Electronic Fare Payment (EFP), also known as Automatic Fare Collection (AFC), provides an automated means of collecting and processing fares for public transportation services such as bus, rail, ferry and other modes. Various products can be utilized by transit agencies and consumers such as smart phones (e-tickets), magnetic stripe cards (read-only or read-write), smart cards, credit cards or transponder tags to pay for transportation services. A fare system includes the functions and equipment used by a transit agency to implement a fare collection system, which can be an open system (accepts numerous payment types from multiple issuers such as credit cards) or a closed system (which accept a transit-agency fare media only).
Utah Transit Authority – Physical Architecture for their electronic fare collection system.
A fare payment system may incorporate the following components:
- ticket vending machines (TVMs),
- point of sale (POS) terminals,
- e-commerce web sites that sell fare products,
- manned card issuance and revaluation networks,
- fare gates and turnstiles,
- depot and station computers,
- customer service centers,
- merchant sales outlets,
- central computer systems, and
- clearing and settlement functions to support revenue reconciliation and other fare data analyses.
Oregon’s TriMet e-ticket smartphone application
EFP systems are typically separate from operational systems discussed in other ITS factsheets. However, EFP systems could be combined with Computer Aided Dispatch Systems (CADS), Automated Vehicle Location (AVL) systems and Advanced Traveler Information Systems (ATIS) to provide even more accurate ridership, localized ridership and advanced traveler information.
One of the challenges facing any EFP system is interoperability and the integration of systems and components from different manufacturers. This problem can arise when different types of fare collection equipment are used within one system or when a region is trying to establish a system used by one transit agency that will seamlessly operate with a different system used by another agency. Help with these issues can be found by looking at research performed through the Transit Cooperative Research Program (TCRP) on interoperability issues for smart cards and EFP systems in transit.
Factors to Consider
Electronic Fare Payment can provide benefits to an agency of any size. However, the system implementation costs are high and may be difficult to finance for smaller or rural agencies. Typically agencies with larger traffic volumes and the desire to minimize paid staff and move towards a more efficient, reliable and automated system will see the greatest benefit from an EFP system. Agencies may also look into partnering with other regional agencies, vendors or businesses to become part of a larger EFP network, which may help offset the costs.
As transit agencies consider implementing new fare payment systems, they need to keep in mind that there will be customers without access to mainstream financial services, such as bank accounts or credit cards, or customers who do not readily use new technologies, such as smartphones, and may be unable to benefit from these new fare payment systems. Accessibility of any new fare payment options must be available to all transit riders.
- Develop a structured procurement plan and performance-oriented requirements and specifications
- Involve staff from various departments and outside stakeholders, such as contractors that may provide transportation services
or may be (eventually) linked to the transit agency service and EFP network
- Visit transit agencies providing similar transportation services and discuss their EFP systems and related technologies
Utah Transit Authority electronic fare collection system
- System design and development effort
- Procurement and installation of fare collection and dispensing equipment
- Procurement and installation of computer system which meets security standards
- Installation and modification of communications system and infrastructure
- Purchase and production of fare media
- Day-to-day administration and operation
- Maintenance and repair
- Sales and distribution
- Revenue accounting
- Training (administrative, maintenance, operators, and the passenger)
- Perform rigorous testing of the entire system to identify areas where more EFP tools / coverage are needed
- Install backup systems to ensure undisrupted communication and data storage in case of failure by main network
- Develop standard data-exchange protocols to be able to add equipment from multiple vendors, operate on different bandwidths, and communicate with different technologies (reference the Transit Communications Interface Profiles—TCIP)
- Equip all systems with virus and firewall protection
- Expect learning curves as customers and agency staff transition to EFP
- EFP systems are typically independent of other ITS related systems. However, equipment from multiple vendors and among different regional area transit agencies may require special attention when planning and integrating a new EFP system
- Transit systems associated with EFP should be linked with the communication networks used by information technologies
- Use standardized technology, commercial agreements and back-office interoperability to achieve an integrated system
- In a closed system, prepaid cards issued by a transit authority are not interoperable. Prepaid cards can be loaded, reloaded or even automatically reloaded by using credit and debit cards. These systems are generally managed by transit agencies
- Open contactless systems use near field communication (NFC), which is a short-range wireless connectivity technology also known as ISO/IEC 18092
- On open contactless systems, riders are asked to register their participating cards with the transit authority to facilitate authorization when they board a transit vehicle
- Transactions in an open system must be sent to a centralized server for authorization. In a closed system, value is stored in the transit card and can be processed locally at the reader and reconciled later with the centralized server at specific times during the day
- Many transit agencies are moving toward cloud-based back ends for customer service and support
Benefits and Costs
The majority of benefits in any new EFP system accrue to transit users in the form of customer convenience. Transit agencies benefit from reduced operations and maintenance costs, a reduction in fare evasion and increased efficiency of money handling processes.
Benefits of a Closed System
- Transit authority acts as its own bank for issuing the stored-value payment cards and the financial clearinghouse for transaction settlements
- Build and maintain infrastructure to support card issuing and transaction processing services
- Riders must purchase and carry a transit form of payment
- Proprietary fare payment technology
Benefits of an Open System
- Transit authority accepts an open bankcard payment and doesn’t have to support their own infrastructure to process fare payments
- Eliminates the transit authority from being in the banking and payment processing business
- Eliminates the need for proprietary equipment
- Customer convenience
- Transit authority gets out of the ticket business
The costs of an electronic fare payment system are highly dependent on the type of system and technology deployed. Most automated fare systems can increase customer satisfaction, attract new riders and increase operating efficiency while decreasing cash handling costs. In exchange, agencies must incur capital costs, clearinghouse costs and recurring maintenance costs for card readers. Clearinghouse costs can be shared in an open or regional system or an agency can charge other merchants fees for using their transaction processing systems.
A new entry/exit card reader can cost between $10,000 and $15,000. Upgrading an existing card reader from a closed to an open system can be done in some cases for around $5,000 per fare box. A new payment technology initiative can cost upwards of $50 to $100 million to procure and install system-wide in a major city transit and bus system.
For a closed system the transit agency buys smart cards and equipment that is able to read the cards, adds their logo, issues, distributes and sells the cards, and is able to recharge or add value to the smart cards. In an open system the process for fare payments is centered on banks and financial institutions, not the transit agency. Open and closed systems both require card readers that must be maintained by the transit authority. In an open system, the need for transit-agency-issued fare-media machines and live ticket agents at transit stations is reduced or eliminated.