Top Stories
The ticketing crossroads: Navigating unpredictability in transit payments
Global Banking and Finance Review
Company
By Philippe Vappereau, CEO, Calypso Networks Association
Today, reliably predicting passenger behaviour is a significant challenge for long-term planning in the transport sector. Accommodating this unpredictability requires flexibility and strategies that adapt networks to new transit trends to attract passengers. But what does ticketing flexibility look like, what key trends are shaping transit payments, and what considerations do planners need to have when scoping upgrade strategies?
Familiar challenges… but with new pressures… and new trends
To maintain public transit’s attractiveness, Public Transport Operators (PTOs) and Public Transport Authorities (PTAs) must predict, and support passenger demands. Achieving this has become a significant challenge. Today, many passengers have more agile travel patterns and use public transit from the first to the last step of their journeys. Accommodating flexibility sustainably and cost-effectively will be a pivotal part of PTOs and PTAs future network strategies.
So, what are the pressure points?
Value for money has always been a reason why many passengers choose public transit, yet with increasingly agile travelling patterns, fares and tariff structures need to become less rigid and offer value alongside flexibility. Today, more PTOs and PTAs expand their offering beyond traditional weekly/season tickets to include flexible options, including Pay-as-you-Go (PAYG) models. As with any strategy, there is an optimum balance, and planners will need to consider how they can introduce fare flexibility to maintain attractiveness without affecting ticketing revenue.
With MaaS policies, PTOs and PTAs are now thinking about every step of every passenger’s journey. To complement this, a joined-up, seamless ticketing solution is needed. Mobile-based ticketing will be the driver behind MaaS adoption, but as MaaS matures, planners will need to consider the needs of every passenger. Alongside mobile devices (m-ticketing), planners need to consider the potential of the hundreds of millions of smartcards that are already used every day. Consequently, there is a need for the ticketing community to assess how it can integrate multimodal ticketing across all fare media and achieve MaaS for all.
With the ongoing digital transformation and the IoT revolution unlocking new levels of convenience and flexibility throughout our daily lives, ticketing needs to play its part. NFC technology and m-ticketing will be the central technology underpinning innovations in this space. This will help networks to migrate beyond QR codes as the basis of their contactless offer, which can be viewed as only a short-to-medium term solution.
Responding to these pressure points will go a long way in building a futureproof ticketing ecosystem. However, identifying where the pressures lie is just the first step. How can PTOs and PTAs then create meaningful change in ticketing payments?
One size…fits no-one
One approach to support flexible ticketing is merging travellers’ daily payments into the transit ticketing experience through open-loop ticketing solutions. Open loop is when a passenger uses their contactless EMV® bank card or digital wallet on an NFC-enabled device for ticket purchasing and validation. It relies on the infrastructure put in place by payment networks e.g., Mastercard, Visa, American Express and relies on EMV technologies. In addition, we are also seeing hybrid open/closed loop solutions emerge with white label/closed loop EMV® ticketing.
Open loop is playing an increasingly prominent role in transit and ticketing. However, planners need to consider the needs of all passengers when developing strategies. So, this means supporting the needs of unbanked passengers, from all demographics, including those who simply want to keep their ticketing payments separate from their daily spending habits. Relying solely on open loop ticketing can automatically exclude a significant proportion of travellers. A similar problem emerges with white label EMV, which only supports Account-Based Ticketing (ABT), and which brings with it extra data protection considerations that need to be managed, such as Europe’s GDPR rules.
In tandem with considering passengers’ needs and wants, planners need to consider the different benefits of open and closed loop ticketing. While open loop supports PAYG ticketing and users can use the same card on any compatible network, creating specialised fare/tariff structure that supports commercial performance is a challenge. EMV specifications are built primarily for the global payments industry (rather than the ticketing community) and do not allow network planners to write data onto the card. They can only read it.
Also, with open loop, authentication times are significantly longer compared to the 0.1-0.2s of a Calypso-based transaction. When network planners need to move tens of thousands of passengers through transit terminals at peak hours, long transaction times can make a big difference to terminal crowding.
Closed loop, built on open standards shaped by the transport community, offers PTOs and PTAs better ‘sovereignty’ over their ticketing systems, enabling them to retain more control over their ticketing policy, and offers vital efficiencies for operators. When considering the challenges facing transit networks, this is an essential feature. For example, managing a season ticket with closed-loop based media comes at a much lower cost than via EMV ABT. It also enables passengers to access every tariff type, including subscriptions, locally-stored value and pay-as-you-go, all delivered with the same level of high performance and data privacy safeguards.
A melting pot of ticketing tech
Given the diverse range of trends and technologies and the unique needs of passengers and networks, the ticketing ecosystem will become a melting pot. It will include a rich combination of open and closed loop systems on networks evolving in tandem with new fare media such as mobiles and wearables offering a smarter, contactless experience.
Supporting growth in this space are tools that help planners respond quickly and cost effectively. This includes security and certification measures for mobile ticketing, supporting its added security considerations. Open source technology such as Eclipse Keyple will fuel sustainable tech ticketing innovation for networks while liberating them from any proprietary hardware constraints within their existing infrastructure.
The next 12 months is an important time for transit ticketing as it looks to develop its offering and recover from declines in passenger footfall. Timeliness and cost-effectiveness will be essential components of ticketing strategies to develop a futureproofed, smart, secure and flexible offering that responds to network and passenger needs and generates a tangible ROI for all.
Explore more articles in the Top Stories category
