Strategic Planning of An Integrated Smart Card Fare Collection System Challenges and Solutions

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1 Strategic Planning of An Integrated Smart Card Fare Collection System Challenges and Solutions Noriani Mohammed Noor Postgraduate Student of UITM, Shah Alam Sri Kenangan, Jalan 1/27D, Seksyen 6 Wangsa Maju, Kuala Lumpur, Malaysia riani_msc204@yahoo.com ABSTRACT Public Transportation systems have been developed and formed independently from one another although they are within the same regional province where the corollary of such development is tremendously experienced. There are little coordination and collaboration between public transport operators and little integration and interoperability among their Fare Collection systems. Therefore, public transportations importance, fulfillment of passengers needs and satisfactions as well as patronage has persisted to weaken and decline. This report, which presented the research and findings of barriers to Integrated Smart Card Fare Collection System (ISFCS) implementation and the possible solutions to these barriers as well as it describe the benefits and risks of the systems. The ISFCS played a major role in improvement process of multi-modal and multi-operator coordination within public transportation industry and bridging the gaps with the aim to provide a customer focused and streamlined and integrated public transport Fare Collection system. The customer information and fare collection data are the two main aspects of ISFCS that have the potential to encourage integration of multi modal operators. Most of the operators lack of responsiveness to the enormous growth of Information Technology which the system adoption would result in economic and societal changes that have significant implications for public operators in terms of serving the public better, providing better Fare Collection services and driving the fundamental improvements in their business operations and organizational structures between operators. Categories and Subject Descriptors K.6. [Management of Computing and Information Systems]: Strategic Information System Planning. General Terms Management Keywords Integrated Smart Card Fare Collection System (ISFCS), Public Transport, Fare Media and Payment, Multi Modal, Multi Operator. 1. INTRODUCTION Kuala Lumpur, the bustling Malaysian capital, is one of the fastest growing cities in Asia is having a state of the art public transportation system that the development has been rapid and impressive. The rapid economic growth in the Asian Region resulted in urban urbanization, hence the city of Kuala Lumpur is not left out from the development, it faced the difficulties in regards to manage the ever challenging traffic congestion that was caused by inefficient public transportation system and private car ownership drastic increment. The increasing of automobile ownership in Malaysia produces more single occupancy vehicles (SOV) and with the decreasing in usage for public transports, caused road congestion to be worsened. The unattractiveness of public transport has also contributed to an increase in traffic congestion in Kuala Lumpur. However if automobile drivers could realize and be attracted to the benefits of public transports as compared to the automobile driving, perhaps more drivers would choose to utilize the public transports. An efficient and reliable public transport with the implementation of ISFCS may help to reduce the congestion if Kuala Lumpur population supports the system. In The Edge Report by Yap Lih Huey (The Edge, 2004), Transport Minister Datuk Seri Chan Kong Choy has said that the use of public transportation has decreased from 34% in 1985 to the current 16% of the total mode of transportation among commuters; while the use pf private cars has jumped to 17% from 46% for the same period. The demand of traveling into the city of Kuala Lumpur is estimated to be increased as the automobile ownership increased. Though, the demand is far beyond the roads system capacity, even after new roads have been built and existing roads were improved. Besides the SOV, there is also growing concern for noise pollution, traffic congestion, energy use and conservation as well as environment pollution from the excessive use of motor vehicles. In comprehending the single vehicle occupancy is approaching diminishing scale efficiencies, hence the public transport

2 attractiveness must be improved, at the same time the single occupancy vehicle (SOV) that entered the city could be taken to a satisfactory level. The improvement of public transport services as a strategy to overcome the critical traffic problem with the aim to optimize the people movement by using public transports rather than private vehicles, may seem to be the most strategic steps to reduce car ownership and single occupancy vehicle, and use of motor vehicles. The public transportation industry could become more competitive and viable if it continues to enhance in services and operations. Therefore, the Kuala Lumpur population would be likely to consider public transports more frequently when choosing traveling options. The public transport operators could improve their services by being innovative and proposing something different and new using latest technologies for their current service levels. In regards to this, Integrated Smart Card Fare Collection System (ISFCS) could mean for one of the possible technology solution. When ISFCS implementation is feasible, innovative Fare Collection services could be offered to improve the attractiveness of Public Transport. The operators may possibly attract more passengers with the technology deployed, at the same time passengers may experience improved traveling services and perhaps reduce traffic congestion in the city of Kuala Lumpur. Smart card provides the option to store value in the card and recycle of the periodical ticket card as long as the value in the card is reloaded and sufficient for the fare usage. Hence, integrated smart card Fare Collection system is seen to be most the suitable solution for future fare payment system of integrated multi modal and multi operator public transport services. For this reason, the integrated smart card Fare Collection system for public transport is expected to increase public transport services usage through an improved, cost effective, and integrate Fare Collection service of different means of public transport. 1.3 Statement of Problem The current fare payment systems do not allow transfer from a mode of transport to another mode of transport without having to buy ticket for each mode, thus making difficult for the passenger to have seamless traveling experience when using public transport. The systems are also unable to manage large volumes of transactions while providing the least possible impedance for traveling. Passengers are forced to purchase new ticket every time they travel in different mode of transports e.g. bus, light rail transit and train, along any single journey. Thus, this could make the tickets to be more costly and time consuming when they need to use different mode of services to get to a destination. 1.1 The needs for Improving Public Transport Fare System Integrated Fare Collection services in public transportations are services that are designed for passengers to utilize same fare media on multi modal and multi operator public transports fare payment system. The need for integration of public transportation Fare Collection system is viewed as a critical and essential in achieving the objective of improving the attractiveness of public transports Fare Collection service by increasing the patronage as well as reducing the road congestions and air pollutions. Local public transport operators have an ongoing concern on improving the Fare Collection services and increasing ridership. Therefore, in efforts to improve Fare Collection services, many operators plan to adopt and implement integrated smart card Fare Collection system which could collectively enhance ridership and improve their revenue collection. 1.2 Public Transport Fare Payment System Here, the discussion for some of the interesting features of public transport fare payment system with the introduction of integrated smart card Fare Collection system. Most of public transport operators in Kuala Lumpur are still using paper and magnetic stripe ticket as fare media for their fare payment system. Tickets must be bought on the spot as they do not have any pre store value in the tickets. It is also not durable for periodical ticket where they have to replace after each expiry with a new ticket as the old ticket longer is no longer valid. It is difficult to implement multi-ride tickets using the old fare payment system when traveling using multi modal and multi operator transport, unless there is a single card that can hold store-value, then the value shall be deducted once the passenger used the public transport. Following were the main problems faced by public transports operators in their existing fare payment system, which they need to overcome in order to improve attractiveness of public transport. (1) Current system need to accept cash as payment (2) The paper tickets are not designed for long term use or periodic especially for monthly pass or longer seasonal pass (3) No option and do not encourage for people to buy ticket in advance (4) Passengers can only buy ticket on the spot for single journey (5) Required more tickets machines or counters with staff (6) Tickets are inconvenient as they are used for single-trip and passengers are required to purchase separate tickets when need to transfer between mode and operator. 1.4 Fare Collection System Issues and Possible solution There is a need for a business transformation of the public transport fare payment or collection environment that uses cash and paper-based tickets. From the historical perspective, cash have been dominated the public transport fare collection process and the systems were formed with in efficiency, fraud and manipulation. In the 1970s, the magnetic stripe paper was introduced with the hope to restricting the cash handling problems. However, the paper and magnetic ticket was limited to a single operator environment where the fare payment media was only operable on the operator s system.

