London taking contactless for half of PAYG

Four years ago Consult Hyperion completed a transit project which changed not only the way people paid for their travel, but cemented contactless in the vocabulary of the masses.  We were focussed on getting contactless bank cards to work for pay-as-you-go (PAYG) transit payments. This was a significant undertaking since it had not been done before and the customer proposition included a fair-price promise. This fair-price promise required the contactless bank card solution to mimic the existing Oyster “capping” which allows customers to travel without knowing the tariffs, trusting that they will only be charged the best price they could have got had they bothered to research it all beforehand. It required adding contactless payment card acceptance to all TfL readers and the building of a bespoke back office to support this new Account-Based Ticketing (ABT) where no travel information is stored on the card.

Convenience is king in mass transit. And our task was to meet the demands of one of the world’s busiest transit environments but make it cheaper to operate. The long-term vision was that by 2018, Oyster cards would be migrated to use the ABT back office and the legacy Oyster system would be turned off. The Oyster brand would remain alongside bank cards for those not using bank cards, but the technology powering this, would be changed to be ABT.

TfL and Consult Hyperion worked closely with the payment schemes to define the process of card acceptance and with the UK Card Association to establish a harmonized set of rules to balance risk between TfL and the card issuers.

The system launched on buses in 2012 and on the rest of the TfL Oyster network in 2014. Later in 2016 the privately-run river buses were added.

Fare collection costs were reduced from 14% to less than 9% of fare revenue. In 2016, 34% of TfL PAYG journeys were made using contactless bank cards (56% were Oyster and 10% were paper tickets). Is this good, bad or indifferent? Well, this figure needs to be understood in context:

  • Contactless bank cards were still rolling out. In 2015, less than half[1] of UK bank cards were contactless.
  • Not everyone has a bank account. In 2015, about 5%[2] of UK adults were unbanked and half of these did not want a bank account.
  • Loss of government subsidy and a mayor-imposed TfL fare freeze meant that the vision of turning the legacy Oyster system off had to be reconsidered. Existing Oyster users have no incentive to switch over to using their bank cards.
  • Not all foreigners arriving in London are keen to use their bank cards since they may be subject to bank charges back home, making Oyster the better choice for them.

Despite these barriers to the uptake of contactless bank cards, by April 2016, 9% of all UK contactless transactions took place on TfL services.[3] By 2018 (year 4 of acceptance of bank cards on the full Oyster network), the percentage of PAYG journeys made using bank cards (or their emulations on phones or wearables) has risen from 34% to approximately 50%.

Consult Hyperion were uniquely qualified to help TfL deliver their ambition.  Bringing in-depth knowledge and a heritage of working with the major payment networks and their detailed specifications for three decades, a solid understanding of proprietary transit technologies and practical experience of delivering innovative payment methods, outside of the retail community.

The team at Consult Hyperion is now involved across the globe working with transit agencies looking to emulate the success of London in their own cities. As well as Transport for the North in the UK, these projects have included working in countries where contactless success has outpaced the UK, such as Australia to territories where contactless payments are still emerging, like India and Colombia. Our US team has been working for a number of agencies who, today are developing systems capable of accepting contactless payment cards, even though issuance is less than 0.01%, in the hope that transit will drive banks to start issuing cards. There are early signs of success.

It is clear, that the success of TfL’s Future Ticketing Project has helped drive a sea-change in the payments and transportation industries that can save money in one industry and drive transaction volumes up in another. With our help, we are confident this success will continue.

 


[1] UK Cards Association Summary Statistics

[2] Financial Inclusion Commission 2015 Report

[3] UK Cards Association Contactless Transit Project Briefing – May 2016

 

Tickets via Mobile or TVM?—you decide

I often travel from Edinburgh to Leeds by train — pretty much every week in fact. I use the Trainline app (other apps are available) to search for train times. All sensible options I might care to consider (except perhaps for split ticketing) are displayed with their departure times and prices. I click on the one that I want, pay by card and download the barcode ticket to my mobile. All from one device all in seconds. It is very customer focussed because they know they will sell more that way and there is competition. I don’t even mind paying their booking fee and their credit card fee for the convenience.

