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The Green Sheet Online Edition

March 14, 2011 • Issue 11:03:01

London steers toward open payments by 2012 Olympics

By the time the 2012 London Olympic and Paralympic Games commence in late July, the city's transportation authority expects to have upgraded its city-wide bus system to enable an "open" payment platform that accepts contactless, network-branded credit and debit cards for fare payment.

The current Oyster card system, which is a proprietary, "closed" prepaid card system used across London's entire public transit network, will be modified to also allow bankcards embedded with near field communication (NFC)-enabled chips to be used to pay for public transportation around the city.

After the systems on its fleet of 8,000 buses are upgraded, the Transport for London (TfL) intends to upgrade the Tube (subway system), Docklands Light Railway, tram and London Overground network by the end of 2012. Additionally, TfL said it was in talks about upgrading to open payments the Oyster card system used on the U.K.'s National Rail service.

Upgrades coming

According to Randy Vanderhoof, Executive Director of the Princeton Junction, N.J.-based Smart Card Alliance, the TfL has been working toward migrating its payment system from closed to open since 2008. Vanderhoof said the migration involves upgrading both the front- and back-end Oyster card infrastructure.

On the front-end, card readers at turnstiles and on buses must be upgraded to accept bank-issued, network-branded contactless cards, he said. On the back-end, "their system has to be modified so that they can capture the taps when somebody enters the system or enters the bus, and when they get off, to calculate the fare and then submit that data to the settlement house so they calculate what the actual charge will be to the card," he added.

Vanderhoof can also see the logic behind upgrading the London bus system first, since that system has fewer "reader points" compared to the multitude of turnstiles and stations across London's entire mass transit system.

London buses also have the most ridership. A September 2008 TfL presentation on its open payment initiative said London's transit system services over 3 million people per day. According to the report, the London bus system accounts for 6.3 million journeys per day, while the second highest usage occurs on the London Underground, where less than half as many journeys (3.1 million) are facilitated daily.

The first U.S. installation

Vanderhoof said only in the United States and the U.K. have contactless, NFC-based payment cards been issued in large numbers. Additionally, only Salt Lake City has introduced an open fare payment transit system in the United States, with Philadelphia, Washington, Chicago, Toronto and New York in various stages of open payment development, Vanderhoof noted.

Craig Roberts, Manager for Technology Development for the Utah Transit Authority, said Salt Lake City moved to an open payment system in January 2009 after a three-and-a-half-year review process. The city's mass transit system is made up of 530 buses, light rail and commuter rail, with an average weekday ridership of 139,317 people and a total ridership in 2010 of over 39 million.

Unlike the Oyster card system in London, Salt Lake City did not have a closed-loop, proprietary card system to upgrade. Instead, the UTA's previous system was cash- and token-based - "perhaps one of the dumbest fare collections in the country," Roberts said.

Because Salt Lake City did not have to retrofit an electronic legacy system, installing an open payment system was not as complex as what the TfL will be going through, Roberts said. Only approximately 1 percent of transit payments in Salt Lake City are facilitated with bankcards today, he noted, as the UTA has not promoted that feature in order to tweak its system for maximum efficiency when the agency scales up bankcard usage.

Roberts expects bankcards to one day be a primary means of fare payment in Salt Lake City; it will offer greater convenience for transit riders and provide many benefits for the UTA, such as:

  • Greater revenue potential through more efficient services for riders
  • Reduced costs, such as no card issuing necessary by the UTA and reduction in the physical collection of cash
  • Greater flexibility for adding or changing products or services
  • Opportunity to take advantage of innovations arising from the broad payments industry ecosystem
  • Interoperability of the UTA's system with other open transit payment systems
  • More opportunities to partner with businesses to cross-promote services
  • Alleviation from certain data security and certification responsibilities
  • Greater ridership metrics (origination and destination data) to optimize service planning

Smart phones, too

Outside North America and the U.K., the movement is toward enabling mobile phones - not cards - as contactless payment devices, Vanderhoof said. Once the London transit networks are upgraded to an open payment system that accepts open-loop, contactless credit and debit cards, contactless mobile phone payments will also be viable on the system, with no additional system upgrade necessary, according to Vanderhoof.

"The mobile phone operates in what they call 'card emulation mode,' which means it communicates to the reader just like a contactless card does," he said.

But that doesn't necessarily mean all visitors to London for the 2012 Summer Olympic Games will be able to tap NFC-enabled smart phones on readers to pay for bus fares. In Asia, where such smart phones are common, technology other than the international NFC standard was adopted to render the phones contactless payment devices, Vanderhoof said.

So an Olympic sports fan from Japan will not be able to pay for bus rides around London with a smart phone intended for the Asia market. "So they have a migration step to get to become full NFC," Vanderhoof said. "And once NFC is adopted in Asia, then those mobile phones will then be able to support the international payments platform." end of article

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