3 The current Fare Collection systems are not flexible where the passengers must queue at counters to buy tickets and no available option for buying in advance when they need to travel between multiple modes. They also need to buy ticket for each mode of transport. These problems could possibly be solved by the measure of integrated smart card Fare Collection system implementation that leads to the improved integrated Fare Collection systems between multiple modes and operators. Integrated Smart Card Fare Collection System simplified the fare payment process by allowing passengers to pay in advance and avoiding queuing at tickets counters thus making it easier for them to purchase tickets. Thus the Fare Collection system would allow passengers to travel throughout the participated public transports network with a single ticket. It is important, to provide turn-up-and-go convenience and to make public transport an attractive alternative than to drive. This is crucial when attracting new passengers to try out for the system before becoming frequent users. 1.5 Current Fare Collection System Disadvantages Some of the disadvantages of current paper-based Fare Collection system in multi-modal and multi-operators public transportation environments are listed as following: (1) Passengers could not have seamless traveling when using multi-modal and multi-operators services for a single journey. (2) No consolidated fare structures and policies for operators. (3) More Cash handling and system fraud. (4) Inefficient and ineffective of financial management and reporting capabilities. (5) The operating and maintenance costs are higher. (6) System operational and administrative was inefficient. (7) Unattractiveness of public transport services that reduced patronage and readership. 1.6 Research Question The research question here is: What are the barriers and the proposed solution for the implementation of an Integrated Smart Card Fare Collection Solution, which it may attract more patronage, in order to improve public transport services in Kuala Lumpur? The issue of ISFCS implementation for public transport is critical for various reasons. The public transport has the potential of facilitating to ease road congestion by attracting more patronage and ISFCS could provide public transport operators with better Fare Collection system that offer more efficient in operations and Fare Collection services, provide seamless traveling experience and enhance Fare Collection functionalities for passengers and operators. This could perhaps make the public transportation more feasible and attractive for everyone. However, the public transportation operators is facing an issue of whether they should replace the paper based or magnetic stripe tickets and independent fare collection systems to the integrated smart card Fare Collection system that could make fare collection and payment more convenient for the operators and passengers. As many public operators are still not willing to venture into the integrated systems as most of them are not confidences with the returns from the investment of the new systems. They foresee that there will be implementation barriers that they need to overcome such as a significant amount of financial funding would be needed and the revenues would be shared among the participated operators, thus the profitability would be lowered. In addition, when multiple operators are involved, cooperation and coordination are highly required to successfully implement the system. 1.7 Project Outcome The research produces a report on the barriers and potential solution for the implementation of an integrated smart card Fare Collection system of public transport in Kuala Lumpur, in order to improve the Fare Collection system operations and services of public transportations. 1.8 Project Aim and Objectives The aim of the study is to identify barriers to the implementation of integrated smart card Fare Collection system for public transportations through face-to-face interviews and survey questionnaires of the transits operators, smart card ticket provider and the transits passengers in Kuala Lumpur. By analyzing these barriers, essentially a general picture of the barriers, solutions and key factors that lead to the implementation of the system for public transport operators in Kuala Lumpur could be ascertained. This was done with a survey of light rail transits operators, a smart card ticket provider in Kuala Lumpur, and the transits passengers to distinguish main aspects that lead to implementation of ISFCS. Light rail transits operators play a vital role in the Kuala Lumpur public transportation industry and by imparting experience and information about implementation issues and barriers; public transport operators could avoid making mistakes with the common solution and provisions could be articulated. The research is expected to identify constituents and essentials of public transport operators that could overcome barriers for implementation of ISFCS. The research will have the following objectives: 1. The review of current Fare Collection system and exploration of the potential impacts of an integrated smart card Fare Collection system of public transportations.

4 2. The identification of the possible barriers for the implementation of an integrated smart card Fare Collection solution for public transport. 3. The review and analysis of the implementation barriers of an integrated smart card ticketing. 4. The establishment of the potential solution for the implementation barriers of an integrated smart card Fare Collection system. 5. The analysis of the collected data and with the evidence base on the theme research, thus develop certain deductions to assist in developing solution for the implementation barriers of an integrated smart card Fare Collection system and improving public transportations services. 1.9 Project Scope and Situation Overview The research setting will be positioned at the Light Rail Transit stations, transits operator and smart card ticket provider headquarter offices. The situation context will concentrate on the responses of an integrated smart card Fare Collection scheme from the public transportations stakeholders. This study was also included smart card ticket provider and transits passengers for transits located in Klang valley. The operators are and located in the city of Kuala Lumpur or Klang valley. Depending on the information retrieved from face-to-face interview, it took from one to several meetings to obtain all the necessary information. Besides meetings, communications with operators were conducted through telephone conversations. In addition, the survey questionnaires for the passengers at the transits were also conducted for the busiest station and non-busy station. The questionnaires were distributed to the passengers and collected at the same day after they were filled. The surveys outcomes were only limited to those who completed the survey form Summary Public transportation could become an alternative traveling mode for the single occupancy driver by bringing service improvement to its operations. In addition, it could also become more attractive for frequent patronage by taking the advantage of the improvement in services levels especially for Fare Collection operations and seamless traveling. It is hoped that Integrated Smart Card Fare Collection System would be designed to make it easy for the passengers to buy ticket and hard to travel without one. However many complex issues and factors affect the accomplishment of the ISFCS implementation, thus success is not always assured for the public transportation industry. There are two approaches taken for this research, first, an assessment of relevant ISFCS implementation barriers, issues, benefits and disadvantages that has been ascertained through the literature review. Second is the analysis of survey data on implementation barriers through a focused survey sample population of transits operators, passengers and smart card ticket provider as well as discussion of the perceived barriers and ways that may be embarked on to resolve the barriers. 2. LITERATURE REVIEW 2.1 Background of Fare Payment System The literature review will establish the definition of integrated Fare Collection while searching for barriers that effect ISFCS implementation with solutions and with the aim to improve attractiveness of public transportations. Currently, the worldwide are considerably expanded towards use of smart card for Fare Collection integration. There are many integrated Fare Collection services using smart card available and in place with sufficient practical experience from real project around to consider the enhancement towards ISFCS implementation. Integrated Fare Collection and electronic Fare Collection appears to be entwined and almost synonyms for many cashless payment situations. In addition, the trends of electronic Fare Collection are rapidly approaching to cashless means of transactions that include other services payment too. James (2001) described that public viewpoint and expectation of Fare Collection integration services are providing an improved experience towards these criteria: safe, reliable, frequent, accessible, easy to use, comfortable and appealing Fare Collection appealing. All of these criteria are so critical for integrated Fare Collection services of multi modal and multi operator public transportations where passenger could experience the seamless traveling and smooth transfer. The fare collection system of public transport has become more sophisticated in recent years with more flexible structures requiring more advances fare collection equipment to process tickets and admit passengers. Though, the system has often been plagued by reliability problems, frequently resulting is significant congestion and delay during the accessibility. There are many factors that effect ISFCS implementation as it should be simple to introduce and deploy, additionally, it has benefits that easy to understand, measure, inexpensive and offer significant improvements over the exiting paper-based or magnetic stripe Fare Collection systems. The factors like organizational characteristics, business process, rules and procedures, system compatibility, as well as employee and users reaction and response towards the enhancements. Various documents and internet resource were reviewed for pertinent information related to smart card technologies, public transportations, and integrated smart card Fare Collection implementation. Reference and bibliography of relevant literature references were included at the end of this study report.

5 2.2 Demand of Public Transport and Private Vehicle Most people travel into the city will choose private vehicles or automobiles over public transports due to its conveniences and practicality. Public transportation services does not always link up travelers starting point and destination for the essential journey and period, hence most them find that they must travel by private automobiles or driving regardless of the advantages of using public transportations. Moreover, they seems to understand that beside the convenience and practicality aspects, private automobiles or vehicles provides the advantages of comfort, privacy and time saving while public transportations disadvantages are longer journey time, no privacy and discomfort. All these disadvantages are having immediate consequences, whereas the advantages of using public transportations like reduce congestions, pollutions and traveling costs and the disadvantages of using private automobiles, like vehicle maintenance costs, traffic congestions have delayed effects and consequences (Huey and Everett, 1996). There are many reasons why the public transportation are seen to be less attractive than driving or travel with private vehicles, Consumers consider the immediate factor from experiences of waiting for bus, transits, or trains, such as uncomfortable and crowded environment to be the factors when choosing public transportations. Furthermore, the benefit of driving is also immediate like having independence, status and fast trips and experienced it directly. In contrast, generally, most benefits of public transportation usage like reduce pollutions and congestions are encountered and undergo by public rather than individually. 2.3 Integrated Smart Card Ticketing Fare Collection Systems are the first point of contact for consumers and may also be the only equipment utilized by consumers. Hence the conditions, characteristics, features and robustness of the fare collection system and fare media design must be suited well for the consumers. Fairhust (1986) indicated that the needs for attractive Fare Collection solutions for greater revenue provisions and Fare Collection benefits for public transport in order to improve its attractiveness. Here, integrated Fare Collection implies that a single ticket is used to travel using multiple modes of public transports. The objectives of ISFCS are to provide a single fare media and common integrated fare collection system, manage pricing structure and policy for multi-operators and multi-modal, and provide accurate financial transactions, revenue and income distribution as well as evaluation reporting of passengers traveling pattern. ISFCS would largely include the integrated fares which require the second and subsequent boarding charges elimination for the passengers who transfers between services in order to complete their journey. This elimination would signify a demise of revenue and concerns to participated operators thus it would need to be compensated by suitable fares settlement. Ellenberg (1999), stated that integrated smart card Fare Collection system is usually regarded as too costly to be used by infrequent passengers, however many system integrators would disagree with it (Moreau, 2003). For ISFCS implementation, user requirements identification and finding, and information of the Fare Collection services changes are key characteristics of successful the implementation (Irwin, 2004). ISFCS has to be professed and alleged as beneficial from the standpoint and perception of public transportation industry stakeholders, the operators, users, local authorities, government, as well as system integrators. 2.4 Potential Barriers There are a variety of potential barriers for ISFCS implementation and they were highlighted here for the comprehensiveness of this study. This review focuses on barriers concerning to the introduction and deployment of integrated Fare Collection with smart card technology for public transports. Lawson and Steinmetz (1997) indicated that certain barriers for widespread of smart card system implementation might have the relevancy with smart Fare Collection even though they may perhaps differ for some extents System Funding The project funding is seen to be the most critical factor that affects ISFCS implementation. Several key concerns are capital and operating costs that include how the costs are apportioned among participated public operators and structured financial arrangement that provide a win-win for everyone involved Standardization of Operation Procedures and Government Policies It is difficult to enable large-scale of ISFCS unless a common operation procedures and policy is achieved among the participated public transport operators. Thus the stakeholders involved may reluctant to commit for sponsoring huge funds due to the uncertainty, ambiguity and insecurity of guiding principles in operational. The local government and public transport operators coordination is a potential factor that correlates to implementation of ISFCS (Balducci, 2004). The governing structures such as uncertainties of platform setting process, unclear authorization seats over the decision and institutional or legal constraints has restricted operators authorization and (Giuliano et al, 2000 ; Lovering and Ashmore, 2000). Individual operators may have clear guidelines and procedure for the process of decision making, however when multiple operators are involved, the process would be more challenging and touch when priorities differ and operation guidelines and procedures have not been developed (Multisystem Inc. et. al, 2003) Cooperation Among Operators The real challenge in placing the ISFCS is managing stakeholders expectations and operators cooperation, but not the technology itself. The cooperation among the participated operators may also hard to establish as a result of differences in operations policy, business process and practices (Turner and Smith, 2001). Nevertheless, there is a need for public transport operators, government, local councils and system technologist to