I also travel regularly from UK airports by train to Consult Hyperion’s offices and use ticket vending machines (TVMs) to buy my train ticket when I arrive. I know I should just use the mobile ticket app even when buying tickets on departure, right?  Well, unfortunately that option is not always available so I revert to the TVM. On some routes I would need to ‘Print from a ticket machine using your payment card’ which is a horrible experience requiring not just the payment card but typing in a long code. With barcodes rolling out across the whole of the UK by the end of 2018, it will be possible for some to bypass the TVMs entirely.

It is not always possible to buy in advance since I don’t know when or whether the plane will arrive. On these occasions I buy a ‘ticket on departure’ from a TVM. These machines seem uniformly unpleasant to use compared to the mobile experience. The customer is required to select options such as which route they want to travel to their destination or what kind of ticket they require (peak, off-peak, etc) without being given the other information they need such as when the next train leaves and what time is peak time. It is a stressful situation even for seasoned travellers. Tourists have no hope.

But this is not news. The government published the Action plan for information on rail fares and ticketing in December 2016. Around the same time, RDG published a ten-point plan for the improvement of TVMs. More recently, a progress report was published in December 2017. Descriptions of how the actions relevant to TVMs in these reports will be achieved include:

  • Ticket vending machines will tell customers when they are configured to sell off-peak tickets so that the customer will know that by waiting (e.g. in 15 minutes) they can purchase a cheaper ticket or by going to the ticket office (!)
  • DfT and RDG will collaborate on a strategy to ensure a consistent high quality customer experience of ticket vending machines, including the role of the Ticket Vending Machines Design Guidelines; and consider whether these contain principles which should form the basis for obligations in future franchise agreements. (Due early 2018)

TVMs were originally introduced as queue busters at train stations for simple tickets only. However, the reality is that one third of passengers now use them and the options available are highly complex. So, in summary, it does not look as though the customer experience at TVMs is set to improve significantly any time soon due to all the constraints and even if it did, it would almost certainly be less good than the mobile app experience:

  • Ability to select and buy tickets from anywhere with internet connection with relevant information automatically supplied to aid decision making.
  • Delivery of tickets directly to the mobile device; no need to print anything out.
  • Better support for overseas visitors who will usually not want to have to understand the fares and routes details before travelling.
  • Freeing up space in crowded stations (you think we have problems, we are working in Mumbai where Churchgate station has same traffic as London Waterloo but 25% of the space)
  • Reduced costs from not having to operate so many ticket windows and TVMs.
  • Opening up the ticket retail market and promoting competition.
  • Easier to deploy enhancements due to simple app software updates.

Clearly, mobile is not the whole solution (having spoken to industry colleagues, it seems only about 10% of rail tickets in the UK are sold using mobile apps) but the legacy that is TVMs is a big part of the problem.

I was asked again this year to act as a judge for the TTG18 Transport Ticketing Awards. Imagine my excitement when I spotted not one, but two submissions for TVMs (Ticket Vending Machines) that solve the customer experience problem.

Both solution proposed are to provide an audio (and optional video) link to remote ticket clerks where simple advice can be given or the clerk can also remotely control the TVM’s user interface. While this might provide better accessibility for those unable to use the TVMs (e.g. signing for the deaf, or offering other languages). I realise it does not suit everyone, but I think I’ll stick with my smart phone app.

The train I am on today writing this blog is delayed by over two hours due a broken-down train ahead of us. This means that I will get a full refund due to the Delay Repay regulations. Yay!

We look forward to seeing you in London at TTG18 on 23 and 24 January. If you would like to meet with Consult Hyperion while visiting the event, let us know so we can book a slot.

Contact: Sam.wakefield@chyp.com

Crossing continents for knowledge sharing

Chyp believes that collaboration and knowledge sharing across markets can help the advancement of the industry and this is particularly true in transport ticketing. For example, we have found that our work for TfL with a large population and high journey count is not all directly applicable to smaller countries who cannot make such significant investments in infrastructure to serve small populations.

Mumbai-visit-TfN-in-Leeds

Recently, we have been working for MMRDA in Mumbai, India. While the environment is very different in some respect, compared to the UK, they have large passenger numbers and administer a system that makes extensive use of private transport operators, two factors similar to Transport for the North (TfN).

