The future is contactless

James Day attends Transport Ticketing Global 2017, where contactless payment technology is shown as the expected route ticketing will take in the coming years

The annual Transport Ticketing Global conference is continuing to attract a large number of delegates from around the world. Speakers this year provided insight from locations close to home in the UK bus market, as well as from as far afield as Singapore and New Zealand, sharing best practice and how best to provide advanced ticketing to public transport passengers.

The event, once again held at Old Billingsgate in Central London, was dominated by contactless payments, with lots of consideration given to its [wlm_nonmember][…]

[/wlm_nonmember][wlm_ismember]future applications in the Mobility as a Service model which many see as the future of integrated transport. Smartcard ticketing was mentioned far less, and the consensus seemed to be that it is ageing technology which will be made obsolete by contactless bank cards and various smartphone apps.

As usual, the event is split into multiple seminars for much of the time, meaning it isn’t possible to attend everything. What follows are some of the highlights from the presentations CBW attended this year.

Val Shawcross – Technology and TfL

The Deputy Chairman of Transport for London (TfL) and Deputy Mayor of London for Transport, Val Shawcross, opened the event this year.

“We all know transport is vital for our everyday lives in London,” she began.

“I don’t think many Londoners think an awful lot about the tickets in their pockets these days, because it has got so easy, except when they have to pay for them. I’m really pleased our mayor made one of his central pledges around freezing fares.

“TfL is one of the world’s biggest transport authorities, responsible for virtually all our transport services. When we come out with our next transport strategy around May, you’ll see we’re also extremely interested in walking, cycling and public health promotion.”

On the market’s use of technology, Val added: “London has been at the forefront of innovation and change in transport in recent years by harnessing technology and delivering solutions that have never been done before. However, it’s important that we don’t lose sight of the fact that it is the outcome that is important to people.

“There are five important reasons TfL must continue to utilise technology and data for the benefit of Londoners.

“London is bigger than it has ever been and continues to grow. By 2040, there will be an extra six million trips per day, and there is finite capacity. We must obtain every ounce of capacity from the network. The application of technology can help.

“The pace of change of technology is faster than ever and we need to keep up with it.

“TfL has always been a data-rich organisation, which today is collected as a by-product of its operations, not manually. This is combined with insight from surveys and CCTV. The data is used to better plan and improve services and make roads safer.

“Uniquely for a public transport authority, TfL will cover its own operating costs from 2019. We have to do that while keeping fares affordable. It is essential we find solutions to make life easier and fairer, so we need to find cheaper ways of delivering the TfL investment programme.

“The final concern is accessibility. The network needs to be accessible to all Londoners, at a cost that is not a barrier. Technology can help us provide innovative solutions that will enable you to get around easily on public transport, whoever you are.”

Val said that nowhere has the use of technology to develop the TfL network been more obvious than ticketing, highlighting Oyster and the contactless rollout.

Aaron Ross – Creating smart cities

The keynote speech of the event was delivered by Aaron Ross, Managing Director EMEA of ViX Technology.

He began: “During the last year, we’ve seen some fantastic innovation in our industry and the wider technology community. The pace of technical innovation is unprecedented.

“We’ve witnessed the launch of biomechanical identification for ticketing, we’ve seen self-driving vehicles embedded in everyday travel, and experience advancements in Bluetooth to improve range and reliability.

“Across our industry we’re reaching the conclusion the public transport and private technology-led solutions will converge in relatively short order.”

Aaron talked at length about the ‘smart home’ setup he personally has, where electronic devices talk frictionlessly to each other control lighting and music. He said a similar methodology could be applied to smart cities, where a similar frictionless setup would be most beneficial.

He said: “We’re seeing examples of ‘be on’ and ‘be off’ substituting ‘tap on’ and ‘tap off.’

“The supporting technology is available today. While there are some examples of how this data rich, connected world can benefit consumers, perhaps in our industry we must challenge each other to ask if we’re moving quickly enough, and if we’re doing enough to challenge the status quo.

“From a consumer perspective, all transit systems need to be easy to use and completely trusted. Those growing up in the digital age are not used to waiting for services. The thought of having to pre-purchase or top-up a closed-loop system in advance is completely incompatible with the convenience of a few taps on a smartphone.”

Aaron also had some interesting comments on Uber: “Clearly, no operator can take the bullish stance we see from some private sector companies like Uber, where they deliberately launched driverless cars without the correct licences in San Francisco last year. It would appear the value of the trial outweighed the penalties and bureaucracy of compliance.

“Such a cavalier attitude wouldn’t suit our industry,” he paused, “Would it? Or is it the time to be bold, and challenge the status quo?

“We as suppliers are seeing more changes in the approach our customers our willing to make.”

Mike Szikszai – The job of ticketing is under threat

Mike Szikszai of New Zealand-based Snapper provided a presentation entitled ‘Why ticketing is about to get fired,’ a case study which examined the service it was supposed to provide.