6 collaborate towards a common goal of placing the ISFCS, to encourage and bring about conversion from driving to traveling using public transport as suggested by Pickett (2000). Many published studies instituted that interest in ISFCS varied by transport mode. For example, bus operators may have interest in managing smart card fare program using the same system and technology while transits operators interested in coordinating and placing system that reduce fraud (Maxey and Benjamin, 1996; Field and Agnew, 1996; Libbrech and Oy, 1999; Foote and Stuart, 2000). This also entailed that the different type of mode may cause the intolerant decision for adopting ISFCS to improve Fare Collection services among the participated operators System Reliability and Constancy Another concern among public operators is the system stability and reliability as they do not want to invest for a system that is going to be obsolete in near future or not interoperability and incompatibility with other systems. For example, the smart card reader could be transfer or exchange between the operating modes for fare payment systems in used among the participated operators. This concern has led to reluctance of investment in ISFCS by public operators. However, common standard do exits for smart card elements for its physical feature and data protocols (Stanford, 1999), though the flexibility always comes at a price and normally the figure is at high Implementation Costs The initial cost for the required infrastructure and administration of ISFCS establishment, should take into account the running costs, system upgrades and technology life. However, the cost may likely to decrease as the technology becomes established, ascertained and common as well as accepted by public transport operator. The high cost of integrated Fare Collection solution may discourage public transport operators to invest into the solutions, especially when the systems are unlikely to be economically viable for longer period and no clear indication that services and operations of public transport could be improved and enhanced Competition Among Operators The competitive and unregulated environment has discouraged public transport operators to cooperate and collaborate in an integrated smart Fare Collection solution even though there is a need for such advancement and progression. However, Clarke (1993) expected that most of public transport operators were compelled and demanded to provide advance services in ticketing, while integration of Fare Collection system may offer opportunity in modernize, enhancing and improving Fare Collection services, although the fare revenue might be shared among their competitors Public Behaviors and Operators Conceptions Public attitude was probably one of the critical barriers for the potential deployment of ISFCS (Dunning, 1998). Lack of necessary knowledge and information about electronic transactions and its applications may cause public to reluctance and accord a lower priority then the conventional tickets or payment methods. Turner and Smith (2001) reported that critical business risks such as varying and irreconcilable fare revenue policies or procedures, Fare Collection operating strategies that might change data processing implications, revenue apportionment and distribution mechanisms, capital expenditure and operating costs apportionment, transactions data security and privacy as well as new marker share risks might deter operators from participating in ISFCS establishment. However, if these issues could be overcome and user needs are given priority in ISFCS deployment, patronage levels may possibly improved and the solution would be succeeded Organizational Characteristics Some of the organizational barriers or constraints include resistance to change and risk-taking by the operators, lack of resources for funding, support from management, and institutional infrastructure, the implementation id irrelevant for addressing Fare Collection problems ass well as operational issues and regulatory complexities. The organization must be committed to introduce and establish the system so as employee also need to be perceptive to implement in order for the deployment to be success. Usually, implementation of new technology would involve altering human behavior, acceptance and tolerance of the new idea. Resistance to change by people normally because of following reasons: (1) System implementation is ambiguity and no certainty. (2) The implementation would threaten to change the way people work, relationship between others and status in organization. (3) Insufficient communication and information about the implementation (4) No adequate benefits, returns and rewards for the work involved in deploying the system Fare Scheme Public operators incentives to implement ISFCS that offer smart card stored-value and season pass fare program may also vary by their markets of users and patronage. The acceptance of smart card was differ between income group with lower income groups may resist if they are not likely to have bank account used for reloading the cards and was also unable to afford a large amount pre loaded card instead they may prefer to use the cash tickets for per ride basis (Foote and Stuart, 2000; Multisystem Inc. et el 2003).

7 Technological Advances The adoption of ISFCS may be hindered by public transports operators uncertainty over the technological advances in the future. As in the United States (U.S.), the government agencies have been active in developing procedures and standards for reducing operators risks in implementing a particular technology (Dahlgren and Lee, 1994). As in normal, technology like the smart card system has the risk of soon to be obsolete or incompatible. As a results, a publicprivate partnership organization (The International Transport Smart Cards Organization (ITSO), that based in the U.K. has also developed a set of standards for public transport smart card Fare Collection solutions. The American Public Transportation Association (APTA) in United States (U.S.), has also been developing guidelines and standard procedures for its member operators, with the aim to lower the costs for entry of the operators and technology vendors. 2.5 Potential Benefits Smart cards utilization for collecting fare payment in public transportation industry has been more established and dominant. Clark (1999) reported that the main reason for smart card popularity with public is because of its conveniences. Smart card is a plastic card with an embedded silicon chip that can store a cash value and an appropriate sum deducted whenever a transaction is made. Holm & Oorni (1999) asserted that the ISFCS was less liable to fare evasion and fraud, and provide automatic financial consolidation, clearing and reconciliation (within 3 weeks) which it is much faster than manual reconciliation (about 2 months) in order to receive income. In addition, about 50% of capital costs for the ISFCS deployment had been recuperated in a year System Reliability and Constancy Brown (1998) commented that a considerable advantage of integrated smart card Fare Collection solution would be the transactions volume, which it could manage for s short period. Therefore, this would contribute towards the multi mode transports system integration and at the same time emphasize that the technology developments are significant for the future of public transportation industry. Moreau (2003) also asserted that it is better to discard magnetic stripe tickets as it is cheaper due to the reduces investment in pure contactless equipment, as well as the maintenance savings from eliminating magnetic stripe tickets completely, can more than offset the incremental cost of using contactless smart card tickets. The ISFCS possibly will provide passengers with the speed and convenience when traveling with public transport while they could also anticipate advantages that associated with electronic or smart Fare Collection technology. Benefits such as improved trip connectivity, increased readership, decreased operational costs and improved Fare Collection services have motivated public transports operators to collectively use ISFCS in their operations. Moreover, the technology contribute a significant incentive for the operators to collaborate and integrate due to its efficiency and effectiveness in improving public transport Fare Collection service network when deployed in multi operator and multi modal perspective Fraud Control Lawson and Steinmetz (1997), in their report, noted that the Smart Card Fare Collection technology is able to control fraud and fare evasion where 10% of passengers perhaps traveling without or with invalid tickets at any time. In addition, the technology may offer operators to have variable in fares that could improve demand during off-peak period. Operators could have flexibility in fare policy charges and multiple fare structures. The transactions data that are captured into centralized system, could be used to generate statistics report and passenger s profiles, hence operators may revise ticket pricing, routes, and services accordingly. 1 In the United States, there are a significant number of ISFCS implemented and in operational that led to collaboration and partnership involving multi modal integrations of public transportations Improve Patronage There was very little literatures published for Asian region on the Integrated Smart Card Fare Collection that could attract more patronage as the solution could still be relatively new. However, Oulds (1999) reported that smart card could improve public transports experience and shift from driving to traveling with public transports. Pickett (1999 and 2000) also addressed that integrated smart card Fare Collection services could increase public transport competitiveness with private vehicles. Pickett suggested that since driving is very convenience, public transport operator should also provide integrated smart card Fare Collection to permit users with multi mode transportation application to simplify the fare payment process and practice. The smart card transaction from the ISFCS can be utilized to produce a range of analysis to understand passengers traveling behavior. Though, the quality and utility of data source depends on which the system is designed and implemented that include the fare structure, passengers composition, Fare Collection services and the trips or journeys involved. These travels behavior such as level of card usage and interchange and boarding patterns analysis and findings could be used for system evaluation that it is useful to improve patronage.

