Mobile Payment and Service Strategies for Public Transport · 27.02.2009 · Transit and Contactless Smart Cards. 2. Customer Service and Distribution. 3. Transit and Mobile. 4

Mobile Payment and Service Strategies

for Public Transport

Mobile Payment and Service Strategies

for Public TransportBuilding on Contactless Programs and

APTA StandardsFebruary 26, 2009

Confidential & Proprietary 2

Table of Contents

1. Transit and Contactless Smart Cards2. Customer Service and Distribution3. Transit and Mobile4. Contactless Payments5. Transit as a Merchant6. The UTFS Task Force and CFMS7. NFC and Mobile Payment8. Getting Traction with Mobile9. Managing the Way Forward


Transit and Contactless Smart Cards

Transit Agencies worldwide have moved to contactless smart card based fare systemsObjectives include greater patron convenience, more flexible fares, better customer service and lower operating costsNumerous successful programs are operating worldwide in large scaleIn the US, 14 programs are operational with more than 40,000 contactless terminals installedRegional transit brands (e.g. SmarTrip, Breeze, TAP) have been established to facilitate multi-agency acceptance at the local levelSystems have been delivered using both proprietary solutions andopen published standards


Customer Service and Distribution

Contactless programs offer several improvements to customer service and distribution models

Cards are long life and re-loadableCards may be distributed in collaboration with 3rd partiesUsers may register their cards and enroll in automatic replenishment programs

• This encourages electronic payment, reduces cash processing, and improves throughput times

Web based services enable customer self serviceEnrollment/registration establishes a closer relationship with the user


Web Based Customer Service Tools

Purchase a new cardReload an existing cardReview account informationChange payment options.Review balance and passesRegister cardSet up threshold autoload (automatic reload)View transaction and purchase historyLink other cards to this accounthttp://www.pathsmartlinkcard.com/


Transit and Mobile Commerce

Mobile Phones offer the potential to serve in many fare system roles:

An internet access deviceA portable point of sale deviceA self service kioskA customer service response nodeA personalized mail boxA delivery channel for promotional messagingA fare payment device


Taking Advantage of Mobile

Benefits will be achieved throughLower cost of customer service provision due to fewer calls and automated response mechanismsMore immediate response to customer service inquiriesProactive delivery of information driving down customer queries and improving customer satisfactionLower cost of fare media and distribution costs as “virtual smart cards” are carried on phonesThe ability to support multiple payment mechanisms and drive payment behavior through systems and promotional strategiesThe ability to generate new revenue streams through promotional partnerships


Transit as a Merchant

Transit authorities currently accept credit and debit cards at vending machines, on-line, and via attended service locationsAs fare systems are opened for contactless payments each device becomes a specialized POS terminalAs with other merchant categories, transit authorities will wish to manage the payment behavior of their customers to drive cost optimizationWith a mix of pre-paid, account based, credit, and debit products available, product strategies will need to consider such managementFor those running card based systems, the application enables a mobile program without dependency on outside “card” issuers


Payment Options and Managing the Mix

Whether card based or account based, fares and fare products can be purchased via many sources of funds

CreditSignature DebitPIN DebitPre-paid account

• Private • Bank/Association sponsored

ACHElectronic CheckElectronic Benefits AccountCash

Supporting a discreet mobile ticketing application can be used as both a customer service and payment mix management tool


The UTFS Task Force and CFMS

The task force was formed in 2001 with the objective of establishing an open interoperability standard for transit smartcardsA series of work groups composed of AFC suppliers, consultants, agencies, and component manufacturers involving more than 20 organizations developed the Contactless Fare Media StandardCFMS was ratified by the APTA Leadership in 2007It was developed in collaboration with the Port Authority New York/New Jersey who had sponsored the NY/NJ Regional Interoperability SpecificationTwo operational systems are utilizing the standard (PATH and PACTO) while a third (Miami MetroDade) is in the implementation stage


The Task Force and the Mobile Initiative

Objective is to define a business model using a mobile phone as a customer service delivery channel

Workshop held at APTA Annual Conference in OctoberIdentify business motivators for mobile telcos and transit agenciesIdentify transit related applications and key business drivers

Players and rolesApplicable business modelsArchitecture

Develop business model for selected applicationsDevelop implementation plan for moving forward


Payment

Discounts and Loyalty Benefits

Transit Information

APPLICATION

Transit payment applicationConctless bank applicationMobile telco payment application

Discounts associated with fare structureCoupons delivered to transit customers through arrangements between transit agency and third partyCoupons delivered to telco customers using transit through an arrangement between transit and telco

Schedules, fares, system mapsReal time operational issues, such as

DelaysCrowded trains

Parking lot status

DESCRIPTION

Examples of key Mobile applications in transit


Examples of key players in the transit-Mobile eco system

Payment

Discounts and Loyalty Benefits

Transit Information

APPLICATION

Transit Agency selects payment application type and establishes acceptance infrastructureTelco provides payment devicePayment gateway and processing provided by either

