterCard and Amex payments via mobile phone and that opens up the potential for value-adding services on the mobile that are simply not possible using cards.

Transport for London (TfL) has stated it will support NFC payments on mobile phones in 2012.

[From Transport for London to accept NFC payments from 2012 • NFC World]

It’s big deal. It’s not been possible to experiment with Oyster in mobile phones because the chipsets used for NFC do not (yet) support the more secure Oyster cards and the software emulations are too slow for practical use. By going down this route, TfL can avoid this problem completely and start to explore the next smart ticketing revolution, which will be integration of ticketing and mobiles. This is just the sort of thing I’m looking forward to learning about at Transport Ticketing 2012 in London on the 24th-26th January 2012. I’ve been along to this event for the last couple of years and found it an excellent way to get an up-to-date picture of what’s happening in this space. The wonderful people at Clarion have given me a delegate pass for this event (worth an astonishing ONE THOUSAND THREE HUNDRED AND FORTY NINE POUNDS plus VAT) to give away as a prize on the blog. So if you are going to be in London on those day and you’d like to come along and meet some of the key players in the field — and me — then all you have to do is to be the first person to reply to this post with the name of the iconic London transport red bus model that was in service from 1956-2005, a new version of which is being developed for reintroduction in 2012.

This competition is open to all except employees of Consult Hyperion and members of their immediate families, is void where prohibited. The decision of the judge (me) will be arbitrary, capricious and final. Good luck.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers


5 comments

  1. I stand corrected!

    We have a winner! E-mail me your contact details David and I will arrange your complimentary delegate place with the organisers.

  2. Oops, sorry, double checked and you were right! It was put into operation in 1956. The first Routemaster prototype was built in 1954! So, still a winner or does it make my entry void? 🙁

  3. Hi Dave – did you get my contact details? grin

    (No – can you e-mail me at dave dot birch at chyp dot com thanks)

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