8 2.5.4 Multi Application Chang at el. (1997) reported that in Taiwan, when the public were offered with multi application smart card, they expected the card to be able to use for multi mode of public transportations and payment of parking at stations, this has indicated usage increase probability. With the application, fares were discounted, and public acceptance has exceeded the expectations. Public transport operators are always looking forward for ways to improve reliability and consistency in operations for attracting more patronage. ISFCS may perhaps make boarding and alighting process to be faster and simpler and it is likely to decrease traveling and improve fare payment cycles Incomes Improvement According to Calder (1999), there might be some business opportunities and benefits from an integrated smart card Fare Collection solutions and its multi-functional capabilities to provide cost savings in term of reduce employment, passenger and luggage tracking as well as ticket distribution and administration, in addition revenue could be improved from ticketing, loyalty scheme and on board services. ISFCS have the features of eliminating the need for cash for the rides with fund values stored on smart card ticket and allow for automatically fare deduction from the card. Moreover, the system provide greater fare data collection activities which from the data collected, required information could be derive to make services decisions and assess travel habits and traffic patterns. The integrated Fare Collection solution for public transport is expected to permit operators and local authorities to gain the benefits of secure and meticulous revenue control (Lamb, 1998). 2.6 Possible Disadvantages Holm and Oorni (1999) identified that potential issues associated with the integrated smart card ticketing, such as card defects, application errors, hardware malfunctions, insufficient training for staff and user as well as post sales support by system integrator, also organizational and operational problems. Smart Cart ticket could make fare evasion difficult, however the detection is costly due to the ticket expiry date was not printed on card and stored in the chip that required smart card reader to identify the validation date. 2.7 System Costs There are various cost elements that associated with the implementation of ISFCS, they include existing fare structures, fare media and equipments, and institutional arrangements between the participated public transports operators. The cost elements are summarized as following: (1) Card Reader equipment (2) Fare Collection Processing Unit (3) Card Vending Machine (4) Central Clearing House hardware and software (5) Maintenance and repair spare parts (6) On-board guarding machine (7) Fare execution hardware and software (8) Point of Sales Unit (9) Operational support and maintenance (10) System consultancy Generally, there are different approaches for the integration of Fare Collection system. First, all participated operators could incorporate the new ISFCS using all the same components and second, each operator could upgrade its system to be compatible with each other. The first option shall develop a unified system which all would be operated using the same technology. While the second option is more difficult to manage as the variability of technology being used among participated operators and the costs differences to develop integration solutions for interfacing with each other systems. Even with the declining costs of information and communication technologies products, the operators still faced the challenges in selecting and arranging investments for ISFCS as they must evaluate and consider the costs, benefits and risks factors when replacing the ways Fare Collection services are delivered. The following cost elements table showed the estimated cost for each required item of a new ISFCS implementation. With ISFCS, each participating operator should be able to accept other operators payments with a single fare media and combined fare structure though system integration to manage each operator s fare charges. In addition, the operators may have to abandon their existing system and fare structure in order to for ISFCS to be universally accepted to all participated operators. Table 1: The estimated cost for each required item of a new

9 ISFCS implementation Cost Elements Estimated Cost 1. Card Reader equipment RM2,000 - RM3,000 / unit 2.Fare Collection Processing Unit RM2,500 RM3,500 / unit 3.Card Vending Machine RM RM8,000 / unit 4.Central Clearing House hardware and software RM800,000 RM1,500,00 5.Maintenance and repair Spare parts RM10,000 RM20,000 / year 6.On-board guarding machine RM2,500 RM4,000 / unit 7.Fare execution hardware and software RM5,000 RM7,000 / unit 8.Point of Sales Unit RM3,500 RM4,500 / unit 9.Operational support and maintenance RM30,000 RM50,00 / year 10.System consultancy RM300,000 RM500,000 / year The amounts showed have been estimated based upon information from system integrators, providers and vendors For operator that already have the electronic Fare Collection solution, an upgrade to existing machine would be an alternative by having the following costs elements as shown in table. ISFCS implementation with electronic Fare Collection solution available Cost Elements Estimated Cost 1. Card Reader equipment enhancement RM2,000 - RM3,000 / unit 2.Fare Collection Processing enhancement Unit 3.Central Clearing House hardware and software RM2,500 RM3,500 / unit RM800,000 RM1,500,00 4.Maintenance and repair Spare parts RM10,000 RM20,000 / year 5.Fare execution hardware and software enhancement RM5,000 RM7,000 / unit 6.Operational support and maintenance RM30,000 RM50,00 / year 7.System consultancy RM300,000 RM500,000/ year The amounts showed have been estimated based upon information from system integrators, providers and vendors With the implementation of ISFCS, the new operating and maintenance costs of Fare Collection system will be higher due to Central Clearing House hardware and software, new Fare Collection equipments and for highly trained personnel for system support and maintenance. When changing entirely new ISFCS, it does not provide cost effective alternative to the old system as it is costly to implement. Nevertheless, there were no studies about costs of interoperable and implementation of ISFCS that indicated the execution would produce the benefits expected as the literature of studies has been more to descriptive rather than evaluative. In fact, there were cases where some operators actual had lost revenue (Foote and Stuart, 2000), in contrast to often reported benefits in revenue after ISFCS implementation. For example, the Chicago Transits Authority (CTA) has implemented the system and ridership increased due to prepaid discounted smart card fare ticket introduced but because of the heavy discounts, their revenues have dropped for the discounted passes given to increase the ridership (Foote and Stuart, 2000). Although, it is important to evaluate the costs and benefits of ISFCS implementation, though most of the literature and studies reports on the information and evaluation of ISFCS are clearly and essentially limited with most of the projects evaluated were not supported by reliable evidence as they were heavily promotional and riddled with IT jargons (Deakin, 2002). Table 2: The estimated cost for each required item for

10 2.8 Summary Public transportation has a significant role in providing mobility for those that no access to private automobile or vehicles and alternative to driving. It is an important traveling option for daily lives and the implementation of ISFCS is critical in making continuous improvements in public transport Fare Collection system and serving current and potential passengers. The implementation depends largely on operators that willing to take the lead for change and revolution in Fare Collection services. The ISFCS implementation involved many factors which some of key barriers are project funding where it is difficult to acquire large amount of funds as the system costs at some the point are costly, resistance to change and reason for the resistance may be due to the organizational background and culture, lack of interest, knowledge and funding, as well as the perception of undesirable. The ISFCS implementation is expected to provide benefits that include, such as, easy to deploy and inexpensive, have benefits that simple to measure, as well as provide critical improvements and enhancements. more efficiency of service coordination, improved system performance and operations, effective system maintenance, safer and accurate cash handling, faster and efficient passage processing, and improved Fare Collection service quality. The need for ISFCS does not necessarily ensure that the operators will deployed the solution as in many situation, political and social factors can prevent the introduction of ISFCS. The operators may also have difficulties in initiating the deployment if they lack of required funding and political support. Even though sufficient funding could be retrieved, however If there is no organizer that initiates the deployment, it would not be realized.. 3. LITERATURE REVIEW 3.1 Research Method and Scope The key reason of this study was to gather information from transits operators, smart card ticket provider and transit passengers about the barriers or issues for ISFCS implementation of public transportations in Kuala Lumpur. This study was conducted using the delivery and collection questionnaire, and semi-structures questionnaire with interview method. The survey research method was undertaken to obtain the response from stakeholders of public transports in Kuala Lumpur that could contribute comments, knowledge and opinions within the industry. 3.2 Survey Questionnaires of Public Transports Stakeholders The survey questionnaires and semi-structured interviews of the public transports operators and passengers as well as smart card ticket provider would then produce view and comments for the possible barriers and solutions in introducing the integrated smart card Fare Collection solution. The primary data will be derived from operators experiences that would generate a valuable insight into the potential of change and obstacles that may influence a move to integrated smart card Fare Collection system and passengers responses and feedback for the barriers to introduce the integrated smart card Fare Collection solution from the public generally. The on-site survey questionnaires and semi-structured questionnaires with interviews has been chosen as they are the best way to obtain response quickly and as accurate as possible. The questions were mostly focused on the implementation barriers and issues; what will be the barriers and issues emerged during the initiation, design and installation phases, what will be the resistant for the Fare Collection services enhancement involved, What will be the obstacles and was there any resistance during the implementation stage, what may be the solutions foreseen to overcome the obstacles, what may be the inputs of other operators to participate in ISFCS implementation, what may possibly be the resistance to change factors from the viewpoint of transits officials. 3.2 Survey On Transits Operators and Smart Card Ticket Provider Perceptions Process For the transits operators and the smart card tickets provider, the semi-structured questionnaires with interview were used; this was to explore and explain the themes that may emerge from the questionnaires with uniformity and consistency in data, as well as more in-depth details and to rectify findings from the use of questionnaires. The interview was conducted at the head offices and there were about five key personnel from each transits and smart card ticket provider offices involved, from the management to the operational working level. In addition, communication was also conducted through telephone conversations and s. The operators and smart card ticket provider were initially contacted through telephone and appointments were arranged to meet the identified officials. All meetings were scheduled at head offices and lasted about 40 minutes to one hour. Additionally, extensive face-to-face interviews with the key personnel were conducted to ensure that information gathered was accurate and completed. The meetings with the respective officials were conducted after questionnaires were filled and to ensure all responses were not misinterpreted. After all the semi-structured questionnaires and interviews were completed, the findings were compiled. The structure face-to-face interviews with key personnel were conducted in order to obtain more quantitative and richer understanding of barriers and constraints that influenced operators decision to implement ISFCS. These interviews were utilized to provide additional and detail insight of implementation barriers which proved to be somewhat useful in supplement the available data and refining the recommended solutions. The semi-structured questionnaires with interviews has been chosen as they are the best way to obtain response quickly and as