Sharing knowledge not only helps speed to market of deployments but creates a trusted environment and one with credibility. MMRDA asked Chyp to facilitate meetings for them in the UK with transport operators and suppliers in order that they could learn from those who have done it before or are planning to deliver a similar project. The result was a tour of the UK starting in London and taking in Transport for the North. The picture above shows the meeting which was held in Leeds and included presentations from:

Transport for the North

  • Alastair Richards (Director Integrated and Smart Travel (IST))
  • Jo Tansley Thomas (Programme Manager (IST))
  • John Elliott (ABT Back Office Requirements Team Lead (Consult Hyperion))

MMRDA

  • Ashish Chandra (PWC India)

Partnerships are hard to form. We hope that MMRDA will benefit from the organisations they met and their sharing in experience planning and deploying ABT in complex environments in the UK, remembering that differences can be as important to learn as similarities.

Paying for Transit

I recently presented at the Transport Card Forum 2017 in Birmingham. The subject I was asked to speak about was “How will we pay for transit in the future”. Knowing how slowly things move in the transport industry, the easy answer would have been, exactly as we pay now.

However, I thought it would be more helpful to assume that the answer is not cash, and to survey the categories of payments available and emerging today and put them into the context of paying for transit.

The direction of travel of the transit ticketing industry is to use Account Based Ticketing (ABT) and so I further assumed that ABT lies at the heart of any solution. Next, the travelling customer has a choice of media used to identify them to their payment mechanism.  This is ring 1.

ring1

These customer media can be categorised as either open- or closed-loop. Open loop means that they can be used to make payments generally, whereas closed loop means they can only be used within the transit ticketing scheme.

closed-open-loop-payment

Next comes the ‘authority to travel’ and ‘time of payment’ rings. Either the customer pays for authority in advance (e.g. season ticket) or they pay for it at the time of travel (e.g. pay on a bus or train) or they pay later. ‘Authority to travel’ might take the form of a ticket, but increasingly there will be no tickets issued. These are rings 2 and 3.

Time-of-payment

Finally, the outer rings (4 and 5) were added to show what kind of account might be used and how these relate to existing models such as those from the UKCA for the use of contactless bank cards in transit.

Models

The UKCA models on the left-hand side have been discussed in previous blogs. Models 1 and 2 are what are being used in the UK building on what was achieved in London on TfL between 2008 and 2014. UK buses are now implementing Model 1 (and some are implementing parts of Model 2). Transport for the North (TfN) is implementing Model 2 for the whole of the North of England. Model 3 seems to have been abandoned as too hard to run in parallel with the other models. Perhaps other technologies will continue to dominate, such as bar code and ITSO smartcard ticketing for Pre-purchased authority to travel on national rail. Perhaps there is no need for a third way?

But what about those unable to use, or who do not wish to use, their own contactless bank cards? The right-hand side shows the equivalent models needed for them. As the figure below shows, there are two options for them, Either:

  • They fund a pre-paid transit account (a bit like loading value to an Oyster card, but value is loaded to the account instead for ABT. Or …
  • They allow payment to be taken directly from their payment account outside of the transit scheme. Payment is claimed from an open-loop account such as a payment card, bank account, online wallet (PayPal, Google Wallet, etc.).

The challenge for the latter option is that the transit scheme will struggle to manage the risk since the cannot tell whether the payment account has funds in it to pay for travel. Therefore, the preference at this stage is likely to be for for pre-paid transit accounts. And, therefore, this is what is likely to be chosen by TfN and other places as their solution for those not using bank cards with ABT schemes.

Focus-on-closed-loop

Thanks are due to my colleague, Alex Lithgow Smith, for developing my original idea of the rings showing aspects of payment in transit.

Dominating the city centres in the next five years

On 25 January 2017, I moderated a panel discussion at Transport Ticketing Global 2017 entitled “which public transport technology solution will be dominating city centres in the next five years”.

