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2008 APTA Fare Collection Workshop Fare
Collection 101 Emerging Technologies Near Field
Communications and Credit Card-Based Transit
Payment
Curtis Pierce Boston MA March 2008
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Emerging standards for both cell phones and bank
cards employ contactless technology to facilitate
transit payments
NFC Cell Phones
Contactless Credit Cards

• Near Field Communication (NFC) is a set of
  standards enabling cell phones to communicate
  securely at ranges of up to 1.5 inches
• NFC can be used for payments, information
  transfer and access
• Standards for NFC, cell phone and payments
  architectures are solidifying
• Handset makers have NFC handsets in Europe
• U.S. will follow when the demand is there

• Contactless bank cards are supported by all the
  major card types and associations
• As bank cards move to smaller payments
  contactless provides added speed with increased
  security
• 35 million contactless bank cards have been
  issued in the U.S. projected to grow to 50-60
  million in 2008
• This will represent about 5 of all cards

Both technologies have adopted ISO/IEC 14443 as
the communication standard which is compatible
with most contactless card readers
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Both technologies are a natural fit for transit
payments
For the Rider

• Most riders already carry cell phones and credit
  cards
• Dont have to worry about transit tickets
• Cell phones may have higher penetration amongst
  transit riders

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Bank card transit payments have been piloted
worldwide
Dual Chip
Contactless bank payments
Chip Transit Mag Stripe Credit
Mag Stripe bank payments
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Similarly NFC pilots have been carried out
worldwide
Transit
Information Posters
Access
Hotels
Sports
Fast Food
Convenience stores
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NFC transit transaction flow
Cell phone
Payment processor
Telco back office
Cellular OTA network
Cell Chip
NFC Chip
Value Flow
Internet with secure connections
NFC 14443(A)
Web interface
Operators network
Fare gate or reader
Operator back office
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Contactless bank card transit transaction flow
Payment processor
Bank card
Contactless Chip
Value Flow
Internet with secure connections
NFC 14443(A)
Can be real-time or store and forward
Operators network
Fare gate or reader
Operator back office
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Transit operators considering either technology
for fare payments need to make key decisions
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Other elements to consider when beginning a
project

• A Transit operator will need strong business
  relationships with
• Telcos
• Banks
• Point of sale outlets
• Additional acceptance locations
• The customer experience must be held foremost
  throughout the process
• The user experience should be consistent
  regardless of payment means or mode of travel
• Speed of transaction is critical

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The next twelve months will be an exciting time
for transit payments

• Pilots around the world continue to prove NFC and
  contactless bank cards are viable payment
  platforms
• Transit payments will continue to be a highly
  visible part of the trials
• The transit industry appears to be well
  positioned to benefit from the new technology
• Technology advances suggest that real-time
  authorization can be implemented even on mobile
  readers in the near future

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Thank You

• Curtis Pierce
• Booz Allen Hamilton
• Pierce_curtis_at_bah.com
• 415.627.3370