T3 Webinar Presentation

Your Smart Phone is Getting Smarter: Leveraging Open Fare Payment Systems and Mobile Devices (June 29, 2011)

Open Payment Systems in Public Transit

Presenter:   Burt A. Wilhelm, Vice President, Integrated Solutions – US Emerging Payments
Presenter's Org:   MasterCard Worldwide

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T3 Webinars are brought to you by the ITS Professional Capacity Building (PCB) Program at the U.S. Department of Transportation's ITS Joint Program Office (JPO), Research and Innovative Technology Administration (RITA).

The slides in this presentation are branded in the upper right corner with the MasterCard Worldwide logo and many also contain the following text at the bottom: MasterCard Proprietary Information / MasterCard © 2011.

Slide 1:  Open Payment Systems in Public Transit

Burt A. Wilhelm, Vice President
Integrated Solutions – US Emerging Payments
June 29, 2011

Slide 2:  Payment Card Products

Contactless – Similar to a standard payment card with some differences...

Sample MasterCard® PayPass™ card, other branded products may be similar

[This slide contains two images: the front and back views of a MasterCard contactless payment card, which highlights the differences between it and a MasterCard credit card. The front view identifies the PayPass™ Radial Mark and the PayPass™ Identifier. The back view points out the Embedded Chip, the Shortened Signature Panel, and the Embedded Antenna.]

Slide 3:  Payment Card Products

The Financial Industry is migrating to contactless... in many forms

Sample MasterCard® PayPass™ enabled products, other branded products may be similar

[This slide contains five images of MasterCard PayPass enabled/branded products: a smart phone, a keychain card with a fob, a contactless payment card, a mobile phone with a contactless payment sticker, and a watch.]

Slide 4:  Contactless Bankcards Used In Transit

Lots of ways to say it...

  • Open System
  • Open Standards System
  • Open Bankcard System
  • Open Payments System
  • Open Standards Payments System
  • Open Contactless Payments System
  • Open Banking Standards Payment System

[This slide contains a photograph of a closeup of the face of a very happy person with a big smile.]

Slide 5:  Open Payments (continued)

So what does MasterCard® mean “Open Payments?”

Open Standard*:

  • A standard that is publicly available and has various rights to use associated with it
  • May also have various properties of how it was designed (e.g. open process)

Global Open Payments System:

  • A global payment system, specifically related to bankcard payment processing
  • Capable of accepting and processing payment transactions originated by cardholders/consumers using payment cards or devices issued by any bank globally

*Source: Wikipedia: http://en.wikipedia.org/wiki/Open_standard

Slide 6:  Traditional Transit Payment System

Transaction Process Flow*

* Illustration denotes traditional AFC system and is only one (1) of several potential payment processing schemes

[This slide contains a flow chart of the Transaction Process, which contains two sections: a Closed-Loop System and an Open-Loop System. The Closed-Loop System shows the Cardholder connected to the Merchant, which is connected to Fare Media, which is connected back to the Cardholder. The Open-Loop System shows the Acquirer connected to MasterCard, which is connected to numerous Issuers. The Closed-Loop System is connected to the Open-Loop System from the Merchant to and from the Acquirer.]

Slide 7:  Open Payments (continued)

How do “Open Payments” in transit differ from Proprietary “Closed Loop” Payments

  • With Open Payments there is no need for consumer to first buy proprietary transit fare media or load proprietary transit fare media with value before they can access transit
  • Open Payments allows consumers to simply tap with a contactless banking card/device at entry points without any prior interaction

[This slide contains three images. The first image is a photograph of a woman conducting a transaction at a customer service window, labeled 'Separate Fare Purchase/Reload'. This image has a large "Not Required" banner across it. The second image is a photograph of a contactless payment card being swiped across a PayPass detector at a transit turnstyle. It's labeled 'Access to Transit Services.' The second image has an arrow connecting it to the third image, which is a photograph of a handful of passengers inside a subway car. It's labeled 'Use of Transit Services.' ]

Slide 8:  Open Payments Solution

MasterCard Transit Risk Management Processing Flows

[This slide contains a diagram of the Processing flows. A Cardholder taps a card on the Reader. The Reader checks card information against a Local Deny List (Reader makes access control decision if 'offline.' The Reader is connected to the Third-party managed Automated Fare Collection (AFC), which is contained within the Vendor Transit Platform and manages Transit Accounts and Fare Policies. The AFC is connected to to the Acquirer for Clearing and Settling. The AFC also connects to the Transit Risk Management Processing Solution, which contains an Active Card Account List (including a Hot Card List). The Transit Risk Management Processing Solution connects to MasterCard, which routes the authorization to the Issuer on behalf of the Acquirer.]

Slide 9:  Open Payments (continued)

Benefits of Open Payments in Transit

  • Can displace cash, proprietary paper tickets/contactless cards:
    • reduced ticket vending lines and bus boarding times
    • increased passenger flow in stations & on buses
  • Can reduce need for:
    • paper ticket and/or proprietary card procurement and card security
    • ticket vending equipment and maintenance
    • issuance and vending operations staff
    • cash handling and reconciliation
    • large customer service call centre operations

Slide 10:  Open Payments (continued)

  • Standard Cardholder Devices:
    • MasterCard PayPass™ cards/devices and contactless products from other payment brands that are already in market can work in the system
      • No special application required
    • solution based on industry standards (EMV, ISO14443)
    • multiple form factors (fobs, mobile devices, stickers, etc.)
  • Standard Terminals and Readers:
    • compliant PayPass readers available via multiple vendors
    • inexpensive payment terminals available via multiple vendors
    • compliant with industry security standards (PCI DSS)
    • certified to international standards (EMV/MChip etc.)

Slide 11:  Open Payments (continued)

  • Leveraging open standards could enable rapid deployment in a transit agency or even in a region
  • Leveraging open standards can provide for increased competition:
    • more vendors competing
    • new sources for equipment

[This slide contains a graphic of six images. A center circle has lines connecting out to five rectangular boxes. The circle is labeled 'Subways,' and has a photograph of a subway car in it. The boxes each contain a label and a photograph of an example: 'Buses', 'Commuter Rail,' 'Toll Roads,' 'Taxi Cabs,' and 'Ferries'.]

Slide 12:  Open Payments (continued)

Open Standards and Business Rules

  • Open Standards can be leveraged to develop technologies to support your business needs
  • Business Rules play an important role:
    • Merchant Rules (transit specific, parameter driven)
    • Industry Rules:
      • Payments Processing
      • Data and Security Requirements and Best Practices

Open Standards and Business Rules
Used together could yield the desired solution

Slide 13:  Contact Information

Burt A. Wilhelm
Vice President
MasterCard Worldwide
Integrated Payments Solutions
US Emerging Payments

E-Mail: Burt_Wilhelm@mastercard.com
Office: 914-249-3218

Slide 14: 

[This slide contains a large MasterCard Worldwide logo and the phrase The Heart of Commerce™.]

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