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Date Posted: 06:47:13 03/09/03 Sun
Author: (West Yorkshire Passenger Transport Executive)
Subject: Ticketing for Integrated Transport:The role of Smartcards

http://www.atco.org.uk/policy/atcosmart.htm

Ticketing for Integrated Transport:
The role of Smartcards

John Carr

Director, Passenger Information & Facilities
Metro (West Yorkshire Passenger Transport Executive)

Introduction

If integrated transport is to be a reality, a key feature has to be easily understood, easily used ticketing that can be used on all services regardless of operator or mode. Already there is a great deal of multi-modal through ticketing and inter-available concessionary travel using paper based or magnetic media in the UK. However, few existing systems are capable of delivering the degree of accuracy in tracking use and allocating revenue between parties that are desirable to build the confidence of operators in a commercial, deregulated environment. "Smartcards", electronic media based on memory and processor chips offer a potential solution.

Many successful demonstrations of the potential use of smartcards, both contact and contactless, as public transport ticketing and payment media have been implemented around the world. However, with only a few notable exceptions, smartcards have not so far been widely adopted in public transport. This may be because the proponents of such systems have often concentrated on the technological and operator advantages and neglected to examine the potential human impacts on passengers and staff. Relatively little work has been published about the marketing implications of smartcards in public transport. Business cases then fail to show clear surpluses of financial benefits over costs, with the further drawback that some of the modes of operation of smartcard systems may actually involve greater effort on the part of passengers than the use of conventional card and cash based systems.

This paper examines British trials of smartcard systems, notably those in West Yorkshire, London and Merseyside, where monitoring has included passenger and staff reactions. The evidence clearly suggests that passengers do value the convenience and potential security for their expenditure that smartcards offer. However, both they and public transport staff recognise that these will only be realised when smartcards are used on a network-wide basis and can be recharged at a large number of locations (including on bus).

Further user benefits, particularly for the groups most susceptible to persuasion to transfer their travel mode from car to public transport, can be derived when the cards can be used in other areas and commercial sectors also, in other words are inter-operable. Recognising this, ITSO - the Integrated Transport Smartcard Organisation - a group comprising all sectors of British public transport operators and public transport authorities and supported by the UK Government was formed in December 1998. ITSO expects to publish full technical specifications for fully inter-operable public transport smartcard fares and ticketing systems in the UK by the end of June 2000.

This paper describes the approach being taken in Great Britain towards the adoption of common specifications for inter-operable smartcards. It shows how the requirements have been influenced by the swing in British transport policy to integrated transport systems, and how market research amongst passengers and public transport staff supports the objectives of operators and authorities.

ITSO: the Integrated Transport Smartcard Organisation

The Integrated Transport Smartcard Organisation - ITSO - evolved out of an initiative started by the English Passenger Transport Executives and London Transport following UITP�s February 1998 Conference on Automatic Fare Collection in Bologna. In December 1998, the group held a workshop at which they were joined by a wide spectrum of bus and train operators and non-metropolitan authorities. The workshop agreed that a common specification for inter-operable smartcards was required and ITSO was born.

ITSO�s objectives can be summarised as:

to develop a Framework and Customer Friendly Specifications for inter-operable Contactless Smartcards for Public Transport. This must provide for a transport e-purse.

to encourage the application of the specifications throughout the UK ensuring (as far as practicable) that Transport Smartcard Schemes are compatible with other social and commercial applications of Contactless Smartcards.

to respect the confidentiality of data for each party involved in local and inter-operable Contactless Smartcard applications in Public Transport.

to provide Open Standards available to any organisation willing to conform to the limited number of rules necessary to use the ITSO specifications.

ITSO has been supported from the beginning by the UK Department of the Environment, the Regions and Transport (DETR) who co-funded the appointment of consultants MVA to undertake the development of business and technical specifications for ITSO. This work started in May 1999 and by January 2000, a full business specification had been produced.

Work is now in progress to develop a full technical implementation specification from the business specification, following the principles for development of international standards. For this a more broadly based "Editorial Group" of technical experts on various aspects of smartcards has been assembled led by MVA. Members of the Transport Operations Research Group at Newcastle University, noted internationally for their work on the use of smartcards on a range of applications including public transport and road user charging is reviewing the work of the Editorial Group, thus providing an assessment process for the development which is being managed by a "Moderator Group" of ITSO members.