11 accurate as possible. The answers given may represent the real thoughts and ideas of the respondents and it might not necessary represent their organizations. The questionnaires with choice of selection gave the respondents with an idea to what the answers or responses could be without having to figure out what might be the appropriate answer. Thus, the responses were a set of standard options. 3.3 Survey On Passengers Perceptions Process For the passengers, the delivery and collection questionnaire method was utilized; this was to ensure that the questions were answered in a standardized and structured format as well as collected at the spot to ensure high response rate. Questionnaires form was created as straightforward as possible for the participants to easily and clearly understand the questions. Since the passengers of the transits were at large, there were about ten participants randomly selected during the peak and off-peak hours of working days for eight weeks. The forms were distributed at the busiest interchange and non-busy station; four weeks were spent for data collection at each station. 3.4 Summary The objective of this study was to identify barriers to ISFCS implementation and the possible solutions to the barriers. Face-toface interview and survey questions were used to gauge information on implementation barriers from the point of view of operators, smart card ticket provider and passengers. The public transport operators were transits operators in Kuala Lumpur, STAR and PUTRA of RapidKL and RSSB (Touch N Go) ticket as well as passengers. All complete questionnaires were collected, analyzed and discussed in order to evaluate the survey results and generate the possible solution for the barriers. Please use a 9-point Times Roman font, or other Roman font with serifs, as close as possible in appearance to Times Roman in which these guidelines have been set. The goal is to have a 9- point text, as you see here. Please use sans-serif or nonproportional fonts only for special purposes, such as distinguishing source code text. If Times Roman is not available, try the font named Computer Modern Roman. On a Macintosh, use the font named Times. Right margins should be justified, not ragged. The on-site survey questionnaires has been chosen as they are the best way to obtain response quickly and as accurate as possible. However, the on-site (transits station) survey has significant constraints on the survey instrument design because the questionnaires must be as simple as possible that they can be filled and answered in a short period as while waiting for the transits. The survey questions for the passengers were developed and finalized after the discussion with the transits officials. The simple random sample will be used for the passengers at the busiest station interchange, it is estimated about 20,000 passengers a day, hence my calculated sample size is about 640 passengers. Due to time constraint only 200 passengers will randomly selected during the peak and off-peak hours whereby ten passengers for five working days for four weeks. The same method will be used for a non-busy station, which a total of 200 passengers will be randomly selected. The total selected passengers for the two stations would be about 400 and will be collected in the period of eight weeks. The survey forms were distributed to the passengers at the transits stations in order for the passengers to fill up the forms and obtain their inputs. The forms were retrieved immediately after they were completed. They were many restrictions as the time available for the passengers to complete the form was limited and they were on hurry to make their journey to the destination. Some of the responses might be chosen because of wanting to complete the form as soon as possible and without really gave fully considerations and thought for the answer that was really desired. Instead, they might just simple choose any answer without fully analyze the questions and some of the forms were not fully completed. The opinions and responses were collected from the completed survey forms. Normally, the survey took about five to seven minutes to complete the form. Later, all the results were compiled, arranged and analyzed. 4. SURVEY RESULTS AND DISCUSSION 4.1 The Study Results The study has evaluated the barriers of the ISFCS implementation and the survey results were discussed in the following sections. The implementation barriers have been drawn upon from transits operators, smart card ticket provider and passenger s survey as well as the literature review described in the earlier section of this study that contained information on ISFCS implementation barriers. The surveys were relevant and significant to ISFCS implementation planning, design and installation processes. The key barriers were analyzed and discussed below for each barrier identified earlier and indicative solutions were also discussed accordingly to each of the barriers in the Conclusion and Recommendation chapter. Through the study, Public transport operators is hoped to learn about implementation barriers and how they could overcome the barriers. 4.2 The Survey Results of Transits Operators Perceptions The semi-structured questionnaire with interview has been utilized to gather information on the transits organizations and identify key barriers for ISFCS implementation. The transits organization was Rangkaian Pengangkutan Integrasi Deras Sdn Bhd (RapidKL) for PUTRA and STAR light rail transits operators and the survey was conducted at their head offices. 40 officials were given the survey questionnaires forms for each transits operator and all of the forms were completed thus the response percentage was 100%.

12 4.2.1 The Organizations Company Background: Rangkaian Pengangkutan Integrasi Deras Sdn Bhd (RAPIDKL) 2 is the company that provides an integrated public transport system in the Klang Valley incorporating transits and bus services. The company was incorporated in July 2004 and in operational since November the same year. RAPID KL today transports about 3.3 million customers each week: 2.1 million on the Ampang Line, Sri Petaling Line (both formerly known as STAR line) and Kelana Jaya Line (formerly known as PUTRA line), as well as 1.3 million on the RAPIDKL bus system, which they were previously known as Intrakota and Cityliner bus systems. RAPIDKL provides public transports services across 49 light rail transits stations and 134 bus routes Implementation Needs and Barriers RapidKL was looking forward to implement ISFCS as the Malaysian federal government has announced in the Malaysian Budgetary Plan for year 2006, that about 400 million would be allocated for the public transportations industry to improve public transport services. Besides that, the state authorities also provide funding for public transportation improvement program. In order to implement ISFCS, financial assistance and perseverance are very critical to introduce improvements. Sometimes, due to budgetary problems, ISFCS implementation was terminated or postponed. The funds are not just for deployment but also critical for the system to continue in operational. For STAR line officials, implementation and operational budget issues was an obstacle to provide better Fare Collection services. They also concerned about resistance to change by other public transports operators because there was no presence of project champion to lead, manage and coordinate ISFCS implementation plans and processes. With the aim to deploy a new ISFCS, initially, it would take sometimes to obtain support from others public transports operators as some of the operators might oppose to the implementation. During the initiation and planning phase, the operators might face the problems of not having a strong multi-modal integration model. Funding is very crucial for RAPIDKL to deploy the ISFCS project and with the financial aids from the federal government; RAPIDKL may able to reduce its project costing. For both of the transits operators (PUTRA and STAR lines), the management of the organizations were having open-minded but skeptical attitude toward ISFCS implementation. Moreover, with lack of the communication and knowledge, it could cause for negative perception by all stakeholders. Both operators had the same major challenges to ISFCS implementation, which they were insufficient funding to drive the development and insufficient support from other public transport operators. Although some companies received funding from the government, some of the systems are running as unsubsidized commercial ventures. For PUTRA line officials, ISFCS came about as there is a need for Fare Collection service enhancement. However, the implementation was challenging and strenuous due to some of the project committee members were not receptive to the enhancement. At the beginning, there was a complaint about the project costing where by the system was too expensive and the return was belief to be unjustified. Then PUTRA line officails also received resistance from some of the officials for the Fare Collection system improvements as they expected that the system might substitute or transform their work position and the introduction of automatic ticket machines for ISFCS would cause for replacement of operation staff. Other concerns was raised from the belief that the public may not willing to spend on the additional charges for the smart card ticket even though it was a one time initial charges for purchasing a new smart card. In addition, they also concerned about the coordination and cooperation between other public transport operators. The STAR line officials perceived that opposition to ISFCS implementation was mainly due to working committees concerns about the implementation costs and how to proportionate the costs and also the revenues. However, the opposition might be overcome by the funding provided by federal government. Again, a financial issue was a main factor for ISFCS implementation. 2 RANGKAIAN PENGANGKUTAN INTEGRASI DERAS (Rapid KL), (PUTRA Line and STAR Line),No.1 Jalan PJU 1A/46, Off Jalan Lapangan Terbang Sultan Salahuddin Abdul Aziz Shah, Petaling Jaya, Selangor, at The transits operators planned to implement ISFCS in year 2004 as they had attained approval from the authorities, however, due to a funding shortfall, the plan was not possible to be executed. Their plan was to integrate smart card Fare Collection systems for all transits, commuters train and bus in Klang Valley area. (See Figure 1: Transits and Commuters Maps). 4.3 The Survey Results of Smart Card Ticket Operator Perceptions The semi-structured questionnaire with interview has been utilized to gather information on the smart card ticket operator organization and identify key barriers for ISFCS implementation. The organization was Rangakaian Segar Sdn Bhd (RSSB) and the survey was conducted at their head office. 20 officials were given the survey questionnaires forms and, all of the forms were completed by the ticket operator thus the response percentage was 100% The Organization Company Background: Rangakaian Segar Sdn Bhd (RSSB) 3 is the smart card ticket operator of Touch n Go smart card ticket, SmartTAG and The Central Clearing House System (CCHS). The company was incorporated in October 1996 and officially 3 Rangkaian Segar Sdn Bhd, 9th Floor, Tower 1, Faber Towers, Jalan Desa Bahagia off Taman Desa 58100, Kuala Lumpur, at

