Corporate Presentation

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Use of Bank Cards VS Transit Cards in Transit
Interoperable Fare Management Systems
Gerard NAJMAN Thales Transportation Systems
S.A. Business Development Director RCS
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Core objectives for the Transit Agencies

• Tangible improvements in customer service
• Allow any customer, occasional or unbanked, to
  travel
• Ease minimize purchase actions for customers
• Ease fare media validation improve speed and
  information displayed
• Manage customers claims in case of
  malfunctioning, lost or stolen card
• Fare Policy flexibility in a regional scheme
• Manage distance related fare systems as well as
  flat fare
• Provide the best fare to the customer, maybe
  through a combination of products
• Take into consideration the customers profile,
  and thus automatic concessions
• Operating and business efficiencies
• Reduce the cost of cash handling
• Reduce the cost of the sale channels
• Reduce the cost of fare evasion
• Reduce the cost of maintenance
• Transaction speed under the commonly requested
  250 ms
• Maximize passenger throughput to minimize dwell
  times (buses) gates (metro)
• Avoid risks of faulty transactions due to tearing
• Data security and customer privacy
• ? All these issues have been on discussion in the
  transit industry

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Key milestones for the Contactless Fare Media
Systems in Transit and related standards

• 1992 First Smart Card system in Finland (Oulu)
  using Idesco card
• 1996 First large scale Smart Card system in
  Seoul (using Mifare 1 card)
• 1997 Octopus Card system in Hong Kong (using
  Sony FeliCa technology)
• These 2 large projects convinced the ISO to
  choose the 13,56 MHz frequency for the ISO 14443
  standard for Proximity Cards (PICC)
• 1998 Publication of the ISO 14443 Standard for
  PICC
• 2000 Launch by the CEN of the Standard
  Architecture for Interoperability
• 2002 Launch by APTA of the UTFS (Universal
  Transit Fare System) Standard
• 2004 Final approval of the CEN/TC278/WG3
  Standard Architecture
• 2004 Introduction of this Standard Architecture
  into UTFS and ISO
• 2007 Publication of the US CFMS (Contactless
  Fare Media Systems) Standard
• 2007 Publication of the ISO 24014-1 Standard
  Architecture
• All provisions are made to allow interoperability
  between heterogeneous systems

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Trip Concepts Fare Policies in the Netherlands
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Implementation of check-in / check-out in buses
as in the other transit means
Check-out
Main objective ensure payments and reduce
overrides
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Daily Clearing Settlement Process
Clearing Operator (Clearing Settlement)
Transit Agencies (Settlement Reports Exception
Reports)
Transit Agencies (Transaction Data)
Central Clearing House System
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Revenue Apportionment and Clearing
Revenue apportionment 2 modes
Repartition fee (y)
Clearing House

• Sales
• Sales usage

Agency 1
Bank account debit for product renew

Agency 2
Bank account debit for product renew
Agency 3
Sale fee (x)
Bank
Point of Sale


Money flow
Credit/debit card payment
Customer
Payment for service
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Standard Interoperable Fare Management Framework
? ISO 24014-1
addresses the Transit Application not the Fare
Media
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Transit Application Management
ISO 24014-1 IFM model
Application Owner
Product Owner
Application retailer
Application management
Product retailer
C Forwarding
Customer
Service Operator
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Fare Media Management

• The Fare Media may be
• a Transit Card
• a Bank Card
• a Loyalty Card
• a NFC Mobile Phone
• etc

Card producer
Card retailer
Fare Media management
C Forwarding
Card
Service Operator
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Contactless e-Payment main features in US

• These are best known through their brand names
• PayPass from MasterCard, PayWave from Visa,
  ExpressPay from AmEx.
• Worldwide, 2 different products related to
  national bank regulations
• Mag stripe alike in US ? on-line read only
  (bank data)
• EMV compliant in all other countries ? off-line
  data read only (bank other data)
• In US
• The bank card is identified and authenticated on
  site by its number and registered
• The applicable unit fare will be debited from the
  bank account and post-paid to the Transit Agency
• The payment of a period pass by the customer has
  been done from his(her) bank account.
• All processing based on Fare Business Rules
  are performed at the Back-Office
• On-line transactions on site, unless the
  merchant (e.g. the Transit Agency) takes the risk
  for non-payment by the customer to get faster
  off-line transactions.

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Differences between Transit Application Bank
e-Payment Application in US

• Transit Application
• Fare rules processing on site
• Read and write data in the card
• Authentication in the front-end device
• Possibility to deduct and add value
• Management of transition stages
• Display a message accordingly
• Customer always aware
• Real time card inspection capability
• Customers claim card reconstruction

• Bank e-Payment Application
• Fare rules processing in the back end
• Card read only
• Authentication on-line with back end
• Values to be debited in the back end
• The transaction needs a known value
• Message on card acceptance only
• Customer will know with his bill
• No enforcement of inspection on site
• Customers claim post-billing

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Contactless Card/Fare Media and Application
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Impact of security choices (on-line VS off-line)

• On-line transaction need to scan a huge hotlist
  stored in the Back Office
• rail regular communication network
• buses, need for a real time communication over
  the air between the on-board devices and the
  Back-Office
• ? issue the validation time (probably over one
  second) related to the size of the list and
  communication and response time.
• Off-line transactions the hotlist needs to be
  stored in each front end device and updated
  nightly as in a regular Transit Fare Management
  System
• ? issue a memory size to be estimated, depending
  on the risk policy of the Transit Agency full
  hotlist or list limited to the identified
  fraudulent cards in the Transit system.

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Card Issuance by banks business issues

• Simpler for Transit Agencies as executed under
  banks responsibility,
• PayPass/PayWave/ExpressPay are linked to a bank
  account
• ? need to issue transit-only prepaid cards for
  unbanked customers,
• ? business model to assess between Banks and
  Transit Agencies to issue such prepaid cards.

• The e-Payment System alone does not seem able to
  address all riders
• If so, there is a need for a dual card
  issuance system
• a Bank Card for the banked regular commuters or
  occasional riders willing to use the e-Payment
  product,
• a Transit Card for example for unbanked
  customers and for transit benefits.

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Device approval by the Banking Sector

• All devices including a bank card reader need to
  be approved by the Banking Sector (at least 12
  months)
• Today separate PayPass, PayWave and ExpressPay
  type approvals
• The device will need an approval anytime there
  is a software change, even if only related to the
  Transit application.
• The Transit Industry needs from the Bank Industry
  a simplification of the certification process.

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Transit Agencies choices

• Financial e-payment gives strong benefits but
  cannot yet address all kinds of transit
  customers,
• The Transit Application in a dedicated media,
• The Transit Application in a co-branded Card (as
  in London, Singapore and Taipei),
• NFC phones, in which the payment is an
  additional application alongside the SIM and
  phone applications.

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Thank you for your attention !
Any question now ?

• Any further information ?
• Please contact
• gerard.najman_at_thalesgroup.com
• tel [phone]
• fax [phone]