Towards the end of 1999, ITSO was approached by the European Standards Organisation, CEN, Technical Working Group 11 and invited to join their work on development of a European standard. This has been done and members of the ITSO/MVA team are part of the Task Force funded by the European Commission to take the European Standards work forward.

The case for smartcards in public transport

Using information collected for ITSO, an analysis has been made of the factors that may contribute to a business case for the introduction of inter-operable smartcards.

These may be considered as benefits to three groups:

Transport Authorities

Operators

Customers

Benefits for Transport Authorities

In the UK transport authorities typically offer concessionary travel schemes for elderly, young and disabled people. Nationally over �480 million is spent on this. The Transport Bill introduces a new minimum level for such schemes (half fare or better) that is expected to increase this cost further.

At present, surveys or agreed allocation rules based on aggregated patronage are used to distribute the bulk of this money. With smartcards instead of card passes and permits to verify entitlement the quantity and quality of information available to control and monitor schemes will be considerably increased.

Similar arguments apply to the multi-operator inter-operable ticketing schemes already run by transport authorities in partnership with operators, principally in the metropolitan areas. Such schemes have proved very successful in retaining and attracting customers for public transport. However, one of the tensions between participants is the accuracy of allocation of each operator�s share of the pooled income from the sale of such tickets.

For both concessionary travel and smartcards the statistical basis on which financial settlements are based will improve from surveys of a few per cent of passengers to knowing at least one end of the trip for virtually all journeys from smartcard usage records. There will be the possibility to improve this further using small supplementary surveys or "data mining" to link uses of particular cards.

Throughout the world, the current thrust of transport policy is to attract travel out of cars onto public transport. The UK Government has introduced new legislation to implement such policies that are based on the "sticks" of more intensive road and traffic management, including bus priorities and other measures to assist bus movement that must be matched by "carrots" to attract users onto public transport. The flexibility of smartcards enables tickets and pricing to be more closely matched to an individual traveller�s requirements and could also open up other useful services through inter-operability outside the transport sector.

Some of the new products that smartcards would facilitate include:

electronic purse - because of transaction speed and security considerations these may not be electronic cash but rather electronic "tokens" equivalent to cash for fares payment.

loyalty and reward schemes for regular users.

multi-function applications such as multi-modal transport cards including parking and other road charges, leisure cards, education cards or telephone cards combined with transport.

Benefits for Operators

Many of the commercial benefits described for transport authorities apply also to public transport operators.

In addition, operators will receive benefits from reduced cash handling, better revenue control with lower potential for fraud, and increased confidence to participate in multi-modal and inter-operable ticketing schemes.

The information generated from smartcards will enable better market intelligence to be assembled allowing the possibility of closer targeting of promotional activities and for more responsive planning of networks and services. This will include opportunities for more integration between services and modes.

Smartcards should improve the speed of boarding for buses and contribute to faster journeys. Together with the market intelligence and integration opportunities mentioned operators will be able to market better services for their customers and potential customers.

Benefits for Customers

As already noted, there is relatively little published material on customer responses to smartcards. Some trials in the UK have included specific market research and the following have been used in drawing the conclusions presented here.

London (Harrow) Trial (introduced 1994)
Operating on 21 routes, this offered concessionary travel and stored value. 152 users were interviewed in the stored value evaluation and 113 in the concessionary travel. In addition there were group interviews (focus groups) with operators, drivers, members of the public and LT management.

West Yorkshire Trials (1996/1998)

One trial involved one group of routes between Wakefield and Dewsbury operated by the Arriva Group. Multi-journey tickets and passes were available. 102 users responded to a questionnaire survey. The second trial involved a single route in Bradford operated by First Group. Stored value tickets were available. 113 users responded to a questionnaire. Smartcards offering stored value passes and First Group is now extending travelcards throughout Bradford on a commercial basis with local and national launches during April 2000.

Merseytravel (1996/1998)

Two trials were conducted, one for elderly travellers and one of stored value cards for students at a college in the Southport area, north of Liverpool. Focus groups were conducted with the customers and the bus drivers for each trial.

Hertfordshire (1998)

The Herts Smart Scheme, a partnership between Hertfordshire County Council, Arriva Group and Transmo (system supplier) involves season tickets and passes for schoolchildren and elderly people in one District in the county. It is to be extended progressively throughout Hertfordshire. Focus Groups for schoolchildren and Telephone Interviews with 152 elderly people were used to gauge customer response.

