T3 Webinar Question and Answer Transcript

Put it on My Card: The Trend Towards Open Fare Payment Systems in Transit Systems (January 18, 2011)

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Q. What does the “IC chip” mean?

Mike Dinning: That stands for integrated circuit chip, on the smart card. And the contactless card, as Tim says, is connected with an RF antenna. There's no power on the card but it's energized by passing within 10 centimeters of the reader. It's the same size and shape as a regular credit card but it's got an integrated circuit chip and an antenna embedded in it.

Q. What is considered health and welfare data?

Mike Dinning: That was part of Tim's presentation. Tim, I believe you were referring to the information on the status of the fare collection system itself.

Tim Weisenberger: Yes, basically uptime; whether you have a device that's down. And if you could see that in an automated manner, you could send a repair crew out to get it; that kind of thing.

Q. Is the rider able to see the balance available when they swipe their card?

Mike Dinning: Now remember you don't have to swipe any more. This is a contactless technology. So all you have to do is tap and go. In fact, some of us don't even take the card out of our wallets. You just bump up against the card reader and it reads your contactless card. So it's an extremely convenient and quick transaction. And you do see the balance. There's usually a display that gives you the balance on your card, and if you're on a distance based system the amount of the fare on the leg you just took, right next, in a little display right next to the card reader at the turnstile or fare box. You can also, on most systems — or I guess on every system — you can get the balance by just tapping your card on the card reader at a ticket vending machine.

Q. What's the cost to implement such systems on a small transit system?

Mike Dinning: I mentioned at the very beginning of the webinar that the Ventura County Transportation Commission was one of the first to implement a contactless smart card system. And those of you who know, Ventura County Transportation Commission actually coordinates five or six smaller, relatively small bus systems. So that might be a good benchmark for a small system. Also the Smart Card Alliance has issued a whitepaper on the costs of implementing a contactless transit payment system. This is one of the series of whitepapers that the Smart Card Alliance Transportation Council has prepared over the last several years. It's one of the big benefits of working with the Alliance, by the way. Tim and Brian, you have any other suggestions on how to estimate the cost of an implementation in a small system?

Tim Weisenberger: Well this is Tim. Just one thought I have; and it's not very definitive. But I know in my experience, different vendors have always kind of tried to drive into that smaller transit agency marketplace; not your large players like New York, Chicago, Washington, and on and on. And I think one of the difficulties there is when you start trying to contain the costs, you start coming up with sort of an approach that has certain aspects to it; and, for lack of a better term, it's sort of plain vanilla. But the big but is, who likes vanilla? It really is driven by what your requirements are, so it's very unique to the requirements of the agency.

Brian Stein: In summary, basically it depends what it is you do want to implement. If you want plain vanilla, to use Tim's phrase, you can go pretty much barebones. But you can have some readers in there that can withstand the environment; some barrier arranging costs. If they're not exposed to the elements, you can go with something that's off the shelf, for around the couple of hundred dollar range. But as you start wanting to introduce it to the harsh environment of transit, you need to start adding some more robustness to it. So that's going to increase the costs on there. And as you go from maybe to simply just have a simple store purse to do I want to do all these bells and whistles of everything, well that's going to drive up the cost, based on what it is you want to develop from an application perspective. So the simple answer is it depends.

Mike Dinning: A good consultant answer. But a point we were trying to make throughout the presentations is that one of the primary goals of the open system approach is to make as many of the elements of the system as much of a commodity as possible. So the components are all things you can buy from more than one vendor, and that should help drive the costs down.

Brian Stein: Correct.

Q. Are those RFPs, with open payment solutions, available to download somewhere? If yes, where can I find them?

Mike Dinning: Brian, you want to tackle that? I think you're on top of that, all the RFPs.

Brian Stein: Yes; it varies. From agencies, if they post them, if they have a website available — which more and more agencies do — you can go in and download. Some just haven't opened, but you can just go to their website and download those. Others you need to register and pay. And our recent one — and there was no PIM, but it was an RFP in New York; it was like $500 to register to get a copy of the RFP. On those, APTA does have a link to procurements that are ongoing, that can — they have the pointers to the website from there.

Mike Dinning: Yes. Again this emphasizes the value of getting involved with the APTA Fare Collection Committee and the Smart Card Alliance Transportation Council. Both those organizations are extremely good about collecting information like RFPs and distributing that right away to all their members. So again, this is — if you really want to get involved and get more information, I urge you to — you can start with the websites of the Smart Card Alliance Transportation Council and the APTA Fare Collection Committee.

Q. Please highlight the security strength of the open payment approach.

Mike Dinning: One point to make right off the bat about the security of open payments — and I think Tim and Brian both made this point — is that because the transit authorities would be partnering with financial institutions, a lot of the elements of the open payment architecture is subject to PCI standards, or payment card industry standards. And they are very stringent security standards that certainly protect all the account holder information. Other points to make Tim and Brian?

Tim Weisenberger: One place to go to learn more about those PCI standards is probably your bank. So whatever agency you're with, or organization you're with, your commercial bank would probably be able to help steer you in a direction.

Brian Stein: The banks definitely have a lot of the security standards out there. Those are the ones that currently CFMS's references and guideline. I guess it depends what you want to implement, from a security standard. And there are others. If you go into the EMC or ISO websites, you can do a search on the security standards that are available. That could help facilitate what level security you want to achieve.

Mike Dinning: Yes, I know this is another topic that we discussed pretty extensively through the Transportation Council at the Smart Card Alliance. So again the Alliance is a good resource there.

Q. Can I get copies of the presentations on the webinar?

Mike Dinning: We'll make those available in a follow-up email that you all should be receiving.

Q. With electronic payments using credit cards, who does the customer go to if they have a problem on the transit vehicle with a transaction?

Mike Dinning: I think most transit authorities would have specific policies and procedures for what happens if a card doesn't work on board, and in many cases they would just let the rider take that ride free. One of the beauties of the open payment system is that in many cases the issuer of the card will handle any problem with the card itself, and the customer's inquiries would be directed at the card issuer, not at the transit authority.

Tim Weisenberger: I agree. I think it's kind of a rules of engagement issue. But certainly colloquially what I've heard from transit agency executives is they would love it if they didn't get calls about transaction problems.

Q. Who is envisioned to provide the distributed systems and central systems? Are these from financial services or a transit agency, or does it matter?

Brian Stein: It depends on the application. It could be either.

Mike Dinning: Okay. So here — Brian's serious about that, he's not just giving you a consultant answer. A lot of these configurations do depend on the configuration at the transit authority. There are different ways you can approach it, and that's actually one of the advantages of the open architecture.

Q. For transit agencies that do not have the technology expertise on their staff, where can they find information to design such a system?

Mike Dinning: Well as I said, I think a great place to start is the strong network of transit authorities and equipment suppliers and partners that both the Smart Card Alliance and APTA have pulled together. If you go to the Smart Card Alliance or APTA meetings, you'll get a chance to meet many of the transit agencies — in fact virtually all of them — that are involved in designing and implementing this kind of system. So that's a great source of expertise. You'll also get a chance to meet with all the vendors and the potential vendors that are trying to participate in providing this kind of system and service. So that's a fantastic place to go. And finally — give a lead in to Brian and others on the call — these meetings are also attended by most of the top consultants in the payment system business. So they're always happy to provide — fill the gaps that your transit agency staff may not have the expertise. And we at the Volpe Center, even though we're part of DOT, we act like a consultant. So we've helped many transit authorities get their programs started too. So we're always happy to help.

Tim Weisenberger: Another point: I think APTA has got a very proactive set of user groups. Certain the Fare Systems and Policies Committee can tee up specific questions. I've gotten emails from folks through APTA channels that had some very specific questions. And then the other thing I would say is take a look at the CFMS Standard as a baseline, and just kind of build your education there. Mike also mentioned that there's going to be sort of Smart Card 101, Fare Collection 101 type training sessions at the two industry conferences coming up.

Brian Stein: It's simple — don't be afraid to ask. Go to your peers, and don't be afraid to approach suppliers or consultants. Granted, I'm on the consultant side now, but we're always willing to engage and help educate the process.

Mike Dinning: And I mentioned the Smart Card Alliance Transportation Council's whitepapers. There's some excellent products there, so check the Alliance's website. They've laid out — spent a lot of time laying out the various aspects of these kind of systems and the issues associated with them.

Q. Can you comment on the Department of Defense move to an open standard payment card? Do you see that driving the transit market?