13 launched its services in March 1997 at Metramac Highway and PLUS Expressways. RSSB provides contactless means of fare payment ticket and services through a pre-paid e-payment card called the Touch n Go smart card. RSSB holds the intellectual property rights to the Touch n Go system, which is locally developed according to Mifare standard, the de-facto standard for Contactless smart card. pay for the initial cost for purchasing the ticket. 90% of them also agreed that ISFCS would provide passengers with better Fare Collection services and 88% of them would use the transits more frequent. (See Table 3: Frequency of Passengers Response On Purchase of Smart Card Ticket, Initial Costs of Smart Card Ticket, ISFCS Provide Better Fare Collection Service and Willing to Use Public Transports More Frequent) Implementation Needs and Barriers RSSB expected that with the integration of the public transport Fare Collection systems, it could accommodate new growth of interchange passengers more easily thus lead to the efficiency of boarding time which means shorter time o travel and transfer from one mode to another. They viewed that the best fare payment media are using smart card as the media for integrated Fare Collection system. The integration is hoped to provide better transfers process between multi modal and multi operators at all interchanges for passengers using the ISFCS services. RSSB has described that most public transport operators took longer time to implement because they required a lot of effort to convince the authorities and committees members during the initiation and planning stage. Furthermore, they need a project champion to carry out, lead and coordinate during all stages of the implementation, as well as key personnel and policy makers to support and ensure it is successfully implemented to bring about the improvements. If not, public transport operators may face resistance and coordination problems between participating public transports operators during the implementation. 4.4 The Survey Results of Passengers Perceptions The study collected information from passengers at transits stations for their views on ISFCS implementation barriers. 400 possible respondents were given the survey forms, and about 327 forms were completed, thus the response percentage for the passenger survey was about 82%.(See Appendix (E): Results of Integrated Smart Card Fare Collection System Implementation Barriers Survey Questionnaires for Passengers, Transits Operators and Smart Card Ticket Provider (Frequency, Percentages and Graphs). The survey questions addressed the importance of ISFCS, operators primary concern on ISFCS implementation and passengers attitude towards the implementation. Analysis was conducted on the 327 responses but the responses might only reflect the personal views and thoughts of individuals rather than of the overall passengers magnitude or public transport industry. The survey results for the passengers were discussed in the following sections together with the results for the transits operators and smart card ticket operator. From the survey results, 86% of the respondents willing to purchase the smart card ticket but 95% of them did not agree to Table 3: Frequency of Passengers Response On Purchase of Smart Card Ticket, Initial Costs of Smart Card Ticket, ISFCS Provide Better Fare Collection Service and Willing to Use Public Transports More Frequent. Total Respondents= 327 Yes / Agree No / Disagree Will Purchase Smart Card Ticket Will Pay for Initial Cost of Smart Card Ticket (If the respondent answer yes to question above) Total Respondents = ISFCS Will Provide Better Fare Collection Service Willing to Use Public Transport More Frequent When ISFCS is installed Passengers involvement for the survey was also measured as their inputs are also essentials and influential for ISFCS implementation whereby they would utilize the Fare Collection services offered by the operators. This method provide substantial results as the responses could not be controlled by anyone to its originality and relevancy to the study as the respondents may have personal view of public transportations industry. 4.5 Discussion of Survey Results There were many factors and issues to evaluate and consider when public transports operators wanted to implement ISFCS and in analyzing the survey results, twelve major barriers were identified as implementation barriers. These barriers were described in following section. The discussion of the findings on the study of ISFCS implementation barriers are described as following and it is discovered that all of the factors effected the ISFCS implementation. (See Appendix (E): Results of Integrated Smart Card Fare Collection System Implementation Barriers Survey Questionnaires for Passengers, Transits Operators and Smart Card Ticket Provider (Frequency, Percentages and Graphs), (Table 4: Frequency of Implementation Barrier Perceived by The Transit Operators, Smart Card Ticket Provider and Passengers) and (Table 5: Percentages of Implementation Barrier Perceived by Transit Operators, Smart Card Ticket Provider and Passengers).

14 0 Table 4: Frequency of Implementation Barrier Perceived by The Transit Operators, Smart Card Ticket Provider and Passengers Strong ly Agree Agree Disagre e Strongl y Disagre e No Com ment (1) Financial Funding (2) Project Champion or Coordinator (3) Resistance to Change (4) Risk of Failure (5) Implementati on Duration or Schedule (6) Lack of Knowledge on the System (7) Consistency and Persistence (8) Collaboratio n and Cooperation (9) Revenue Distribution and Sharing (10) Ticket Pricing (11) Cost of System (12) System Fraud (13) Authorities Policy N=387 Graph 1: Frequency of Implementation Barrier Perceived by The Transit Operators, Smart Card Ticket Provider and Passengers Frequency of Integrated Smart Card Ticketing System Implementation Barrier Perceived by Transit Operators,Smart Card Ticket Provider and Passengers Table 5: Percentages of Implementation Barrier Perceived by Transit Operators, Smart Card Ticket Provider and Passengers Strong ly Agree Agre e Disagree Strongly Disagree No Com ment (1) Financial Funding 55% 29% 11% 4% 1% (2) Project Champion 45% 27% 11% 10% 7% (3) Resistance to Change 47% 22% 20% 9% 2% (4) Risk of Failure 32% 26% 25% 11% 6% (5) Implementatio n Duration 33% 25% 27% 11% 4% (6) Lack of System Knowledge 26% 18% 25% 17% 13% (7) Consistency / Persistence 26% 32% 17% 25% 1% (8) Collaboration / Cooperation 41% 30% 20% 9% 1% (9) Revenue Distribution / Sharing 36% 31% 15% 16% 1% (10) Ticket Pricing 44% 18% 18% 20% 0% (11) Cost of System 26% 26% 17% 26% 6% (12) System Fraud 30% 23% 20% 12% 15% (13) Authorities Policy 25% 32% 22% 11% 10% Percentages

15 Graph 2: Percentages of Implementation Barrier Perceived by Transit Operators, Smart Card Ticket Operator and Passengers Percentages of Integrated Smart Card Ticketing System Implementation Barrier Perceived by Transit Operators,Smart Card Ticket Provider and Passengers 90% 84% 80% 72% 69% 71% 67% 70% 62% 58% 58% 58% 57% 60% 51% 53% 50% 44% Percentages 40% 30% 20% 10% 0% (1) Financial Funding (2) Project Champion (3) Resistance to Change (4) Risk of Failure (5) Implementation Duration (6) Lack of Sy stem Know ledge (7) Consistency / Persistence (8) Collaboration / Cooperation (9) Rev enue Distribution / Sharing (10) Ticket Pricing (11) Cost of System (12) Sy stem Fraud (13) Authorities Policy During the system integration implementation process, authorization and control distribution for the available resource between operators and local authorities tend to be political as larger organizations would be have more control for the decision making process as compared to smaller operators. The issues such as who produce more funds and have more power for decision making could be controversial and lead to the integration dismissal. Smaller operators have the fear of identity loss due to creation of new partnership with larger operator. Project Champion or Coordinator 279 or 72 % of respondents answered that a project champion or leader was critical for ISFCS implementation of various public transport system integrations as the champion act as project coordinator and leader of the project. With absent of project champion, there is no leader to coordinate, lead and ensure that all participating operators work together with a common vision to successfully implement ISFCS. The differences between operators in priorities, needs, mission and organizational structures emphasize the constraints and challenges faced by operators and prioritizing collective goals for coordinating ISFCS implementation project. Collaboration and Cooperation Collaboration and coordination has the third highest response with 71% respondents agreed. They believed that the lack of system interoperability and infrastructure differences existed among the participating operators where different system infrastructure and fare payment solution installed at their individual site may cause the differences in operations, policies and priorities that possibly initiate conflicts between the operators. The lack of coordination with each of the operator wanted to choose their own technology; additional costs may possibly incur and caused the operator to withdraw from the integration plan. Financial Funding The survey result indicated that more than 300 or 80% of respondents agreed that financial funding was the most critical barrier because without sufficient funds, the ISFCS implementation would be halted. The ISFCS project funding structure often need clear cut financially quantified however it is difficult for multi operator and multi modal integration to measure costs of investment as the integration is complex and has no simple categorization of cost sharing. With unclear funding mechanisms allocation from the federal government or local state authorities for public transportation industry, making more difficult for the operators to have the changes executed. Implementation cost was a major factor for many of public transport operators as it acted as initial project barrier to start the deployment and only with continuous sufficient funding, the operators may implement ISFCS successfully. The multiple operators have complex fragmentation of roles that create a significant barrier against coordination and collaboration of ISFCS implementation. The operators may lack of understanding on the organizational structures and responsibilities for the decision-making process during the implementation. Therefore, they perceived limited accountabilities and hinder the operators to adapt and respond quickly to implementation and needs for Fare Collection service integration. The multiple stakeholders nature of multi modal integrated Fare Collection services may possibly be the greatest barrier to ISFCS implementation as coordination and cooperation between are required between all participating operators. For example, the bus and transits operators may have their own priorities, plans and specific needs, and all them may differ from one to another. Resistance to Change With 69% respondents agreements, the opposition to the adoption of ISFCS or resistance to change mostly appeared to have been predominantly among the station Fare Collection