On the morning of the event, I get together with the panellists to consider how the discussion might go. I start to think about my experience of the past as a proxy for the future. Past performance is no guarantee of the future, I know, but my mind races:

In the 1990s, things started to move from paper and plastic tokens to smart card-based solutions. ITSO was born. In 2005, we worked with ITSO and the DfT to assess the suitability of ITSO for a national travel e-purse. We were asked by the DfT to help develop Part 11 of the ITSO specification in order that ITSO could be made more suitable to an online world and not require every reader to contain an ISAM.

In 2005, we worked with DfT to help them understand how their planned new smart ID card and driving licence might be used to modernise life for citizens in the UK. In 2007 we worked with DVLA on their planned pilot of smart driving licences to be issued from their new production plan in Swansea. UK gov decided not to issue any smart driving licences.

In 2008 we worked with DfT to determine the benefits and costs of a national smart ticketing infrastructure. In the same year, we ran a trial of how ITSO tickets could be supported on the primitive NFC phones available at the time. Mobile was going to be the next big thing. Also in the same year, we started working with TfL on how Open Loop ticketing could be deployed across the whole of the London Oyster reader estate.

This was nine years ago. We worked with TfL for seven years on that project, from specification of the readers and revenue inspection devices to designing the end-to-end security.

In 2012, TfL launched Open Loop ticketing on buses. In 2017 (approximately five years later) we are seeing the large bus operators outside of London launching their Open Loop ticketing systems, as well as collaborating with Transport for the North on a multi-modal, multi-operator solution.

I’m back into the room. The panellists and I quickly agree that the answer to the panel discussion questions is, pretty much, that the same technology solutions that are dominating now will be dominating in five years’ time, because of the slow speed at which the industry moves. There is a lot of work going on under the surface, but it takes years to emerge. I am sure that Account-based ticketing is coming next and some of that will be Open Loop. Various operators across the globe are talking to us about this at present.

A final example, last year we conducted a study on beacons for Be-In Be-Out (BIBO) style transit ticketing.  Our research showed that the industry has been looking at this since around 1997. There are still very few examples of it being successfully used, and yet it is still regularly cited as one of the next big things.

In April this year, Consult Hyperion is celebrating 20 years of annual Tomorrow’s Transactions conferences. I will be chairing a session on Transit ticketing on the second day about what is coming next. Confirmed speakers include:

Come and hear what they think is coming next. I expect we will have to look beyond five years.

Account-based ticketing workshops

We’ve been having a lot of fun in recent months leading workshops for transport operators about account-based ticketing. Sharing our recent experience with clients such as the UK’s Transport for London (TfL) and Transport for the North (TfN), Hungary’s BKK, New Zealand’s NZTTL, Belgium’s De Lijn and Stockholm’s Storstockholms Lokaltrafik (SL) and Singapore’s LTA.

The workshops are designed to help transport operators who are new to account-based ticketing understand the issues and options, including how Open-Loop bank cards can be blended with existing smart ticketing. A typical agenda covers the following subjects:

Trends

  • Customer propositions should drive everything
  • Smart ticketing trends
  • Technology roadmap
  • Benefits of ABT and Open-Loop

Architecture

  • Basic architecture overview
  • Generic architecture
  • Open loop vs closed loop (the back office)
  • Providing for the unbanked

Open-Loop solutions

  • Open loop implementatons in other countries
  • The 4-party model for payments
  • Transit Transaction Models (’Models 1-3’)
  • Transit Charging Framework (generic, global)

Compliance

  • EMV
  • PCI DSS
  • Working with a QSA

Our latest workshop was sponsored by Mastercard and hosted by Swedbank in Riga, Latvia, and had an audience of 40 including:

  • Transport operators
  • Government bodies
  • Industry suppliers
  • Media

We are looking forward to leading more similar workshops in 2017 across Europe.

Riga view from workshop at 9am.
Riga view from workshop at 9am.
Riga workshop sponsored by Mastercard and hosted by Swedbank.
Riga workshop sponsored by Mastercard and hosted by Swedbank.
Discussing a 'strawman' solution for Riga's needs.
Discussing a ‘strawman’ solution for Riga’s needs.

ODA is a good thing, and not only for transit operators (are you listening USA?)