Passenger Opinions

Exhibit 1 below shows some of the main findings of the research in the Arriva/Metro trial. The principal customer benefits are clearly convenience, perceived time saving, security (cards can be hot listed and replaced) and flexibility. Customers felt that smartcards enhanced the image of public transport.

Interestingly, trials of boarding times showed that in many cases there was little passenger or driver time saving compared with card and cash based systems. However, almost all passengers perceived smartcards as faster, proving that image is important although it may lead to overstated expectations!

Exhibit 1: Passenger Opinions from Survey of Arriva/Metro Trial users

90% easier than cash
85% main benefit not finding change for each trip
74% saves time on bus (95% quicker than cash)
22% replaceable/refundable/secure

86% satisfied with video camera issue
55% want on-bus renewal
55% interested in electronic purse

Most ceasing to use because only on 1 route (65%)
38% inconvenient only renewing at bus stations
Combining results from the West Yorkshire and London trials the following charts show very clearly customers� very positive perceptions of smartcards:

Staff Opinions

As might be expected, staff in all trials were more sceptical but still very positive. They recognised that the time advantages of smartcards can be overstated and that where a card has to be presented to a machine rather than "flashed" in front of the driver smartcards will often take longer than traditional tickets. If, as some operators are now considering, smartcards have to be presented on both entry and exit, these disadvantages will be magnified and such new procedures will require careful marketing if the favourable perceptions of staff and passengerers are not to be reversed.

Overall Market Research Results

Market research tells us that passengers generally like the smartcard concept. The main advantages were seen as:

no change required

convenient and easy to use

more flexible, allowing new products, especially electronic purse

saves time

saves money (this actually ranked lower than saving time)

Another important finding was that there was a high response from customers who had left the trials. A very large proportion of these made the point that they would have continued to use smartcards if they had been available on all services and modes. This demonstrates the importance of inter-operability.

There were very few negative responses, principally to do with disabled people�s difficulties and equipment failure. There is also a warning in the results from the almost universal over estimation of time savings by customers: as staff do not share this view time savings should be cautiously treated in selecting themes for marketing campaigns!

Size of the UK market

Given that smartcards have proved popular with users and that financial business cases have proved hard to construct, it is worth considering briefly the potential market for smartcards and how the business case may be improved.

Concessions account for 18% of passenger receipts (�480 million value). Prepaid tickets (travelcards etc) could be used for more than 60% of passenger journeys. London and West Midlands already achieve 70%.

With current annual patronage of 4.5 billion passenger journeys there could be a UK market of at least 15 million smartcards (over 30% of the population).

A key feature of the public transport smartcard market is that many of the target customers will not currently be significant users of bank or credit cards (current estimates of penetration are between 30% and 40%). This is a group the financial institutions have found difficult to target, being conservative, likely to make only short term decisions and preferring cash. Existing familiarity with public transport prepaid ticketing should enable smartcard introduction easily amongst this group. Inter-operability and potential for use of transport smartcards in other sectors may achieve significant benefits for non-transport service providers and attract capital and revenue from them.

ITSO�s Programme

The market research results summarised in this paper suggest that the inter-operable contactless smartcard is a product that is welcomed by the general public, provided that it is widely available. This supports the objectives for which ITSO was created. Inter-operability requires:

the application to be interoperable
not just co-existent applications
not just a common stored value card
readers to be interoperable
they will encounter applications from different operators
the applications will change over time

Consultants for ITSO have produced a comprehensive statement of the components required in a standard for inter-operable smartcards for public transport use in the UK. The standard must provide for:

a comprehensive range of public transport tickets and passes
future maintenance and development
a flexible approach to single purpose and multi application cards
A moderated process involving technical writing and assessment has been devised by ITSO to produce the technical specifications. When complete the full ITSO Standard will:

Define the platform (using international standards where possible)
Define the envelope (application structure)
Define the standard contracts (aiming to standardize with CEN)
Define the data flows across the interfaces
Define security for each operation in the system
The business specifications to which the technical team is working should be available on the DETR web-site ( http://www.detr.gov.uk/ ). It includes documents on:

Requirements
Framework and Concepts
Functional/Technical Specifications
Passenger Issues
Compiling the Business Case

ITSO is committed to producing

open (non-proprietary) specifications for transport smartcards

freedom for any organisation to adapt the specification, whether a transport operator or authority or not

a continuing organisation to develop and administer the specification

inter-operability within transport and between sectors.