He drew on other industries, such as newspapers. He highlighted the drop in advertising revenue which the publications brought in, which he stated was due to their slow response to the growing mobile and digital markets.

“When newspapers finally got the message, they decided to participate and thought they would win,” Mike said.

“They thought content was king, and they would own and control all of the content. However, they didn’t have much scope to experiment with this as they were already in decline, and when they got involved, they were constrained by their existing heavy business models. They were not able to make any impact.

“It turns out, the newspapers held onto a few sacred cows for too long – things people believe will never happen, but change the whole game when they do at a fundamental level.

“The newspaper market thought people would never read news on a small screen, people wouldn’t use mobile as their preferred method and people couldn’t make money out of ads on mobile.

“The fundamental question newspapers missed was the job they were hired to do. They are salespeople – who need to sell jobs, relationships, second-hand goods and so on. They were and are hired by advertisers, not readers. Facebook and Google do the same job at an ultra-targeted level, which sell to individuals.

“The newspapers got fired.”

Mike suggested that ticketing, both paper and smart ticketing, could be next. To explore the topic further, he examined a milkshake study at McDonalds.

Many people were involved in examining the milkshakes to see how they could improve their sales, but only one looked at the customers who were buying them. It turned out, most were bought in the morning as takeaway breakfast replacements by driving commuters – they were ‘hired’ as a breakfast replacement. McDonalds made the milkshakes thicker so they would last longer and made them faster to get by people in a hurry by putting the dispensers towards the front.

Turning to ticketing, Mike explained: “Ticketing systems are hired by public transport operators to collect money and provide access. What happens when the transport systems changes?

“New models like Mobility as a Service are starting at the ‘crazy idea,’ with people asking how such integration between public and private transport operators could possibly work. But with the tools that are available, this will shift rapidly into a frenzy of activity.

“We need to address some sacred cows in our industry. The idea that not everyone has a smartphone is the first – there are 2.5 billion smartphones in circulation now, more than enough to develop a mobile-only proposition.

“The idea that ‘people won’t use a phone to do X’ is also a sacred cow. We were told customers would never use their phone to reload their smartcards when we launched a mobile app on Android in Ireland. A year later, there are almost 100,000 downloads of the app, and 11% of all reloads for the Leap card are now completed through the app.

“Fundamentally, the job of transport is going to change. This is driven by our passengers, who have a preference for low cost, high convenience and speed.

“Ticketing’s new job is to serve customers immediately, support a range of transport services, scale easily and not be necessary to own anymore.

“Current systems will be fired unless they adapt.”

Robert Montgomery – Delivering contactless across the UK

Stagecoach UK Bus MD, Robert Montgomery, provided insight on the work of the ‘Big Five’ UK bus operators to bring multi-operator contactless ticketing to the UK bus market outside London.

He began by describing the initial implementation of multi-operator ticketing, which he said has been around for a long time, but has often had to be quite expensive. This is because it is difficult to properly administer and distribute the income with paper tickets which work with multiple operators, which in turn inflates the price to account for the commercial risk.

“We got together with Go-Ahead in 2010 to work out how to make multi-operator ticketing work in a smart environment,” Robert explained.

“We delivered it in Oxford with a Smartzone product available on the buses of both operators. We both retail it and accept it. It produced a low cost way of administering a mutli-operator scheme and resulted in much greater bus use. It was hard work, but we made it happen.

“We realised we could make it happen in any city if we wanted to, so the major groups made a commitment to deliver multi-operator ticketing to all the major city regions in the UK, which we have. It is also open to all operators, not just ourselves.”

Robert said contactless was the next frontier, and again requires the cooperation of operators to deliver effectively. “We concluded very rapidly that the only way this would work was with one single back office for all operators,” Robert said. “The idea of multiple back offices being compared at the end of each week just wasn’t an option.

“We could then use the same partnership arrangements with smart-ticketing to deliver contactless arrangements in every urban area in the UK. That is of a massive advantage to bus use across the UK.

“The real vision for us was to get to a stage where you could travel on a bus with a contactless card with a tap and enter into a capped arrangement.

“Our objective is to trial it this year, and have it universal in the UK by 2022. Why? Because it is a game changer for bus use.

“We’ve had various debates about modernising buses and taking things forward. Our view is that by 2022, every bus operating registered services anywhere in the UK must accept contactless cards.

“By the end of 2018, all Stagecoach buses in the UK will accept contactless payments, as will the fleets of other Big Five operators.”

The operators are also working with Transport for the North to avoid separate back offices there, as the organisation was pushing forward with its own agenda.

Robert said that all of the agreements and deadlines had been agreed very recently: “I couldn’t have confidently said we had agreed all of this until last Friday afternoon.”