16 managers and conductors, with the reason of unfamiliarity with new system and lost of jobs. They seem to reject the implementation as it might disrupt their daily routine works and they have used to the old the system. The attitudes of employees and management that have satisfied with their current position and procedures of business flow and system operations thus resisted to change for any new system implementation that may cause uncomfortable situation within their current position. Revenue Distribution and Sharing Revenue sharing and income diffusion agreement is challenging when no contractual policy established before the implementation as well as the different fare setting and policy in ISFCS might cause a different proposition from the participated public transport operators. When there is no standard regulatory obligation for the revenue distribution that authorize the distribution, therefore it could create major problems where no scope for proportion income and investment financing. The revenue factor received 67% responses; the respondents agreed that it is also a key barrier to ISFCS implementation. There also appeared to be hostility between the operators, borne from the fear that the integration will result in a loss of distinctiveness and revenue. Ticket Pricing The different fare setting and policy for integrated system would cause for a difficulty in integrated Fare Collection proposition as shown from the survey results, the Fare Collection pricing has 62% responses that agreed with the barrier. The discounted fare charges and bonuses for multi operator and multi- modal journeys could also be complicated to derive when more operators participated and joint in for the implementation. The operational, administrative and maintenance issues may include pricing, selling and distributing of fare media. When several operators join in the system, each operator might want to keep its pricing structure and system infrastructures. Risk of Failure The risk of failure was agreed by the respondents as a barrier with 58% responses. Even though the system technology are in advance to meet the Fare Collection operational needs of public transportation industry, the phenomenal growth of technological capabilities that coupled with variety in guidelines, standards and applications has made it hard for all participating operators to agree upon the best solution and predict the future trends of smart cards Fare Collection utilization. These uncertainties of technological advancement trends may hinder the adoption of ISFCS, as the solution selected may fail to work with the existing system. The operators responded that they are also concerned about the risk of failures because if the ISFCS failed, they would need to go back to the old system. Furthermore, the implementation duration factor was also significant as when longer times are required, more financial budget would be needed to sustain the deployment, hence the implementation costs might be higher than expected. Implementation Duration The deployment might take more than 3 years to better serve the passengers with ISFCS. According to the transits operators personnel feedback, most of them expected that the system would take more than 3 years to complete. According to the respondents, implementation has been rejected and required several revisit of the plan before it could be approved. More than half of the respondents answered that it would take more than three years to implement and twelve said it might take more than 2 years to complete. (See Table 6: Frequency of Implementation Duration perceived by Transits operators and Smart Card Ticket Provider). The implementation duration has 58% or 225 respondents that agreed it is also one of the implementation barriers. With each operator have different implementation schedule for fare payment system replacement, it is difficult to organize and implement multi operator integrated Fare Collection system. Table 6: Frequency of Implementation Duration Perceived by Transit Operators and Smart Card Ticket Provider 6 month to 1 year 1 to 2 years 2 to 3 years more than 3 years Implementation Duration Consistency and Persistence The consistency or persistence of ISFCS project implementation is a factor where sometimes full commitment was not received by participated operators with the attitude of resistance to change or improve. They would not have the persistence to carry on with the implementation when they faced obstacles as the project progress. The obstacles may come from government policies and regulations posed to public transport operators. This barrier has 58% of respondents agreed to it. Consistency and persistence are considered a factor when the deployment shall involve long implementation schedule, thus the operators must be persistence to bring about the enhancement, if not the deployment would be halted. With the persistence pf project champion, the implementation would eventually be driven through completion despite plan changing due to opposition and different specification to meet passengers needs. Authorities Policy 57% of respondents said that operators were controlled by local or federal authorities policies and legislation on the system itself can be a challenged in fulfilling passengers requirements. The legal and regulatory factors such as privacy, electronic funds transfer, prepaid or stored value cards and expired value cards would give concern to operators. The operators must protect the customers information because of the privacy rights of passengers. This could lead to an issue due to invasion of customer privacy as ISFCS may track and keep detailed information on individual rides and traveling patterns. The issue

17 also includes operators responsibilities and cardholder rights in relation to the refund of expired stored-value card, and lost or stolen cards when bankruptcy happened. In Malaysia, there was no policy incentive by the government to develop the integration Fare Collection services which the public transport operators viewed the services may contribute to a disputable fair policy and regulations for revenue as well as implementation and well as operational costs. The ISFCS data sharing may also be a problem when there are no exclusivity agreements and standard guidelines for shared data. System Fraud System fraud was also agreed as a barrier where the manipulation smart card reader to illegal reloads value onto the card. Then the card can be used without being detected till the system data is analyzed and report is produced to indicate the fraudulence has occurred. Cost of System As described in the literature review section, the cost of ISFCS implementation are considered to be prohibitive investments while the survey results also indicated that system costs is one of the implementation barriers. The lack of market data available and collected for integrated smart card Fare Collection that might provide a quantitative analysis on potential benefits of the integration of multi modal public may hinder public operators to invest for ISFCS. As shown in the table below, most the respondents indicated that the costs of ISFCS implementation was more than RM2,000,000. ISFCS involved substantial amount of cost funding to execute the system as the cost is expensive. In addition, there are varying degree of Fare Collection and journey services provided by public transport operators thus the possibility of integrated Fare Collection solution using ISFCS may not prove to be cost effective for some operators especially operators in smaller organizations. (See Table 7: Frequency of Estimated Cost for Implementation of ISFCS that Perceived by Transit Operators and Smart Car Ticket Provider). Table 7: Frequency of Estimated Cost for Implementation of ISFCS that Perceived by Transit Operators and Smart Car Ticket Provider RM800 K RM1,00 0K RM1,000K RM1,500K RM1,500K RM2,000K >RM2,000K Estimat ed Cost Lack of Knowledge on the System The lack of knowledge on system was not crucial in the surveys; however they are still the factors to be considered for the implementation. As the concept of integrated Fare Collection system is relatively low in Malaysia, the stakeholders were unaware of its complexities and lack of system knowledge for installing ISFCS. Thus, according to the operators, design and user needs specification of ISFCS, have hardly been converted to really produce a reliable and effective system. 4.6 Summary The face-to-face interview survey and questionnaire survey have been a quick and effective approach of acquiring information about ISFCS implementation barriers and issues for public transportations. The face-to-face interview has given in-depth understanding and knowledge of the issues that needed to be elaborated for clarification and verification. However these two methods required more times and efforts as only a limited set of respondents can be reached and interviewed within a specified time frame. Both of the survey findings, showed that the primary barriers of ISFCS implementation was cost funding, project champion for coordination and collaboration, and cooperation among the participated operators. The responses from the operators indicated that the project champion is needed to lead and coordinate the deployment as well as establish the cooperation among the operators. In addition, the results also revealed that funding was also critical as without continuous sufficient funding, the implementation would be halted. The results has provided the insight into present situation regarding to implementation barriers of ISFCS and determined potential solution and recommendations relative to the barriers and identified possible actions might be initiated in response to the solutions. The barrier was analyzed to produce successful approaches to those major issues which may bring learning points for public transport operators. 5. CONCLUSION AND RECOMMENDATIONS 5.1 Integration Guidelines The public transportation industry in Malaysia for the past fifty years has been mostly oblivious to public variation needs and operated with less optimum of efficiency and effectiveness especially for the Fare Collection or fare payments solutions. The fundamental changes in Fare Collection services with the implementation of ISFCS, it is hoped to serve as backbone of public transports operators common goal to provide effective and efficient integrated Fare Collection system that based on new paradigm with customer-oriented perspective. The main benefit of the strategy is that the ISFCS would increase demand for public transportation services by inducing travelers to utilize existing public transport at higher rate while reducing the demand for SOV traveling into the city. The Fare Collection system improvement at public transportation is necessary in order to better serve the city population with good levels of services.

18 The hypothesis of this study is that there were many barriers in implementing the ISFCS for the public transportation but the key barriers that discourages the implementation is lack of funding, while coordination among the participated operators is the main cause to the success of ISFCS implementation. The study has identified that most of the barriers were more of perception then reality and most operators considered these barriers as issues to be solved and not barrier that hold them back. continues in operational. The proposal for initiatives such as establishment of representatives from the operator group to monitor performance, establish measures and provide legislative policy required to achieve long term objectives of ISFCS implementation. Thus it would attract a larger operators group to invest in ISFCS and generate sufficient funding to manage the operation and implementation costs thus greater return on investments. A key factor for implementing ISFCS is good coordination and collaboration between the participating public transports operators in order to provide customers with multi-operators and multimodal Fare Collection services. There must be detail studies and prudent and thorough cooperation because not all existing fare media, equipments and solutions are compatible and complementary to each others. In addition, the new integrated fare structures and policies management would require attention on systems, operations and administration ends as well as organizations structures and setting of all participating operators. While there are many benefits for the operators, they still have a difficult job at hand when implementing ISFCS. Some of these barriers may be existent and valid while other may be perceived and insignificant. Hence the operators must fully comprehend nature of the barriers and overcome them in order to successfully implement ISFCS. The difficulties deepen when several operators are having different fare media, fair pricing and systems infrastructures. The operators should place mechanisms to facilitate provision of customer needs that could improve ridership with proper market research and extensive customer needs analysis. This would give a real picture of the potential demand and identify markets segments for ISFCS implementation planning. Public transports operators must develop an environment necessary to encourage the ISFCS implementation which include risk taking, failure recuperation and quantifying success procedures. 5.2 Recommended Solutions Many critical barriers have been identified, which they have illustrated ISFCS implementation immaturity. Hence, there is a strong argument that ISFCS can be implemented by having many of the measures and solution combination that correspond to the barriers identified in the survey results section. Financial Funding It could be concluded that funding is the major barrier to implement ISFCS, hence operators must find funding resources in ensuring that the deployment would eventually executed. The funding must cover the cost for research market and creating conducive environments for the implementation. The possible funding availability and mechanisms should be identified and established, in addition, the investigation and estimation of ISFCS initial costs should be also explored before the implementation plan is executed. Implementation funds from the government should be apportioned and extended for deployment and The flexibility in funds management and allocation and funding mechanism by the authorities, could encourage and enforce collaboration depending on the procedures and policy set. Thus motivate the operators to move towards better coordination and cooperation for the implementation. The government must also provide continues long term and significant source of investment and funding to ensure public transport services improvement security in the future hence building consumer confidence toward public transport. Project Champion or Coordinator Generally, it is more feasible and workable to appoint a leader from the organizations involved to oversee the implementation process. Therefore, it is likely that the operators and local authorities will work together on consensus based approach with the guidance of the leader. Project champion or coordinator absent was a critical factor to ISFCS implementation thus with the presence of a champion, public transport operators may possibly be able to establish collaboration and coordination with a centralize implementation management. Project champion would lead and coordinate implementation plans and efforts, to ensure all the participated operators contribute to implementation tasks. The ISFCS project should have a strong, formidable, persuasive and dedicated champion is the key to deploy ISFCS for public transportations. Collaboration and Cooperation The barriers of collaboration and coordination are normally political and technical in nature (reference 24), therefore they could not be solved with structural reform of operators organizations. They must work together on mutual trust and strong relationship basis to achieve greater flexibility and adaptability among operators as well as the system integration itself. The common vision establishment between participated operators is an important element and directly associated to coordination and cooperation. The vision is needed to establish in order to increase the effectiveness of ISFCS from the standpoint of customers and encourage coordination that creates greater partnership among participating operators. The coordination with consensus driven decision making process is significant and critical in getting a common vision where this effort would resolve the conflicts that may arise during implementation and integration. They should institute standard framework changes for long term strategic vision, improvement of business process and day-to-day operation for Fare Collection services improvement Resistance to Change