Following the success of Transport for London’s (TfL) Contactless Payments program, a project Consult Hyperion have contributed to since 2008, transportation agencies around the world are following TfL’s lead looking to bring the same convenience to their own customers. Operators are migrating from a world where customers have to exchange real money into transit money before they can ride on a bus or a subway, to a world where you simply tap your bank issued contactless credit or debit card on the transit reader.

The Problem

As brilliant as this new world of transit payment is, it does expose the operator to some level of risk as well as deliver a variety of benefits. I’ll address other risks and benefits in later posts, but for now I want to focus on the risk of accepting a counterfeit bank card in exchange for free travel.

Of course, the benefit of accepting payment cards for transit is that you can reduce the cost of card issuance through using the card customers already have in their pocket. Customers benefit from being able to pay for transit the same way they make other retail purchases every day. With this approach you get the additional benefit of payment card security and you don’t have to rely on proprietary cryptographic techniques that could one day expose your system to fraud. Easy, right?

Well, it’s not quite that simple.

While bank chip cards come with a toolkit of security options for card issuers to use, the majority of issuers of EMV cards in the US today have only implemented one of those options required for the domestic online-only market.

To understand the issue, remember that all EMV cards generate a unique code called a cryptogram which only the card issuer can validate. So for each transaction, the card details and cryptogram are captured and sent for direct verification with the card issuer, who returns a message to accept or decline the transaction to the merchant.

However, this ‘online-only’ option is not suitable for transit operators.

One issue for transit operators is rate of customer throughput. In cities looking to implement open loop payments for transit (the acceptance of EMV cards), there is a need to handle large numbers of passengers passing through the subway gates or boarding buses.  There is not enough time, in this fast moving environment, to wait for each transaction to be authorised online by the card issuer, and there are genuine health and safety risks to slowing down people moving through the system. Hence the strict time limits on transactions:

[Shashi Verma, TfL] said “contactless cards could now deliver transaction times in under the crucial 500ms at which longer queues begin to form”.

http://www.telegraph.co.uk/technology/news/10990294/Tube-to-adopt-contactless-payment-cards.html

“Agencies who have carried out NFC pilots argue that a device must have a transaction time of less than 500ms to be viable, and prevent passenger delays at turnstiles.”

http://www.masstransitmag.com/blog/10615616/nfc-the-mass-transit-payment-revolution

Looking at the how the transit transaction times break down in detail, we find that:

  • There is some time spent by the reader to detect a card and determine what type of card it is. This should take in the order of 10ms but may increase if different card technologies are accepted at the transit reader
  • Then there is a longer period of time where the card and the reader exchange some data that typically takes anywhere from 300 to 400ms on contactless bank cards currently-issued.
  • Finally, the typical times for a card issuer authorisation that we have observed are anything from 500 to 2000ms.

As you can see, adding these times together we are well over the 500ms target the transit industry is seeking.

Now, transit merchants could take the risk on one transaction and check with the card issuer that everything is ok with the card while the customer is making their first journey. If the issuer declines the transactions, the transit operator could put the card on a hotlist to prevent further travel. Seems reasonable? The trouble with this is there is an opportunity for the intrepid fraudster to develop a simple mobile application that looks to a contactless reader like a normal payment card, but in fact, for each transaction, generates a new identifier that will sidestep the transit hotlist.

How Offline Data Authentication helps

There is another option available to card issuers in the EMV toolkit that helps the transit operator meet their 500ms target and also mitigates the risk from counterfeit cards – Offline Data Authentication (ODA). ODA is a method that allows the reader to determine the authenticity of the card and the card issuer using the cryptography provided in contactless bank card chips and readers. Using ODA has the following effect on the transaction time, now that we don’t need to go check with the issuer to authenticate the card:

  • As before, the time to detect the card and allow the card and the reader to exchange data remains the same, about 310 – 410ms
  • Now, the time to carry out ODA now adds around 50ms, meaning a new total transaction time of 360 – 460ms

This meets the 500ms target.

