Thursday 4th June 2020

Why account-based ticketing in transport shouldn’t always mean EMV

Published on April 22nd, 2020

An interesting observation has occurred to me during industry conferences I’ve attended and recent articles I’ve read, says Jean-Philippe Wolyniec, Marketing Working Group Chair at OSPT Alliance. I felt it important to address this issue: ABT is rarely distinguished from Europay, MasterCard and Visa (EMV).

While an EMV transit system is a form ofaccount-based ticketing (ABT), this assimilation is problematic. And crucially, it’s prohibiting PTOs and
Public Transport Agency’s from being able to make the best decisions for their local markets.

Under pressure to deliver more digitalised, on-demand and value-added services, transport operators are facing an influx of information and choices to make. And, as an enabler of mobile and contactless services, ABT is a compelling solution. The increasing reference to ABT when a pure EMV system is being discussed, however, is impairing the ability of decision makers to differentiate between the nuances and benefits of ABT models with and without EMV.

A universal truth is that each transport market is highly unique. While EMV may be the best solution for some, the reality is that a standardised deployment of this model is not best suited to everyone. To help bring some clarity, let’s do a few fact checks.

ABT – Fact check

A definition frequently cited by US-based industry body, the Secure Technology Alliance, defines ABT as: “the transit fare collection system architecture that uses the back-office system to apply relevant business rules, determine the fare, and settle the transaction.” Essentially, the ‘smart thinking’ moves from the front end (fare media, such as a card) to the back end (a cloud-based system managed by the operator).

The benefits are numerous: simpler system management, reduced operational costs (including the dematerialisation of tickets), quicker throughput, more competitive business models, simplified connection with adjacent services…. For consumers, it also empowers them to top-up remotely and use a range of fare media, whether that be a card, mobile or wearable. In the age of mobility-as-a-service (MaaS), migrating to an ABT system makes perfect sense to most operators.

Jean-Philippe Wolyniec

So, why the confusion with EMV? Most would likely point to the most frequently cited ABT success story – Transport for London (TfL), which uses EMV. But there are distinct differences in implementation and important considerations needed before deciding to launch EMV.

Account-based systems can take many forms: with or without EMV, with or without a closed-loop card, online or offline. Indeed, a hybrid form of an ABT system with an EMV plug-in is even possible. So, to help make sense of it all, here’s the key considerations needed.

Considering EMV

All’s fare in EMV and ABT – or is it?

Without owning the fare media, EMV acceptance generally means a flat fare is needed across the entire network. Capping rules and limits can be applied, but these are highly complex to implement and maintain in the field.

While this works well for infrequent travellers (such as tourists), it’s far less cost effective for regular commuters, concessions or children who’d usually benefit from a discounted fare. This also raises another challenge in considering those without bank accounts, such as children, who’d be without access to a bank card for example.

As Andy Yip of Octopus International Business said, “operators need to keep in mind that not all passengers will have an EMV card. To be inclusive and adhere to the principle of public transport – to provide transportation to (all) public, a more inclusive and convenient option should always be available to everyone.”

Love your legacy

Projects rarely plan to entirely replace the existing smartcard system, and witha Snapper report finding most only estimate for 20% adoption of EMV it’s important to consider the ROI of EMV. The longevity of Transport for London (TfL)’s Oyster scheme speaks to this. Since the introduction of EMV in 2012, contactless EMV still only comprises 22% of all journeys at TfL, and roughly half of the total pay-as-you-go journeys.

In 2018, the launch of a new TfL app enabling passengers to top-up their Oyster card ‘on the go’ from their smartphone and to view their journey history made this legacy media even more appealing and user-friendly. In addition to how big your current customer base is, this also poses the question of how important your brand is. To migrate entirely to EMV would forfeit brand ownership and management – not to mention all transactions would be subject to a cut from schemes and banks.

Risk management

All systems require a level of risk management in order to maintain throughput levels – a purely online ABT system would require internet connectivity speeds and reliability currently unavailable. For EMV, this requires its own unique ‘payment and processing later’ model to accommodate where funds may not be available. It’s possible to set up a settlement process with issuers however, this creates additional partnerships that, in turn, require time and money to manage.

Did somebody say data?

A major benefit of an ABT system is increased access to valuable traveller data previously unavailable which can, in turn, be analysed and used to inform new and competitive business and pricing models.

With an EMV implementation, it’s worth noting that the involvement of schemes and banks will reduce the amount of data available to process and evaluate.

Defining your migration to ABT

Undoubtedly, the coming years will be defined by a migration of AFC systems to ABT in some form. The level of convenience offered by EMV acceptance is high but it’s vital that before taking the jump, operators listen beyond the EMV buzz and consider all the factors.

Even simply considering a hybrid ABT system with EMV included can be a game changer for operators to maximise the success of existing legacy systems, minimise costs, and easily enable acceptance of new fare media and the addition of new features.

Singapore is just one example where they have moved from EMV to a hybrid system. EZ-Link, which covers both the Mass Rapid Transit (MRT) and Light Rail Transit (LRT) in Singapore, is a brilliant example of a value-adding ABT system. Managed via the mobile app, travellers can track transactions, block, and top-up their account on the move.

The app also brings additional benefits such as a reward scheme, support for adjacent services such as car parking, and auto-reload functions. Travellers are also given the choice of using either their EZ-Link card or mobile as the fare media.

Another factor commonly overlooked by operators is the benefits of utilising open standards. By championing openness, operators can be freed from the constraints and costs of vendor lock-in, while empowered to innovate and upgrade systems more easily and at a pace they define.

OSPT Alliance’s proven standard, CIPURSE, is pre-packed with a high level of functionality and offers a strong foundation for any ABT project. Earlier this year, we also announced our collaboration with Calypso Networks Association (CNA) to further simplify and fast-track global adoption of transit ticketing open standards. By combining efforts and expertise, selecting open standards has never been a more compelling or futureproof option. For more insight into ABT, and the benefits of utilising CIPURSE and its in-built CCR (Customer Convenience Register) functionality, download our eBook.

The author is Jean-Philippe Wolyniec, Marketing Working Group chair at OSPT Alliance.

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