19 The resistance to change from operators officials could be overcome by emphasizing system training and knowledge transfer to be provided and new scope of work are well established. The resistance to change of operators could be overcome by increasing the cooperation between operators and with leadership role from the participating operators and public transportation planning agencies. For the operators personnel resistance to change, detail explanation of the implementation objectives should be clearly conveyed to all personnel. Each participated operators should also have project champion to encourage and overcome resistance to change within public transport officials, furthermore help them to understand, encourage and strengthen to persist with the implementation. Revenue Distribution and Sharing The revenue collection process need to be studied and considered carefully as operators need to determine which trips and journeys used its services. The operators should have interoperable agreements, payment and reconciliation system for the revenue and income distribution and proportionate. Furthermore, with centralized managed integrated Fare Collection systems, the revenue and income dispersal would be based on the ridership and it would be easily and quickly to be calculated, reconciled and audited for distribution. Ticket Pricing Other main concerns from operators were the smart card Fare Collection system management and operational issues whereby the operators would not want to increase the ticket price any more than necessary. The concerns could be resolved by emphasizing on the system management and operational policy and procedures, as well as educate passengers on the benefits of paying for the initial charge of smart card ticket as it is a one time charge only. Although, the initial charge for smart card ticket was higher and would be absorbed by users, they might favor for paying the charge when they could attained the benefits of having multi-modal integrated ticket for single journey with multi modal public transportation. An integrated and common fare structure would be needed to maintain each operator structure and at the same time, the structure may universally accept by all participating operators, although sometimes practical constraints may impose variability. Risk of Failure An appointment of joint technical committee should develop technical requirements and operational procedures of ISFCS that are based on the coordinated and integrated services as well as operators current status and system infrastructures. The examination of system future capabilities, enhancements and long-term planning must be carried out, in order to avoid integration model that is unable to be incorporated into system future developments and can only be applied to current environments. Implementation Duration or Schedule The operators should take a proactive role in the deployment of ISFCS within their operational paradigms for the resonance of deployment. A study to on ISFCS system analysis should be carried out to identify the process of changing, migration path and implementation plan for the integration models to be developed. Integration Fare Collection solution for multi modal and multi operators is a very intricate and complex commencement and it requires tremendous planning, researching and testing before it can be implemented. Consistency and Persistence The operating agreements between all participating operators must be developed in which the agreements will define the mutual and joint services within ISFCS, fare structures and policies, roles and responsibilities of each operator, technical and non-technical requirements for ISFCS implementation environments. The operators should gain the local and state government officials for the support required and integration opportunities of public transportation industry, this would ensure that all the participated operators continue to work together till the implementation is successfully completed. There is a need to identify and promote potential project champion or leader to lead, coordinate and strive the ISFCS implementation to the completion. When there is a champion available, the persistence of the project deployment could continuously be forwarded and maintained till completion of the project. Authorities Policy Although public transportations policies and legislation are controlled by state or local authorities, public transport operators should have proactive approach to encourage the integration by facilitating coordination and collaboration between participated operators and enable the environment for ISFCS implementation. This would also unite the operators, regional planners, policy makers, and local authorities to position ISFCS which would encourage the operators to step forward and implement ISFCS. The participating operators must be able to discuss and manage the barriers and issues on a common ground with clear definition of roles and responsibilities, and no ambiguity with establishment of standards operational policies to ensure interoperability of ISFCS. The operators should gain the local and state government officials for the support required and integration opportunities of public transportation industry. The involvement of centralized government and local authorities in public transportation industry shall assist the operators in deploying ISFCS. For example, the International research on smart card system in Hong Kong, the ISFCS implementation have been effective and efficient [Widermuth, 1994]. Hence, government could arrange a standard institutional and legal setting for all public transport operators. System Fraud An understanding of the benefits, risks and uncertainties of ISFCS should be developed by participating public transports operators. They may have to make necessary organizational changes in order to trade off for the potential gains and associated risks. With that, cost benefit analysis, and operators and passengers market surveys are practicable steps to encounter all possible risks.

20 Cost of System The operators must agree upon ISFCS technology standards and procedures, and then procure it jointly in order to reduce cost funding. The true costs of ISFCS must be clearly defined during the planning of ISFCS implementation to ensure the participating operators have sufficient funding. Hence, this would mitigate the investment of ISFCS and it could be successfully implemented with the support of all participated operators. Lack of Knowledge on the System The operators involved in the new integrated Fare Collection services must agree to incorporate all technical requirements 4 as well as non-technical in order to ensure that ISFCS is well suited for multi-operators and multi-modal setting. A promotional campaign should be conducted to encourage consumers to use new Fare Collection services. Prior to that, it is proposed that the operators should undertake questionnaires survey of passengers and frequency of public transport services used in order to establish demographic characteristics. Smart card ticket production, distribution and marketing must be supported by all the participated operators. 5.3 Meeting the Aim and Objective With the aim to improve the operation and services of the public transportations, public transports operators may provide the opportunity to render better fare Fare Collection services with seamless traveling, more cost-effective and efficient operations and maintenance as well as meeting passengers satisfactions by managing the integrated smart card Fare Collection system implementation challenges and issues discovered with the possible solutions instituted. The research data sources and analysis were utilized to draw together into structuring the findings for the research objectives set out in section 1.7 of Chapter To review current Fare Collection system and explore the potential impacts of an integrated smart card Fare Collection system of public transportations: In the earlier chapter, it was indicated that the current system with paper-based ticket are having restricted capabilities. While most of public transport operators appear to venture towards smart card Fare Collection system due to its enormous benefits and potentials. Then again, the assumed impending benefits are considered to build a strategic instance for establishment and introduction of ISFCS. 2. To identify the possible barriers for the implementation of an integrated smart card Fare Collection solution for public transport: In summary, the literature review and the survey results have uncovered that three most critical factors in implementing the ISFCS are being sufficient project funding, cooperation between participated and project champion to lead 4 The environments and frameworks within ISFCS to be operated should be first determined. and coordinate implementation. The reviews and surveys results have also indicated that other barriers are revenue allocation or distribution, system cost, technology, ticket pricing and fraud, management involvement, and passenger and employee perceptions. 3. To review and analyze the implementation barriers of an integrated smart card ticketing: It could be concluded that the integrated smart card Fare Collection system could be introduced and perfectly acceptable across all public transport operations, provided that the main barriers have been overcome with continue efforts by the authorities, operators and stakeholders or public transportation industry. 4. To establish the potential solution for the implementation barriers of an integrated smart card Fare Collection system: The operators agreed that the implementation of ISFCS is a challenging project but it can be conquered even with so many barriers and the integration is achievable within the existing Fare Collection system. Furthermore, they were keen to introduce ISFCS and viewed the current situations as being an assent to accomplish it. The task to tackle these barriers is enormous, though the solutions provided would support to successfully achieve the deployment. The joint effort taken by operators and authorities in handling the deployment issues of ISFCS would be able to provide a sustainable and effective solution. 5. To analyze the collected data and with the evidence base on the theme research, thus develop certain deductions to assist in developing solution for the implementation barriers of an integrated smart card Fare Collection system and improving public transportations services: As expected, this study contained findings from the research conducted, with the intention to identify the barriers and issues that may prevent or discourage operators from adopting ISFCS. The analysis and discussion of the research data, have determined which barriers were associated with the implementation thus identify what were the expected solutions to make it possible for the operators to move towards the exercise and deployment of ISFCS. However, this study did not give conclusive substantiation that the income and patronage would be improved due to the ISFCS implementation until the system has been installed and business case is proven with evidence. 5.4 Key Points and Future Research Key Points The finding implied that public acceptance of ISFCS may vary depending on ridership of each operator where the successful implementation would depend on operators abilities to identify market populations, partner with other mode operators, non transportation agencies and local authorities to capture the markets. In summary, the key points that contribute to overcome barriers and successfully implement ISFCS are described as below: