ITS Transit Standards Professional Capacity Building Program

Module 12: Electronic Fare Payment/Advanced Payment Systems: Open Payments

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Slide 1:

Welcome - Graphic image of introductory slide. Please see the Extended Text Description below.

(Extended Text Description: Welcome - Graphic image of introductory slide. A large dark blue rectangle with a wide, light grid pattern at the top half and bands of dark and lighter blue bands below. There is a white square ITS logo box with words "Standards ITS Training - Transit" in green and blue on the middle left side. The word "Welcome" in white is to the right of the logo. Under the logo box is the logo for the U.S. Department of Transpotation, Office of the Assistant Secretary for Research and Technology.)

Slide 2:

Module 12 - Electronic Fare Payment / Advanced Payment Systems: Open Payments Acceptance. Please see the Extended Text Description below.

(Extended Text Description: Title slide contain a blurred image of a bus with the text "Module 12 - Electronic Fare Payment / Advanced Payment Systems: Open Payments Acceptance" superimposed on top of that image. The contactless symbol, a graphic showing a card toward four curved lines representing radio waves within an oval, is also superimposed on the bus image along with a stylized image of a credit card. The bus image was provided under permission from the Rogue Valley Transit District (RVTD) in Medford, Oregon. The contactless symbol was provided under license from EMVCo.)

Slide 3:

Instructor

Headshot photo of Gary B. Yamamura

Gary B. Yamamura

Principal Consultant

Three Point Consulting, Inc.

Slide 4:

Learning Objectives

Slide 5:

Learning Objective 1

Slide 6:

Understand the roles and responsibilities of the key stakeholders and their influence on Open Payment implementations

Slide 7:

Open Payments Acceptance

The term Open Payments refers to the acceptance of bank-issued, contactless

Contactless bankcards may be:

Background image - faded photo of a group of bankcards placed on top of each other with only the left side of each card visible.

Image provided under license from ThinkStock®

Supplement icon indicating items or information that are further explained/detailed in the Student Supplement.

Slide 8:

Key Terms and Abbreviations

Graphic image of a brass key

Image provided under license from Microsoft®

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Slide 9:

Stakeholders

This slide, entitled Stakeholders, has a graphic showing an organization chart. Please see the Extended Text Description below.

(Extended Text Description: This slide, entitled Stakeholders, has a graphic showing an organization chart with nine (9) different colored boxes that represent the stakeholder groups that control and/or support open payments acceptance. The boxes are labeled, from top to bottom, left to right: Card Networks, Issuers, Acquirers, Mobile Payment System Operators, Independent Sales Organizations, Payment Gateways, Merchant (Transit Agency), System Integrator, and Cardholders (Passengers).)

Slide 10:

Card Networks

In the upper right corner of the slide is another graphic, which is a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Card Networks is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Graphic image with 4 graphics aligned along the bottom, which are the acceptance marks of the four major card networks operating in the US – Visa, MasterCard, American Express, and Discover.

Slide 11:

Issuer

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Issuer is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Examples

Slide 12:

Acquirer

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Acquirer is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Examples

Slide 13:

ISO

Independent Sales Organization

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Independent Sales Organizations (ISOs) is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Examples

Slide 14:

Payment Gateway

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Payment Gateway is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Examples

Slide 15:

Mobile Payment System Operator

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Mobile Payment System Operator is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Examples

Background image - faded image of a tray or tablet with backside of credit cards.

Image provided under license from ThinkStock®

Slide 16:

System Integrator

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the System Integrator is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Examples

Slide 17:

Merchant (Transit Agency)

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Transit Agency is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Examples

Slide 18:

Cardholder

A small graphic on this slide indicating organization - a small outline of the organization chart shown on slide #9. Only the box on the chart that represents the Cardholder is shown in color. All of the other boxes are gray.

Roles and Responsibilities

Slide 19:

Recognize the difference between standards, specifications and regulations and the importance of these documents in defining, procuring, implementing and maintaining an EFP system with Open Payments acceptance

Supplement icon indicating items or information that are further explained/detailed in the Student Supplement.

Slide 20:

Standards

Definition

A document that defines processes, procedures and/or technology for the common and repeated use of a system that has been established by consensus and approved by a recognized organization.

International standards are formally approved and maintained by the International Standards Organization (ISO) and/or the International Electrotechnical Commission (IEC).

Key standards

Slide 21:

Specifications

Definition

A detailed description of the performance requirements, dimensions, materials, and interfaces for the development and/or use of a technology or process.

Specifications are typically defined and maintained by the party that offers the technology or process and may be changed at any time.

Key specifications

Slide 22:

Scope of Impact

Scope of Impact graphic. Please see the Extended Text Description below.

