Emerging Technology Guide: Smart Integrated Ticketing

Transport Authorities and public transport operators around the globe are embracing the move from closed loop, card-centric, ticketing systems to dematerialised, smart ticketing and open payment platforms that are user-centric and support flexible fare pricing policies along with the use of contactless payments, mobile devices and digital ticketing.
Among a list of proposed benefits, smart ticketing is able to provide a platform for more efficient and integrated fare pricing, reduce the cost of fare collection and encourage the use of multimodal journeys, making public transport more sustainable and attractive for users. Ultimately, these benefits can contribute to reduced traffic congestion and pollution (improved air quality) as well as better utilisation of the transport system as a whole.

Background

Card-centric (magnetic strip) ticketing technologies have been around since the 1970’s (adopted in Australia during the late 70’s and 80’s), whilst smartcard systems have been progressively implemented across the globe since the late 90’s and 00’s.
These types of systems require(d) all passengers to have a physical ticket or system specific smartcard that is read and verified at turnstiles or by other proprietary readers. As such, these systems are often referred to as Close-Loop environments i.e. the defined equipment, tickets and/or smartcards regulate the ability of commuters to access the transport system.
Whilst the closed-loop nature of these systems has meant that they normally comply with strict security standards, they have often been criticised for the relatively high costs associated with implementation, issuing cards and maintaining ticketing equipment, turnstiles, readers etc.
In Australia, the main smart card systems are Opal (NSW, est. 2012), Myki (VIC, est. 2012) and GoCard (QLD, est. 2008). Other well known, smart card systems, include London’s Oyster card (est. 2003) and Hong Kong’s Octopus card (est. 1997). These systems all commenced operation as closed-loop environments, but many systems are now being progressively updated to provide for contactless payment and digital ticketing.

What is Smart Ticketing

“Smart Ticketing” is a collective term used to describe flexible, open-loop ticketing systems that are typically account or user-centric, rather than ticket or smartcard-centric i.e. allows a user to interact with the system in multiple ways, including, but not limited to the use of the above-mentioned proprietary smartcards, along with other methods such as contactless payment, mobile devices and digital tickets.
Typically, the differences between Smartcard (Card-Centric, Closed-Loop) systems and Smart Ticketing (User-Centric, Open-Loop) systems are as follows:

Table 1 Comparison of Smartcard VS Smart Ticketing System

Ticketing & Smartcard Systems Smart Ticketing Systems
Architecture Closed-Loop
Card-Centric System, Server-based platform
Open-Loop
Account or User-Centric System, Cloud-Based Integration
Linked to Smartcard
User details and payment details linked to a Smartcard
User ID (Account)
Device(s) and open payment methods associated with a User
Equipment Proprietary Equipment
Reads, validates and authorises a network specific smartcard or ticket
Conforms with Open Standards
Reads, validates and authorised smartcards, contactless payment and digital tickets
Architecture Server-Based
Cloud-Based
Fare Pricing Static
System specific fixed fare pricing
Dynamic (Flexible)
Opportunities for Integrated & flexible (multi-modal) fare pricing models

By way of further comparison, card-centric ticketing systems are reliant on users maintaining a positive cash balance against the card, as payments are processed within the closed-loop system i.e. the price of each ticket is drawn down against the balance on the (smart)card; if an adequate balance isn’t available at the time of travel, the card is rejected and the user is denied access to the transport network.

Whilst, smart ticketing solutions maintain this option, through the integration of cloud-based platforms and the use of Application Programming Interfaces (API’s) they facilitate payment through various channels such as credit and debit cards, Apple Pay®, Google Pay® etc.

Similarly, whilst smart ticketing solutions maintain the ability to use smartcards, the cloud-based integration also enables the use of other technologies, such as, Near Field Communication (NFC, as used in mobiles), QR Codes and others to purchase and pay for the right to use the transport network.

Benefits of Smart Ticketing

A Smart Ticketing ecosystem delivers three major benefits for public transport authorities and operators:

  • Improved Customer Experience
    Customers are no longer required to purchase, top-up, scan and retain a physical ticket or smartcard. Rather, they are able to use bank cards and personal devices such as mobile phones, smart watches and other wearable technologies to buy and validate a ticket. This is a particular benefit to infrequent travellers or those that travel between multiple cities as they aren’t required to buy one-off tickets or carry multiple transport specific cards.
  • Enables Innovation
    A smart ticketing system can also provide for integration with new mobility services, thereby providing users with the opportunity to plan more efficient routes that incorporate changes between modes of transport.User and account-based smart ticketing systems can also consolidate transactions from multiple modes and offer the ability to introduce innovative pricing policies and bill customers once they have completed their trips – for example, applying daily, weekly or monthly thresholds and/or discounts.
  • Higher Revenues & Reduced Cost of Operation
    By improving the customer experience, embracing technology and adopting innovative journey pricing, public transport authorities and operators are increasing their potential market size by encouraging a more efficient use of public transport. This in turn has the potential to increase revenue.

Additionally, as seen from examples in London and other cities, the introduction of smart ticketing can also dramatically reduce the cost of “fare collection” – a reduction in or elimination of operation and maintenance costs associated with the ticketing vending machines, turnstiles and other physical equipment. As a result of upgrading the Oyster card system to enable contactless payments, Transport for London (TfL) was able to reduce it’s cost of fare collection from 14% to 9% of farebox revenues.

Additionally, since the beginning of 2000, the outbreak of COVID-19 has posed significant challenges to transport authorities and operators and the continued use of traditional ticketing systems. Many public transport operators temporarily disabled their physical ticketing systems to limit personal contact. Smart ticketing systems can significantly reduce physical interactions across the public transport eco-system. Thereby, providing further benefits to users.

Main Challenges to Implementing Smart Ticketing

Primarily, the biggest challenge to implementing a smart ticketing solution is that legacy, card-centric (closed-loop) systems are not designed to incorporate new and emerging technologies – traditional card readers and backend systems cannot process open payments (EMV & NFC protocols) or recognise mobile tickets (QR codes etc.).

Also, in order for Smart Ticketing systems to work optimally, they require interoperability between transport modes to combine trip information, timetables, pricing policies, booking and payment systems. Given the disruptive transport business models that have evolved in the past decade, the interoperability and integration of the smart ticketing system could potentially extend to non-government transport services, such as car sharing, e-scooters and bikes etc.

Ultimately, smart ticketing systems and the digitisation of data originating from the transport network is a pathway to establishing a Mobility as a Service (MaaS) solution i.e. the digitisation and integration of data from multiple transport services would facilitate the use of AI and machine learning to provide optimised travel and trip planning recommendations.

Hence, in most instances, the adoption of a fully integrated smart ticketing solution requires both the upgrading or replacement of existing physical equipment along with considerable changes to backend systems and I.T. infrastructure in order to achieve the longer-term benefits.

Implementation also requires cooperation between numerous stakeholders including, departments within transport authorities, transport operators, ticketing systems vendors and others in order to implement solutions and combine products and services to realise the full benefits of such a system.

Arising from this complexity, several legal and commercial issues may also present themselves as challenges e.g. Existing smartcard vendors are unlikely to have contracts that require them to support the integration of newer technologies. Hence, depending on several variables this may require detailed consideration of introducing and integrating parallel ticketing pathways versus the replacement of existing systems.

Additionally, the adoption of newer technologies may come with their own constraints e.g. the use of NFC technology has some limitations as Apple requires commercial agreements with vendors in order for it to be used on iOS devices.

