Doing Transit Payments Right

These days, reaping the benefits of account based ticketing requires knowledge, vision, and planning.

Account based ticketing (ABT) is not a new technology in the transportation industry. In fact, smart ticketing—from card-based to account-based—has been around for decades, dating back to the 1980s. The obvious appeal to riders initially was the simplicity the technology brought, which improved the overall customer experience while enabling complex fare policies to help agencies collect and protect revenue.

Today, we are embarking on the evolution of the account-based ticketing system into one that not only simplifies life but also leverages innovation and technology to deliver a more seamless and equitable experience that meets the needs of all customers.

With burgeoning populations and more people turning to public transportation, the need for fully integrated ABT implementations, and the benefits they bring, continues to grow around the world.

The White House’s Infrastructure Investment and Jobs Act, announced last year, includes $39 billion of new investment to modernize transit and improve accessibility for the elderly and people with disabilities. The Act embraces more than 24,000 buses, 5,000 rail cars, 200 stations, and thousands of miles of track. Now, ABT opens the door to equitable, multi-modal access to public transportation for all journey types and all people.

Multiple Benefits

ABT enables customers to travel using secure travel media. This includes anything that can be machine-read and securely authenticated, such as wearables, smart cards, barcodes, or contactless bank cards, also known as contactless EMV.

Each travel medium is associated with an account in the back-office system. When used at a validator or gate, the information is sent to this system to determine the fare charges that need to be made.

A true account-based system architecture is designed to keep pace with rapidly evolving technologies and the demand for multimodal integration. Instead of storing information on the traveler’s smart card, account-based systems move the intelligence formerly stored on fare devices in the field to the back office, along with fare policy, products, and pricing.

This makes it easier for agencies to manage changes and provides greater security and convenience for customers, who are able to manage their accounts online.

On the other hand, piecemeal procurements, where agencies around the globe purchase devices or parts of the back-office services separately, result in a completely fragmented user experience. This lack of integration can cause confusion, frustration, and distrust amongst passengers, which could ultimately lead to people avoiding public transit. In the end, the agency loses ridership and isn’t able to accomplish the goals they set in place for ABT.

Simplifying front-office validation devices, ABT removes the need for complex reference data, such as fare tables and transfer configuration. Instead, the validation devices simply need to be able to read and authenticate a travel medium alongside storing a list of cards not permitted for travel. One thing to note is that some solutions do require that a minimal amount of data be written to the token to help manage payment risk.

ABT back offices are typically robust cloud-hosted systems that can offer customer functionality not viable with traditional smart card systems. By moving complex processing—such as trip and journey construction, fare determination, and best-value functionality—to the back office, ABT can offer multiple benefits to customers. These include complex capping calculations, capping over longer periods (for example, weekly or monthly), and customer-leniency processes, such as automatic trip correction.

Importantly, ABT can remove the need for customers to purchase a ticket in advance of travel. Capable of high-speed best-value calculations, ABT can quickly identify the cheapest possible combinations of fares, capping and assessing these
for each customer using their account details, previous journeys, and any pre-purchase products they have to charge them an accurate fare (if any), without the customer ever needing to worry about having the right ticket.

Smart ticketing was designed to make customers’ journeys easier, removing decisions and worries about incorrect tickets. Providing a consistent, integrated means of paying for these services has proven to increase ridership.

Know Your Goals

Let’s dispel the myth that ABT is expensive. The truth is that it can be costly if it’s done incorrectly, for example, with a disjointed integration. Buying one component now, then purchasing add-on components down the road, will only cost more money in the long run. So it’s important to know what your goals are first before diving into an ABT implementation.

Agencies are sometimes limited by budgetary constraints or are forced to take a piecemeal approach because they aren’t allowed to sole-source with a single vendor. Some agencies just want more agility to introduce new capabilities as they are invented. However, this disjointed approach can lead to inefficiency and a loss on investments.

In fact, an ABT solution can typically work with travel media—including contactless smart cards, barcodes (printed on paper or displayed on a smart phone screen), contactless payment cards (EMV), and mobile devices—that can be authenticated and accepted by validation devices, enabling agencies to minimize the dependencies between the ABT back office and the front-office validation devices.

This makes it easier to introduce and accept new forms of travel media in the future, such as biometrics, location awareness, and ultra wideband, without making significant changes to the back office.

New York City’s public transportation system runs 24/7, accounting for one in every three users of mass transit in the United States. The New York subway system is one of the largest rapid-transit systems in the world, with 472 stations in operation. The New York Metropolitan Transportation Authority (MTA) serves 8.1 million customers per day.

However, New York’s transit system and its fare-payment infrastructure have been aging rapidly. Until recently, some of the equipment dated back to the 1930s and lacked modern functionality such as the ability to pay for fares with modern payment options or check-ride history. New Yorkers faced multiple obstacles when transferring between modes and encountering different payment and ticketing systems.

As a result, the MTA upgraded the fare-payment system on the city’s subways, buses, and trains with a modern system. The system now offers riders absolute freedom when it comes to paying for trips. New Yorkers can take advantage of the more traditional agency-issued smart cards, open payments, and digital wallets (with virtual bank cards within the smart phone wallet) at the bus and turnstile.

The project scope also includes a traveler app, expanded retail network solution, customer call center and mobile ticketing, as well as replacement of existing MetroCard vending machines and rail-ticket vending machines with universal, configurable machines capable of handling different types of fare media.

New York City’s ABT system supports future integration with other account-based fare-payment systems, offering cities, regions, and states a holistic, fully scalable solution for regional transit and surface-transport management. The solution also provides transit authorities the ability to influence traveler behavior across transit modes and support their public-equity and sustainability goals in a way that wasn’t possible before.

In another example, Chicago is home to the second-largest public-transit system in the United States, covering the city and 35 neighboring communities. In addition to the Chicago Transit Authority, regional transit services are also provided by partner agencies Metra commuter rail and Pace suburban bus, both of which connect with CTA bus and rail in numerous locations throughout the area.

The CTA faced a dilemma with its 20-year-old fare-payment system. Not only did obsolescence issues make it difficult and costly to maintain, but the aging system also didn’t have the technology to meet legislative requirements for unifying the region’s three major agencies on a single system by 2015.

With ABT, all travelers now have a one-stop app to manage their trips, make payments, and receive real-time alerts across all public transit services in the Chicago region. These features allow the agency to meet its goals of modernizing the fare-payment system and maximizing convenience and account security for its customers.

Foresight And Planning

The various types of ABT, and the crowded market of vendors that claim to offer ABT, have created confusion across the public transportation industry. There are many misconceptions and myths tied to ABT and so-called variations of ABT. Despite the relative maturity of ABT and contactless EMV acceptance in transit, confusion still exists within the transit industry.

It’s also important to note that not all account-based systems are created equal. The first objective must be to consider all travelers and their needs—not just those with a smart phone or bank card. Once these needs are defined, agencies have the potential to decommission legacy ticketing systems and minimize cost duplication, generating unrecognized value in the process.

The agencies that will reap the benefits of ABT are those that have a complete understanding of what it is and a strategic plan for a fully integrated implementation. This foresight and planning will help agencies prepare for future growth and create a better, more seamless riding experience for travelers everywhere.

—Dave Roat is strategy director at Cubic Transportation Systems