(Extended Text Description: This figure has a graphic with five square boxes with rounded corners. Those five boxes represent the major components of an Electronic Fare Payment System and are labeled from top to bottom, left to right: Acquirer, Fare Media, Reader, Local Device and Central System. Above, below and to the right of that graphic are colored boxes that identify the international standards, federal regulations, and specifications that are applicable to the acceptance of open payments. Those boxes are labeled, from top to bottom, left to right: EMV, Network Specs, ISO/IEC 8583, Regulation II, ISO/IEC 18092, ISO/IEC 14443, Regulation E, Regulation V, and PCI DSS. There are arrows leading from the second sets of boxes outward to indicate the component(s) that is/are potentially covered by the standard, regulation, or specification.)

Remember icon. Used when referencing something already discussed in the module that is necessary to recount.

Slide 23:

Payment Card Industry Data Security Standard (PCI DSS)

A green colored box - corresponds with the color of the box used in the graphic on slide 22.

Tools/Applications icon. An industry-specific item a person would use to accomplish a specific task, and applying that tool to fit your need.

Slide 24:

ISO/IEC 14443

A green colored box - corresponds with the color of the box used in the graphic on slide 22.

Contactless integrated circuit cards -Proximity cards

Remember icon. Used when referencing something already discussed in the module that is necessary to recount.

Slide 25:

ISO/IEC 8583

A green colored box - corresponds with the color of the box used in the graphic on slide 22.

Financial transaction card originated messages, Interchange message specifications

Remember icon. Used when referencing something already discussed in the module that is necessary to recount.

Slide 26:

ISO/IEC 18092

A green colored box - corresponds with the color of the box used in the graphic on slide 22.

Information Technology, Telecommunications and Information Exchange between systems, Near Field Communication, Interface, and Protocol (NFCIP-1)

Remember icon. Used when referencing something already discussed in the module that is necessary to recount.

Slide 27:

EMV

Europay MasterCard, Visa Specifications

A red colored box - corresponds with the color of the box used in the graphic on slide 22.

Remember icon. Used when referencing something already discussed in the module that is necessary to recount.

Slide 28:

Card Network Contactless Card Specifications

A red colored box - corresponds with the color of the box used in the graphic on slide 22.

Remember icon. Used when referencing something already discussed in the module that is necessary to recount.

Slide 29:

Card Network Operating Rules

Tools/Applications icon. An industry-specific item a person would use to accomplish a specific task, and applying that tool to fit your need.

Slide 30:

Regulations

In the U.S., various federal regulations impact acceptance of bankcard transactions. These include:

Slide 31:

Regulation E

Electronic Fund Transfer Act

A blue colored box - corresponds with the color of the box used in the graphic on slide 22.

Tools/Applications icon. An industry-specific item a person would use to accomplish a specific task, and applying that tool to fit your need.

Slide 32:

Regulation II

Debit Card Interchange Fees and Routing

A blue colored box - corresponds with the color of the box used in the graphic on slide 22.

Tools/Applications icon. An industry-specific item a person would use to accomplish a specific task, and applying that tool to fit your need.

Slide 33:

Regulation V

Fair and Accurate Transactions Act

A blue colored box - corresponds with the color of the box used in the graphic on slide 22.

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Slide 34:

Activity. A placeholder graphic with an image of hand over a computer keyboard to show that an activity is taking place.

Slide 35:

Question

Which of the following is NOT a key stakeholder for an EFPS that accepts Open Payments?

Answer Choices

  1. Issuer
  2. Card Network
  3. POS Terminal Manufacturer
  4. Cardholder

Slide 36:

Review of Answers

A small graphical red and yellow X representing incorrect.a) Issuer
Incorrect. The issuer provides cards and card accounts for use in an EFPS system that accepts open payments.

A small graphical red and yellow X representing incorrect.b) Card Network
Incorrect. The card network provides a global platform that facilitates open payments.

A small graphical green and yellow check mark representing correct.c) POS Terminal Manufacturer
Correct! Although the POS Terminal Manufacturer may make equipment for open payment processing, this equipment can be supplied by a variety of different providers.

A small graphical red and yellow X representing incorrect.d) Cardholder
Incorrect. The Cardholders carry and use contactless bankcards in an EFPS that accepts open payments.

Slide 37:

Learning Objective 2

Slide 38:

Common Benefits

Eliminates need for passengers to:

Slide 39:

Common Benefits

Reduces agency need for:

Background image - faded image has a graphic of a hand placing a coin in a slot in the face of a vending machine.

Image provided under license from ThinkStock®

Slide 40:

Common Benefits

Transfers responsibilities to card issuer

Slide 41:

Shared Issues

First tap risk

Mitigation strategy:

Slide 42:

Shared Issues

Merchant fees

Mitigation strategy:

Background image - faded image has a graphic of a person with an outstretched hand. Above the hand are three dollar symbols.