Transit AgencyTelcoThird party acquirer, processor

Transit Agency provides access to customersTelco provides gateway to coupon delivery hostCoupons or loyalty benefits to discounted products

Transit AgencyTelcoThird party

Transaction processor provides back-office processing for settlement and reconciliation of coupons issues

Transit Agency is source of information Telco provides gateway to informationInformation may be hosted by either

Transit AgencyTelcoThird party

KEY PLAYERS AND ROLE


There are several proven revenue generating models

Software,

Mobile phone ring tones

Single one time charge

Purchase

Website access

Accessing Parking information

Fee collected for each usage or accessPer-Transaction

Per-Click

Web information services,

Transit Information Services

Payment for access privileges for a period of time

Subscription

Website banners

On Mobile Phone Display

Software distribution

Transit Payment Application

Examples

Advertising

License

Revenue Generation Model

Advertising revenue to offset cost for the delivery of services

Fee collected per application issued

Frequency of Occurrence


NFC and Mobile Payment

With NFC, application data and products can be delivered to the phone and electronically processed via the proximity interfaceEstablishing the ecosystem to support this is a complex undertaking both in terms of standards development and commercial modelingThe lack of mature commercial models is holding back the carriers and handset makers thus stalling adoptionForward forecasts of market penetration are being ramped back with many not projecting critical mass until 2014This said, the stakeholders appear committed to working through the issues and such critical mass is indeed expected


Preliminary baseline architecture has been developed and distributed


BART NFC Pilot

ObjectivesDemonstrate that the BART EZ Rider Transit Application can be provisioned Over the Air (OTA)Demonstrate that value loads (Top Up) of the transit e-purse can be successfully initiated OTA from SprintDemonstrate that an NFC enabled phone can be used for fare payment at BART faregatesDemonstrate the use of a third party payment processor for processing credit card payments and remittance of funds to BART from Sprint managed Top-Ups


BART NFC TrialJan Jan –– May 2008 Trial: May 2008 Trial: -- Full OTA Provisioning of Transit and Full OTA Provisioning of Transit and

Merchant Cards.Merchant Cards.

3. Wave your phone on the faregate to ride the BART to your favorite Jack in the Box location

1. Tap your phone on “Find Your Burger” NFC Poster at a BART Station in San Francisco

2. Get directions to the nearest Jack in the Box on your phone screen

4. Pay for your meal with your Jack CA$H prepaid card on ViVOpayreaders


BART Pilot Scope

Four month pilot involving 230 participants9000 trips and 800 top upsTrialed Sprint NFC phones enabled with a BART transit application and Jack in the Box pre-paid applicationPhones were demonstrated to be interoperable across 500 Cubic Tri-Reader enabled faregates and VivoTech contactless payment readersTransit application file based on Regional Ticketing Application format as used in Los Angeles, San Diego, MARTA, MinneapolisFirst Data provided the pre-paid application and credit card processing servicesVivoTech provided the OTA provisioning system and e-wallet softwareTransit applications were topped up via auto-loads billed to the credit cardsMore than 80% found the application easy to use


People are Receptive to Mobile Payments

57%Are interested

in having mobile

payments

90%Of those

interested; would pay more for a mobile phone with payment capabilities

64%Ages 18-42

would switch carriers for phone with payment

58%Ages 18-42

would switch banks for mobile

phone with payment

VS.

58%64%

57%

90%

5 to 1Prefer payments

to appear on Bank or card statement vs. mobile phone

bill

Source: Presentation by Pam Zuercher, VP – Product Innovation, VISA USA at Mobile Commerce Summit, Las Vegas, NV, June, 2007


A Good Demographic Fit

Source: American Public Transportation Association (APTA), Profile of Public Transportation Passengers, 2007


Getting Traction with Mobile

The real focus should start with customer service strategies leveraging immediately available technologies and infrastructureThere are many things to “borrow” from mobile commerce models being followed in other segmentsThere is no reason to wait for NFCA properly crafted mobile solution has a sound basis on its own and is only enhanced by the addition of NFCTechnologies such as stickers and memory cards may act as a bridge between mobile service and payment while the NFC ecosystem and related standards work through their stages of development


Managing the Way Forward

The UTFS Task Force has identified four work groups coming out of the October work shop

Business RulesCommunication ProtocolHardwareStandards Development

Identify/Develop Business ModelsDefine Architecture and InterfacesDefine system componentsDefine interface/testing/certification

standards

The focus is on an architecture that supports multiple payment products including CFMS, account based, and contactless payment strategies


Current Progress

The Business Rules working group has been kicked offIt is chaired by Bridgette Karra of Lumenor ConsultingThe standards working group is also being kicked off to:

Explore existing standards that relate to mobile commerce Begin developing a business requirements document

Comments have been received on the baseline architecture and are beginning the consensus building processFollow up on the October session is scheduled on March 16 to take place as part of the APTA Fare Collection Workshop in Houston

Documents

Mobile Payment and Service Strategies for Public Transport · 27.02.2009 · Transit and Contactless Smart Cards. 2. Customer Service and Distribution. 3. Transit and Mobile. 4