It’s time for ODA to be mandated for all Contactless

Contactless bank chip cards personalised with ODA, as mandated in most payment scheme regions, allows transit operators and other merchants alike to mitigate transaction risk by authenticating the card offline. If transit operators can prove the card is genuine and not on their own hotlist, they can open the gates or let the customer on the bus. The next step for the operator will be to get card issuer authorization while the customer is making their first journey. Now they have all the information they need to decide if the customer can make the second journey or not.

While transit operators in established contactless bank chip card markets (outside the US) can introduce open loop payments safe in the knowledge that contactless cards are all going to be supporting ODA, in the US, the picture is less than clear. Migration to bank chip cards is still in its first year, there are very few contactless card products issued and mobile payments such as Apple Pay and Android Pay represent the largest use of ‘contactless’. While transport operators are looking to accept contactless bank cards, they cannot risk doing so until the US domestic cards are ODA capable. If the card brands and US banks want a slice of the US transit market ODA must be at the top of the to-do list.

(By the way, ODA is not just beneficial for transit operators; there are other merchants where this technology can also be helpful. For example, following a natural disaster where communications go down but merchants still need to keep trading to ensure essential supplies get to the right people, or merchants who wish to offer quicker processing at peak periods).

The solution at TfL was simple and effective. If a contactless bank card is presented that does not support ODA, it is rejected and the customer is not allowed to travel. When ApplePay was launched in the US, not all implementations supported ODA and these were also rejected at TfL gates. By the time ApplePay launched in the UK, this problem had been fixed. From a customer support perspective, the US needs to be in a position where all cards have ODA and not just some. Transit operators don’t want to block brands (but could do to avoid confusion). It will be impossible to put a message across to customers that some can use the system and others can’t due to something obscure and technical like ODA!

‘Secure enough’ mobile ticketing

We’ve been working with ITSO on how to implement ‘ITSO with HCE’ since January 2015. In January 2016 we presented at Transport Ticketing in London about the work that we had done to date and this was also summarised in an article in the BCS ITNow magazine.

We have since produced a Functional specification for how ITSO with HCE will work in Phase 1. In addition we have produced minimum security requirements that will have to be met by ITSO with HCE implementations. Currently we are helping ITSO determine how ITSO with HCE implementations will be tested and certified by ITSO to ensure that they are secure enough to be allowed to be used on live ITSO schemes.

We continue to work with ITSO on moving ITSO with HCE forward. Here is the latest from ITSO about plans to pilot ITSO with HCE on a live ITSO scheme in West Yorkshire.

Working together with West Yorkshire Combined Authority, Transport for the North, Ecebs, Penrillian and Consult Hyperion, ITSO will be leading on a trial, due to commence in September 2016, which uses HCE-enabled mobile phones on a live ITSO scheme.

Beacons in Transit

You’ve probable heard about Bluetooth Low Energy (BLE) Beacons being used to help the visually impared navigate on their own around public transport systems. This has been trialled in Bucharest on buses and in London Underground. These are examples of relevant information being pushed to users’ smart phones based upon their location. Other similar use cases might include telling passengers when they are approaching the stop at which they plan to get off, or telling them that their selected vehicle is about to arrive.

The use case I am more interested in is the one that allows passengers to travel without paying upfront and be charged afterward based on the journey that they took. We implemented this with TfL in London using contactless bank cards and it has become known as ‘Aggregated Pay As You Go’. This works well, but relies upon the passenger rembering to ‘tap in’ and ‘tap out’ to mark the end point of each leg of the journey in order that the back office can calculate the journey taken. Appropriate charges are made to the passenger’s bank card account at the end of the day.

Beacons could be used in implementations for this use case. Such a beacons trial is to be carried out in 2017 in West Yorkshire as part of the Transport for the North’s Integrated and Smart Travel (I&ST) programme.

The aim is to automatically determine the bus journey taken by the passenger and charge on a PAYG basis. Therefore, we need to know accurately where the passenger gets on and off the bus. This information will be determined by a smart phone app by interacting with beacons and sent to the back office where the charge is calculated and payment taken.

The trial, commissioned by West Yorkshire Combined Authority (WYCA), will be used to determine:

  • whether the passenger experience is favourable;
  • whether BLE technology can deliver sufficient location accuracy; and
  • how the journey timestamp and location information sent to the back office in such a way that can be trusted and not open to fraud.


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