Image provided under license from ThinkStock®

Slide 43:

Shared Issues

Minimal security for offline payments

Mitigation strategy:

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Image provided under license from ThinkStock®

Slide 44:

Lack of cardholder adoption

Mitigation strategy:

Slide 45:

Shared Issues

Cost of compliance

Mitigation strategy:

Slide 46:

Shared Issues

Few systems in revenue service

Mitigation strategy:

Slide 47:

Shared Issues

Long certification queues

Mitigation strategy:

Slide 48:

Shared Issues

Title VI conflicts

Mitigation strategy:

Slide 49:

Pay as You Go

Open Payments accepted only as Pay As You Go (PAYG) fares

Slide 50:

Pay as You Go

Unique attributes for this method

This slide, entitled Pay as You Go, has a chart with four columns. Please see the Extended Text Description below.

(Extended Text Description: This slide, entitled Pay as You Go, has a chart with four columns. There are three rows in the table and the headings in the first row are Agency and Passenger. Large plus and minus signs appear to the left of the second and third row, respectively. Inside the cells in the table are green and red circles with text that identify attributes associated with the particular type of system being described. The content of the table is as follows:

  Agency Passenger
+ Less* complex platform Possible increase in fare revenue Easy to use  
- Maximum* merchant fees   Highest fare paid Every ride incurs fare

)

* When compared to other Open Payment methods

Slide 51:

PAYG with Fare Capping

Open Payments accepted as PAYG fares with fare capping

Slide 52:

PAYG with Fare Capping

Unique attributes for this method

This slide, entitled PAYG with Fare Capping, has a chart with four columns. Please see the Extended Text Description below.

(Extended Text Description: This slide, entitled PAYG with Fare Capping, has a chart with four columns. There are three rows in the table and the headings in the first row are Agency and Passenger. Large plus and minus signs appear to the left of the second and third row, respectively. Inside the cells in the table are green and red circles with text that identify attributes associated with the particular type of system being described. The content of the table is as follows:

  Agency Passenger
+ Lower merchant fees   Easy to use Faurest fare (for full fare riders)
- Reduced fare revenue Added* platform complexity No special fare program discounts  

)

* When compared to other Open Payment methods

Slide 53:

PAYG with Account-based System

Open Payments accepted as PAYG fares with option to link bankcards to transit accounts

Slide 54:

PAYG with Account-based System

Unique attributes for this method

This slide, entitled PAYG with Fare Capping, has a chart with four columns. Please see the Extended Text Description below.

(Extended Text Description: This slide, entitled PAYG with Fare Capping, has a chart with four columns. There are three rows in the table and the headings in the first row are Agency and Passenger. Large plus and minus signs appear to the left of the second and third row, respectively. Inside the cells in the table are green and red circles with text that identify attributes associated with the particular type of system being described. The content of the table is as follows:

  Agency Passenger
+ Supports current fare policy Higher % of riders served** More choices for discounts and passes  
- Highest* platform complexity Requires network for fare product sales Account required for discounts More difficult to use

)

*When compared to other Open Payment methods
** If agency-issued cards provided to unbanked

Slide 55:

Comparison

  PAYG (Only) PAYG with Fare Capping PAYG With Account-based System
Complexity Lowest Higher Highest
Ease of Use Easy Easy Complex
Fares No discounts Fairest Discounts and passes
Fees Highest Lower Depends on usage
Revenue Higher (maybe) Reduced Minimal impact
Passengers Banked only*

* If no agency-issued prepaid debit card or transit benefits prepaid debit card available

Slide 56:

Activity. A placeholder graphic with an image of hand over a computer keyboard to show that an activity is taking place.

Slide 57:

Question

Which of these Open Payments acceptance methods enables passenger purchase and use of prepaid fare products?

Answer Choices

  1. Pay as You Go
  2. Pay as You Go + Fare Capping
  3. Pay as You Go + Account-based

Slide 58:

Review of Answers

A small graphical red and yellow X representing incorrect.a) Pay as You Go
Incorrect. Using the basic Pay as You Go method, passengers are only able to make full fare payments using their contactless bankcard.

A small graphical red and yellow X representing incorrect.b) Pay as You Go + Fare Capping
Incorrect. Like the basic Pay as You Go method, passengers are only able to make full fare payments using their contactless bankcard. The EFPS tracks these payments and, once a predetermined maximum dollar amount has been reached, all subsequent fares using the same card within a set period of time are waived.

A small graphical green and yellow check mark representing correct.c) Pay as You Go + Account-based
Correct! Using this implementation method, passengers may elect to create a virtual account that is linked to a particular contactless bankcard. The passenger can then add stored value and/or a pass product to that account to pay fares.

Slide 59:

Learning Objective 3

Slide 60:

Understand and Assess the Costs of Merchant Fees

Background image - a faded photo of scattered US coins and dollar bills.

Image provided under license from ThinkStock®

Slide 61:

Understand and Assess the Costs of Merchant Fees

* Excludes Visa Fixed Acquirer Network Fee (FANF). A monthly fee up to $85 assessed for each payment location

Slide 62:

Understand and Assess the Costs of Merchant Fees

Typical Fee Calculation - Credit Card

Fee Type Fixed Variable Fees on $2 fare
Interchange $0.0400 1.65% $0.07
Assessments $0.0223 0.13% $0.03
Acquirer $0.0500 0.20% $0.06
Total fees: $0.16 (8.0%)

Example uses Visa interchange rates as of October 2015, Custom Payment Services (CPS) small ticket, credit

Example icon. Can be real-world (case study), hypothetical, a sample of a table, etc.

Slide 63:

Understand and Assess the Costs of Merchant Fees

Typical Fee Calculation - Debit Card

Fee Type Fixed Variable Fees on $2 fare
Interchange $0.2200 0.50% $0.23
Assessments $0.0223 0.13% $0.03
Acquirer $0.0500 0.20% $0.06
Total fees: $0.32 (16%)

Example uses Visa interchange rates as of October 2015, CPS small ticket, debit

Example icon. Can be real-world (case study), hypothetical, a sample of a table, etc.

Slide 64:

Understand and Assess the Costs of Merchant Fees Aggregation

* Excludes Visa FANF. A monthly fee up to $85 assessed for each payment location

Slide 65:

Key Risks

Recognize the key operational risks and best practices for mitigation

Background image - faded photo of a laptop computer sitting on top of a table to the right of a wallet. There is a hand and a portion of an arm reaching out from a hole in the display of the computer to the wallet and pulling out a bankcard.

Image provided under license from ThinkStock®

Slide 66:

Key Risks

Recognize the key operational risks

Slide 67:

Best Practices

Best practices for mitigation

Slide 68:

Best Practices

Best practices for mitigation

Slide 69:

Best Practices

Best practices for mitigation

Slide 70:

Recognize and Quantify the Benefits

Slide 71:

Recognize and Quantify the Benefits

Slide 72:

Activity. A placeholder graphic with an image of hand over a computer keyboard to show that an activity is taking place.

Slide 73:

Question

Which of the following is NOT a key risk associated with the implementation of Open Payment Acceptance with an EFPS?

Answer Choices

  1. Obsolete technology
  2. Operational costs: Standard compliance and merchant fees
  3. Bankcard data breach
  4. Issuer participation

Slide 74:

Review of Answers

A small graphical green and yellow check mark representing correct.a) Obsolete technology
Correct! Although the potential for technology to be or become obsolete within the expected life of an EFPS is always a concern, this is not a risk specific to open payments acceptance.

A small graphical red and yellow X representing incorrect.b) Operational costs: Standards compliance and merchant fees
Incorrect. The regulations, standard, specifications and fees applicable to open payments acceptance is constantly changing, making the cost associated with these elements a key risk for the agency.

A small graphical red and yellow X representing incorrect.c) Bankcard data breach
Incorrect. The acceptance of open payments may make the agency a target for theft of the bankcard data.

A small graphical red and yellow X representing incorrect.d) Issuer participation
Incorrect. Open payments acceptance is dependent on widespread issuance and promotion of contactless bankcards.

Slide 75:

Case Study. A placeholder graphic of a control center and staff at their stations indicating a Case Study follows.

Slide 76:

Case Study - Utah Transit Authority

Electronic Fare Program

A photo of a card validator sitting on a train station platform. In the background, there is a commuter train and stair rails. Superimposed on the photo is the logo of the Utah Transit Authority, with the letters UTA and a red, white and blue symbol.

Image and logo used by permission from UTA

Example icon. Can be real-world (case study), hypothetical, a sample of a table, etc.

Slide 77:

Case Study - Transport for London

Contactless EMV

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Image provided under license from ThinkStock®

Example icon. Can be real-world (case study), hypothetical, a sample of a table, etc.

Slide 78:

Case Study - Chicago Transit Authority

Ventra Card HH

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Image provided under license from ThinkStock®

Example icon. Can be real-world (case study), hypothetical, a sample of a table, etc.

Slide 79:

Module Summary

What We Have Learned

  1. Open Payments acceptance is defined by various international standards, specifications, and federal regulations.
  2. There are three primary options for implementing Open Payments acceptance.
  3. There are distinct costs, risks, and benefits associated with Open Payments acceptance.

Slide 80:

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