ITSO can only be successful if suppliers accept and will deliver compliant products. The final element of the ITSO process is therefore a consultation and "contribution" process whereby suppliers have been invited to contribute on a common good basis any useful technology or methods they are willing to make available (a number of such contributions have been received) and are also being invited to comment on the parts of the Specification as it develops. As at 1 May 2000, three of the six parts of the specification had been released for comment with the remainder expected by mid May.

Success will bring widespread application not only in transport but also in society generally, especially if other users take advantage of the volume of cards likely to be required in the transport sector as a platform on which to launch other commercial or social applications. Synergies with other business sectors such as mobile telephony and information provision may also be exploited.

"Legacy" Systems

There exist in the UK a number of operating smartcard systems using proprietary products that have been introduced on a non-experimental basis. These include those in Hertfordshire and Nottinghamshire (principally concerned at present with concessionary travel), Milton Keynes (a long standing system using contact rather than contactless smartcards), Bradford, Nottingham and several other cities.

Some of these systems have been designed on the basis of multi-operator and multi-authority availability; others involve single operators but could be expanded. The largest is probably First Bradford�s where travelcard, stored value and loyalty products are currently available with concessionary travel to be added shortly.

If national interoperability is to be achieved, these "legacy" systems will have to be brought into line with the ITSO specification and ITSO and DETR have commissioned further study by TORG to investigate the means and costs of doing this.

Integrated Ticketing

Smartcards are an attractive delivery mechanism for integrated ticketing. The ITSO products will include:

Travelcards

Single journey through tickets

Stored value (electronic purse)

Loyalty schemes

Concessionary permits

Personal identifiers (for example using the EU DISTINCT identity to communicate accessibility requirements

All of these will be interoperable, ie available on the services of all operators or within the jurisdiction of all authorities using ITSO accredited smartcard schemes.

As noted in the introduction, integrated ticketing is a reality without smartcards. Where systems can be completely, or largely, closed (as is the case with the National Railway Network and London Underground) magnetic tickets offer an effective solution and this has been extended to buses in a number of outer London commuting locations by the addition of suitable readers to the on-bus ticketing equipment. However, magnetic technology is dated, may be susceptible to fraud, especially as product values increase the potential rewards for those with access to the necessary technology. In the author�s opinion business cases must include reference to obsolescence and product lives and the continuing development of smartcards will give them an early edge over magnetic systems as has happened in the telephone and some European credit card markets.

Developments such as Journey Solutions and inter-available ticketing between companies within the same operating group show how attractive multi-operator, multi-modal products can be developed using very basic ticketing, but in these cases the solution depends on commercial good will rather than accurate usage data for estimating the allocation of revenue. It is unlikely that such agreements could ever offer a fully interoperable solution. They do however create an excellent base that can be built upon using the ITSO specification.

A good analogy for integrated transport ticketing is the mobile telephone networks where suppliers combined to produce the ETSI standard underpinning the explosion of GSM mobile telephony. That was supplier led interoperability. ITSO has been customer led inviting response from industry suppliers and should derive strength from that. The two subject areas may well converge in the future and it is encouraging that mobile telephones are achieving greatest growth amongst the very market segments � young people and those with effective economic choice � that it is vital to attract to greater public transport rather than car use.

Acknowledgements

The views expressed in this paper are those of the author. However, the thinking behind them is due in large part to the support and encouragement from colleagues in ITSO and various authorities and operating companies. It is not possible to mention everybody, but in particular, Chris Oulds (London Transport Prestige), Roger Torode (London Transport now with UITP EuroTeam), Peter Ratchford (now retired from Merseytravel), Peter Smith (Merseytravel), Chris Cole (Hertfordshire County Council), Martin Siczkowski (formerly Arriva, now Metro), Albert Shaw (Metro), Brandon Jones (First Bradford), Eric Sampson, David Sentinella (both UK Department of the Regions, the Environment and Transport) with John Baggaley and Jeremy Meal (MVA Consultancy), have all contributed invaluable information and advice that have influenced this paper. Geoff Inskip (Greater Manchester PTE and until recently Secretary General of ITSO) has been a driving force in the establishment and leadership of ITSO and the development of smartcard standards in the UK.

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