Mike Dinning: Those of you who may have seen DoD's recent Request for Information will know that they're looking for a way to put a payment application on their DoD identification credential, their ID card. And one of the reasons this is important to all of us around transit is that it's an example of using a contactless identity card, or identification card, for payment of transit fares. This is possible technically because the federal government's moving to the same kind of smart card, contactless smart card, as the payment industry, compliant with the ISO Standard 14443. And Tim mentioned there's already some work at Utah Transit. They're demonstrating that they can accept these DoD ID cards on their transit system. It works just like an account-based system where the card holder identification number is read, and then he has an account in the back office. One of the big advantages of this kind of setup is that it can greatly streamline the transit benefits process. So a government employee who receives transit benefits, their agency can set up an account with the transit authority, and that will cover the cardholder's transit rides when it recognizes their ID at the turnstile. And it's not just the federal government or the DoD ID holders. As Utah Transit Authority has shown, this can be applied for any kind of employer issued ID card, if it meets those contactless card standards. In fact, in Salt Lake City they're accepting employer ID cards from four ski areas, from at least three colleges and universities, and I think plans are for other employers in the region as well. So it's really a good example of how an account-based system can facilitate acceptance of other cards. In addition to making the whole administration of transit benefits more efficient, another thing that's driving that kind of application is the fact that it should virtually eliminate a lot of the fraud that's present in the transit benefits program. Because if someone's using their ID card to ride transit, they're certainly not going to lend it or sell it to anybody else. So the transit benefits would be secure on that. So in that respect, some of the things the Department of Defense are thinking about are really an example of how open payment systems are going to work across the industry, with identification credentials. And Tim mentioned that they were — DoD's request for information also mentioned an application for an open payments — for payments on their card, and this is so some of their cardholders can use the card for payment at their DoD facilities in different parts of the world. And that application could be — I think could be — a model for other types of payments on contactless cards.

Q. Am I right that the key difference between transit smart cards and open systems is where the account data is stored? If so does the open system also require a direct data link from the bus to the back office?

Mike Dinning: For smart cards the data needs to be on the card, because there is no direct data link in the back office in most transit systems.

Tim Weisenberger: The one thing I would say is I would maybe put a fine point that it's not — I wouldn't call it account data, I'd call it more the transaction data. So on a card-based system, you're reading and writing to the card, and so you've got a bit of a transaction history log there. But then everything is moving up into the back office, so that you have all the transactions that all the cards have made. Specific to the data link, I think, at least personally, if you're — you're not going to be content to just let transaction data go through the open financial payment side of the house without at least knowing what's going on, on your system. So I think there'd be a mirror of grabbing that data. And you mentioned buses; I think what you'd have is either a near real-time transmission of the data through wireless. Or just probing is kind of the state of the art right now. Most buses get probed when their shift is done at the garage. Brian, do you want to expand on that?

Brian Stein: Yes. With the use of open payment, and a bus specifically, that traditionally has been one that's not been connected; it's been in offline mode. That's one of the, I'll say, technical challenges. But as the technology advances, it's becoming less of a challenge to have that connectivity. However, those are one of the schemes that you need to determine; what will be your business rules if you come into an offline scenario how you're going to handle that. And that comes down to what is the risk that you want to take on? And it depends; which payment instrument you're using will determine what are the banking regulations behind the risk in an offline authorization process, from that. So those would be things that you would want to speak to the payment industry to get a good understanding — what are the rules and regulations governing that process today, and where some things may be going in the future, where there may be some changes in the direction.

Mike Dinning: Yes, and that was one of the things that was so exciting about the New York City MTA demonstration with Master Card is that for a very high percentage of the time they were able to get good communications from their contactless readers on the bus, back to their clearinghouse, and provide nearly real-time authorization of those transactions.

Q. How about non-barrier commuter rail systems with conductor validation? Are there any examples?

Mike Dinning: I'd say you can see one of those examples in Salt Lake City if you come to the Smart Card Alliance Payment Summit in three weeks. Utah Transit Authority has implemented the smart card system for their commuter rail. They have card validators on the station platform, and people are looking at different kinds of validation onboard the train itself. But handheld readers have basically gotten small enough so there's not a weight or size problem, as there used to be. Brian and Tim, other points to make for commuter rail?

Tim Weisenberger: I would just say that those readers, they could actually be smart phones. There's been pilots of that three to five years ago already in Philadelphia. But — and one of the key selling points was they were able to drop a digital file of the rules and regulations, that was actually, I think, a three or four pound book, that conductors used to have to carry around with them. So it is still, I would say, a hole that needs to be closed. As I was saying earlier, I was decrying that I still have a magnetic stripe card to ride my commuter rail trains, and I don't get the advantage of that contactless. But I think as we move forward, we're seeing that everyone's really focusing on those barrier-free modes that have proof of payment issues.