The Future of Smart Ticketing

In spite of the challenges outlined above, there are still multiple pathways for developing and implementing smart ticketing solutions across transport networks

Parallel Implementation

As mentioned above, TfL, with the support of Mastercard and Cubic, designed and implemented a system upgrade that introduced contactless payments to the London transport network in September 2014. By 2016, contactless payments on the Tube, commuter rail and bus networks were accounting for approx. 17 million journeys (45%) each week.

There are various other examples of transport authorities and operators implementing technologies that can be rolled out in parallel to existing smartcard and ticketing systems. One such example is the use of apps on mobile devices that detect passive digital tags at stops and on buses and trams in order to determine the trips made by the user. The user is then charged directly via the dedicated app. Alternatively, apps such as FAIRTIQ can be used to activate journeys without the need for validation equipment.

Given the well documented issues with the implementation of ticketing systems, these parallel solutions are all progressive steps towards a more fully developed smart ticketing eco-system and potentially de-risks a number of key issues, including the complexity of a full role out.

Replacement

However, by comparison, Comutitres GIE, the French entity responsibility for managing transport ticketing on behalf of RATP, SNCF and OPTILE, have recently engaged a consortium to replace all Ile-de-France bus and tram onboard ticketing platforms with next generation technology. The new onboard ticketing platform will be one of the largest projects to be based on the Information Technology for Public Transport (ITxPT) specifications, that support the purchase and integration of interoperable IT architecture.

Similarly, the MTA in New York is progressively rolling out the One Metro New York (OMNY) contactless fare payment system, that once completed (2023), will fully replace, the MetroCard (magnetic stripe cards).

These replacement projects, potentially lend themselves to more robust and integrated longer-term solutions that not only deliver alternative payment and fare pricing, but through the integration of digitised data provide a platform from which better and more efficient transport services can be provided.

Conclusions

The implementation of smart ticketing is a necessity for the ongoing efficient operation of our transport networks and whilst both routes (parallel and replacement) have their merits, investment decisions will need to be made on the basis of specific circumstances i.e. existing technology, vendor contracting arrangements, complexity of network, interdependencies etc.

However, if the objective is to achieve an efficient federated transport model that ultimately integrates both public and non-public transport services, then the digitisation of (ticketing) data along with the development of interoperable IT architecture will be key to the success of any project.

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Key Terms

Application Programming Interface (API) is software programming code that enables the transmission of data between two otherwise, unconnected software platforms or products.

EMV is an open-standard set of technical specifications for chip card payments and acceptance devices such as POS terminals, kiosks and ATMs. EMV stands for “Europay, Mastercard, and Visa”, the three companies that created the standard.

ISO/IEC 14443 is the international standard that defines contactless smartcards and the transmission protocols to communicate with them.

Open Payment refers to the ability of a system to process payments from multiple sources, using application programming interfaces (API’s) e.g. purchasing goods from a website using credit card, PayPal®, Apple Pay® or Google Pay® (as opposed to a business storing payment details and processing payments through their bank).

Magnetic Stripe (card) is a method of storing data by modifying the magnetism of tiny iron-based magnetic particles (in a north or south pole direction) on a band of magnetic material. The magnetic stripe is read by swiping past a magnetic reading head.

Mobile Ticketing is the process whereby customers can order, pay for, obtain and/or validate tickets using mobile devices, without the need of a physical ticket. The mobile ticket typically contains some form of unique verification, represented visual by some form of technology, such as a QR Code.

Mobility-as-a-Service (MaaS) is a type of service that through a collaborative digital platform enables users to plan, book, and pay for multiple types of mobility services. To provide benefits beyond existing “booking platforms”, MaaS requires access to improved user, demand and real-time data in order to anticipate the best combination of services.

Near-Field Communication (NFC) is a set of communication protocols for communication between two electronic devices over a distance of 4 cm (1 1⁄2 in) or less.

QR Code (abbreviated from Quick Response code) is a type of two-dimensional barcode. Data contained within the QR Code are extracted from patterns that are present in both horizontal and vertical components of the image.