Briony Krikorian-Slade – An update on the contactless journey

Beginning the afternoon session, Briony Krikorian-Slade, Principal Policy Advisor at the UK Cards Association, provided an update on the progression of contactless payment technology.

She explained that the organisation has been working to identify key elements required to expand contactless into a new market – UK public transport outside London.

“It was evident we couldn’t just pick up the London model and move it elsewhere in the UK,” Briony said.
The four key highlighted areas were customer experience and use cases, commercial benefits for both the operators and the card industry, risk and liability, and the business roles which fit the contactless environment.

The association has developed several models for contactless payments on transport – the single pay-as-you-go model, the aggregated pay-as-you-go model used in London and the pre-purchased model, where advanced ticket purchases are redeemed through a card.

Briony went on to explain why the UK Cards Association felt that contactless was a good fit for public transport, touching on the fact that 61% of people in a Transport Focus survey in 2014 felt it was appropriate for that role.
She said: “There are over 100 million contactless cards in the UK now – it’s something people have in their pocket already.

“Also, cards can be provisioned into the likes of Applypay. 7.5% of TfL’s contactless transactions are now happening on mobile.

“Contactless transactions continue to increase exponentially outside of transport, and because of this ubiquity, it is now recognised as beneficial by customers around the country because of speed, ease of use and the fact they don’t need to carry cash.”

One benefit of contactless which Briony highlighted was reduced operating costs, with TfL’s contactless system costing half as much as Oyster to run.

John Hall – Overcoming contactless barriers in London

John Hall, London Senior Account Director for Cubic, spoke about his company’s experience implementing contactless in London, particularly over the last 12 months.

Contactless was first launched on London buses in 2012. In 2014, the entire system was upgraded to a ‘model two’ aggregate system.

“While Oyster was a popular product, there were some limitation to it,” John stated.

“The primary limitation was that ‘real money’ was still being changed into ‘transit money.’ That process of buying the card and topping it up was quite an inefficient process. It takes time and cost.

“This was an attempt to going straight to using real money on the network. One of the by-products of that, by moving all the calculation and risk management into the back office, was it enabled TfL to offer a number of products unavailable on Oyster, such as weekly tapping and auto journey completion.”

John rebutted claims that the system was expensive to implement: “Yes it cost quite a lot to implement, but if you view it in the context of 800 million journeys, climbing by about 1.3 million every single day, and view the cost as a percentage of each one of those journeys, it’s actually a very small proportion.

“We’ve also seen 18 million unique cards, which is 18 million people that have not queued to buy a ticket.

“To me one of the most impressive statistics is that we’re seeing 30,000 new cards every single day in London, 3,000 of which are on mobile phones. That is still growing.”

Between 2003 and 2016, TfL has seen daily journeys on its network increase by 50% to 11.5 million per day. At the same time, the number of ‘real money to transit money’ events has dropped from 1.8 million a day, to less than one million. In 2003, there were four journeys per purchase event. This increased to eight with the introduction of Oyster pay-as-you-go.

In 2013, when contactless was introduced, and without any price differential, there are close to 12 journeys per top-up event.

“That is transformational,” John enthused. “If we were still stuck on the 2003 level of four, given the number of journeys we have today, we would have three million purchase events per day, rather than one. This is social transformation, not just business transformation.

“Without this technology transformation, what would this system be like?”

Richard Moore – A game changing development?

Richard Moore from Rambus Ecebs spoke about a new product from his company which can move smartcard tickets onto a smartphone platform.

The technology, called Host Card Emulation (HCE), is something Richard called a revolution in transport ticketing, making big changes in the way passengers use transport schemes.

“HCE is a technique which has been used in the payments industry in recent years to allow a mobile phone to be used for payment,” he explained.

“The technology allows a mobile phone to pretend to be a smartcard when it is presented to a contactless terminal. It interacts through the NFC antenna on the phone in the same way a contactless smartcard would.

“The terminal can treat it like any other payment card and carry out the transaction accordingly.

“However, the technique doesn’t have to be used for payment. HCE can emulate any type of contactless smartcard. We use this to put a ticket wallet on a virtual smartcard in the phone’s memory instead of a physical smartcard.

“This opens up a realm of secure mobile ticketing.”

Richard said mobile ticketing has been ‘stuck’ because of no option to securely store the tickets on the phone.
“The advantages of moving existing smartcard ticketing onto HCE are many and varied,” he said.

“Most important is the customer experience benefit. Mobile is a medium customers associate with a modern experience. If you’re not doing it on mobile, you’re not doing it the modern way.

“Also, instead of ordering a card and waiting a week for it to be delivered, you download an app and access travel instantly. Instead of waiting in a queue to top-up, I pay for travel in advance and walk past the line.

“Ticketing is at its best when there is no hassle and it’s totally frictionless. HCE gets us closer to that.”[/wlm_ismember]