Blog from: 15 April 2016
The Future of Transport Ticketing – How will it Look?
Interview with Daniel Lim, VP and Head of the Transport Business Line at SMARTRAC Technology Group.
What do you think the biggest evolution will be in the transport ticketing industry over the next five years?
We see a trend toward new, open-loop and mobile payment schemes, like VISA payWave, MasterCard PayPass, Apple Pay and so on, contrary to major closed-loop transport payment standards like MIFARE® DESFire®, OSPT CIPURSE™, FeliCa and Calypso, to name just a few.
What do you see as the top priority for ticketing and fare collection experts right now?
How to reduce the cost of running and maintaining existing fare collection systems, and how contactless card payment can reduce overall operational costs. Fraud prevention is another top priority.
What other geographical markets do you think will be receptive to rolling out sophisticated fare collection programs?
Any geographical market can consider rolling out advanced fare collection programs, so long as the customer base or the commuter base is sufficiently large. SMARTRAC offers its products globally.
Which players do you believe will lead the next wave of innovations, and what needs to be done to drive critical mass for their use in public transport?
There are some limited opportunities for product innovation in the area of transport ticketing products. To promote the use of public transport in cities, one critical factor is convenient and predictable arrival times for buses, MRT trains and railway trains. One area for consideration is the possibility of monitoring the number of people waiting at bus stops and MRT stations, which would enable transport operators to send more buses or MRT trains to crowded bus stops and stations. The technology is already available, and SMARTRAC is a leader in this field.
What advice would you like to give to transport operators who are looking to move towards smart ticketing programs?
Our first advice would be - don’t wait. Do it now. You will achieve cost savings in the medium term, as well as offering more convenience to commuters with the option of using reloadable AFC cards. Also, instances of fraud will be drastically reduced by using a chip-based solution. Transport operators can also tap into the retail market, by partnering with merchants to issue co-branded cards. This is a potential additional revenue stream for transport operators. In some cities like Hong Kong and London, a transport card can be used for micro-payments in 7-Eleven outlets and coffee shops.
Do you think that contactless ticketing solutions are suitable for all transport operators? And for passengers?
In principle, the answer is yes. But as mentioned earlier, there must be a good commuter base to justify the start-up costs of a contactless ticketing solution. In such cases, the sheer volume of daily transactions can cover the cost of implementation.
What do you think other continents can learn from the European market?
The European market is very well established in terms of using contactless cards and contactless ticketing for public transport. Other continents can visit and do field-study trips to Europe to find out the cost benefits, and learn how to roll out such schemes efficiently, avoiding the common pitfalls.
What role do governments play in promoting and regulating smart ticketing solutions?
Governments play a pivotal role in transport ticketing implementations. Fare levels are often controlled by local or national administrations, meaning that a transport operator’s income depends greatly on official policy toward public transport. The possibility of allowing transport cards to be used on other merchants’ premises can help to finance the daily cost of contactless ticketing operations, and even to create some profit to supplement income derived from fares.
What is the role of the mobile phone in Transport Ticketing?
The growing trend and awareness of using mobile phones for small payments is helping to make more people understand the convenience and security of contactless payment overall. There nonetheless will be some kind of competition in terms of the mode of payment, i.e. using mobile phones, contactless cards, RFID paper tickets or RFID tokens, for example.
Do you think that we will ever truly eliminate cash on our transport systems?
This could be highly possible because cash is just one kind of payment credential. Similarly, a stored-value contactless card is like a wallet full of cash. Once the same contactless card can also be used for paying for items, like an electronic form of cash, then the need for cash itself will be diminished.
What development will have the greatest impact on the Transport Ticketing sector?
Open-loop payment schemes like VISA PayWave and MasterCard PayPass, which are being introduced now in several cities as an alternative to transport tickets for automatic fare collection, have created a lot of positive impact for transport operators in terms of cost of operation, and for commuters in terms of convenience.
In your opinion – what will be the common medium of public transport ticketing in 2020?
It will continue to be contactless cards and RFID paper tickets, because in terms of form factor, convenience, standardization and performance, they are unmatchable compared with other modes of payment.
What are your expectations regarding the public transport market in near future?
More smart ticketing applications with enhanced consumer experience to provide transport operators with the ability to dynamically allocate sufficient numbers of buses and trains to different areas and reduce the number of empty buses and trains.
(The interview was first published at future-payments-gateway.com on 29 Feb 2016)