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Transit Moves Contactless Payment [Smart Card Alliance 2010 Payments Summit]

Glenbrook’s Jacqueline Chilton is in Salt Lake City for the Smart Card Alliance 2010 Payments Summit.

If you have been fortunate enough to travel internationally lately, you will have noticed the efficient use of payments in many city transit systems.  From the Oyster Card in London to the Octopus card in Hong Kong and many other urban centers, smart cards are being used to make ticketing more efficient and commuting easier.   Many US cities including Washington, D.C., San Francisco, and Los Angeles transit agencies are also working to move commuters to contactless smart cards.

Mass transit is the fastest growth area for contactless smart cards globally and is forcing technology improvements to lower costs and improve processing speeds.

Locating the Summit in Utah was no accident.  The local transit authority provides an excellent case study of contactless payments with its recent implementation of a new electronic fare collection (EFC) system – “Utah Transit Authority (UTA) Showcases Open Payment System.”  UTA’s implementation is based on an open payment philosophy and is considered particularly interesting as they did not issue cards but rather accept all other cards that can communicate with their terminals.

Who would have thought your ski pass could also work on transit?  An open payments approach has created savings by using student cards, ski resort passes, and employer identification for contactless payments eliminating card issuance costs.   UTA accepts all major contactless cards including Visa payWave, MasterCard PayPass, American Express expresspay and, in trial, a new Discover Zip sticker.  The Department of Defense has also worked with UTA to evaluate providing government employees with a transit capability on the government employee personal identity verification – PIV card.  (Link for more information on government smart card activity).

The “tap on/tap off” approach provides valuable data that the transit agency will use to adjust services to reflect ridership patterns.   UTA is now able to track 95% of all taps and trips.  They use a hosted processing platform based in California to support the data gathering.  The benefits of tracking ridership and eliminating ticketing are considerable.

The implementation challenges in transit are significant.  In a major US metropolitan area there are usually multiple companies to pull together.  Installing readers on all bus doors that work with those at every train station entrance, providing payment validation on all platforms, and technology for conductor enforcement to verify payment requires extensive planning and project management.

There are many jurisdictions in the US introducing smart cards for payment.  They range from the large city centers to recent examples like Miami-Dade Transit EASY Card system, Spokane Transit Authority GO SmartCard, and King Country Metro/Sound Transit ORCA Card to name a few.

The UAT experience demonstrates that the transit use case for contactless payments is effective in increasing customer convenience, reducing costs, and improving services with better data.  There have been lessons learned in accepting multiple card types.  UTA has also encouraged progress in speeding the verification process for the conductors on the trains.  These learnings will support other transit agencies using this technology. The success of contactless cards for mass transit in the US and globally illustrates the leadership transit is taking in the growth in use of smart cards.  The debate at the Smart Card Alliance 2010 Payment Summit now turns to the point of sale merchant environment – a different challenge.

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