Brian Stein: Right. And it's another area, too, that agencies need to decide what will be their policies and regulations. How frequently are they going to do their enforcement, and how visible is it, and random? What are the penalties if somebody is determined that they haven't validated or bought something from that? And it's looking at how things may be done today for commuter rail. I know in New York they go through the system with punch cards and the tickets. You pay a higher fee if you buy onboard. The whole policy was to get people to buy the tickets off board, but you still have that validation going through. So now introduce the RFID technology. That changes how they currently process the trains. So that needs to be thought about; how you now want to incorporate the technology to achieve a similar verification that the riders have a proof of payment coming down.

Mike Dinning: And I think Brian's making some good general points that we should stress more than we have: We like to talk a lot about the technologies involved in these payment systems, but as we all know, in implementing any kind of a technology like this, it's really just an enabler of more improved processes. So it's vital that the transit authority think through their policies, procedures and processes, and that their employees are extensively trained. Demonstrations that have been conducted in Utah and New York City on open payment systems have really helped orient all the employees of the transit authority, and their new partners in financial institutions and other organizations. So you really need to align technology with your policies and procedures, and try all that out in demonstrations. And another factor, which is vital of course, is public education. You really can't communicate too much with the public in introducing a system like this. Again, if you go to the websites for Utah Transit Authority or the New York MTA, they've done a really good job of explaining to the public how these open payment systems work; who their partners are; who to call for more information. And they've really learned a lot in doing their demonstrations, and in Utah actually implementing the system throughout the transit authority. And we'll be discussing all that, at the upcoming meetings at the Smart Card Alliance and the APTA Fare Collection meeting.

Q. Have the presenters written any papers about new approaches for multimodal strategies?

Mike Dinning: That is an excellent question. And I have to say that I don't think any of us have written any papers — at least not recently — on this topic. But I'd refer you, as one source of thinking about it, if you go to the ITS Joint Program Office and you look at some of the strategies under their Integrated Corridor Management program or initiative. Under the Integrated Corridor Management Program, several of the demonstration sites are considering linking their payment systems between transit tolls and parking. I don't think there's any site that's done it in a comprehensive way across all the modes. And that's something we're thinking of; we're going to be discussing I know at the Smart Card Alliance Meeting in Salt Lake City next month. But there's a lot of potential. Craig Roberts from Utah Transit Authority has spoken on it at our Alliance meetings, and I know will be talking about it out there next month.

Tim Weisenberger: I actually — I take a little offense. Because we actually did write a paper for the I-95 Coalition —

Mike Dinning: You're right. I'm sorry!

Tim Weisenberger: About three years ago. And it was on both best practices, but also with an eye toward multimodal payment systems. And that should be available on the I-95 Corridor Coalition site. But really what I think some of our learnings were, were surprisingly you don't see a whole lot of convergence across transportation modes, between payment systems. I think Singapore's got tolling and transit. We mentioned Washington Metro doing the tolling and parking; although strictly speaking that may not be multimodal because it's all within the Washington Metro's purview. But some of the thoughts we had were perhaps — and I mentioned this in my presentation — that because all the transportation payment systems are really stacked up and tuned to be very efficient in those modes, and they tend to be proprietary and they tend to be closed, that those are really big barriers to looking at coordination. And one of the things we came to grips with was that perhaps you need an account type of a system; whether it's a transportation account. And I've seen some consultants talk about these things as well. So I think when we move forward in these innovative avenues, perhaps we will see more coordination in a region between modes. I think — as Mike alluded to or discussed before — a lot of this is not technology; it's more governance, it's business rules, and it's processes. And one of the issues I think you see is if Tom's the head of the transit in a region, and Sally's the head of the tolling in a region, and Bill's the head of parking in a region, they really don't have bosses above them. Where it would be nice if there was a regional head, whether it's a local department of transportation, that has the purview over all the transportation in that region. Now you have someone that could see the benefit of coordination; even though it may cost a little more in one mode and a little less in another, to coordinate those things up. Just a quick anecdote. I worked for about two years in Motorola's Worldwide Smart Card Solutions Division. And you would think we could make a campus card and system work. Well we had security, the security managers, and we had the people that were in charge of the cafeteria and other accounts, and we had other people in charge of finite business processes, and they couldn't agree. We had to go all the way to the CEO of Motorola to kind of break down those barriers. So institutional and governance are really big issues, and it may not just be technology.

Mike Dinning: Sure. But one of the points we want to stress is that with an account-based system it may be much easier to do that. We could have a single transportation account, and give people incentives on the pricing between the various modes. So our questioner is right, that's a topic we all want to discuss more in the future.

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