Smart Ride: European transit systems move to contactless mobile payments Trends and Developments, May 05, 2015

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1 Industry trends suggest that transit system operators are moving away from traditional methods of payment such as cash, tokens and paper tickets to a variety of electronic payment methods, including near field communication (NFC)-based mobile ticketing. Bringing mobile technology into fare payment increases consumer choice and engagement, and decreases the revenue loss and costs associated with fare collection. To complement existing payment methods, transit agencies have been offering mobile ticketing applications with added robust functions to enable the online purchase and delivery of tickets through mobile devices. They have also been equipping train conductors with mobile card readers to accept credit and debit card payments on board trains. Types of mobile payments There are two main types of mobile payments. These are: - Payments using NFC-enabled mobile devices In this case, the mobile phone is equipped with an NFC antenna and the buyer s smartphone functions as a contactless payment card. Payments can be made by deducting the amount from a prepaid mobile account or by direct debit from a bank account, or a linked bank card (debit or credit card). - Mobile point-of-sale solutions These require a mobile payment application to enable the mobile device to function as a point-of-sale (POS) terminal, and a secure mobile card reader. UK s national specification standard ITSO In the UK, Integrated Transport Smartcard Organization (ITSO) specification is the national technical standard for all modes of public transport. It provides a technical platform to build an integrated and interoperable smart ticketing scheme. As such, the ITSO standard covers all components of ticketing smart cards, PoS and back-office systems. 1 / 4

2 Mobile wallet Mobile wallets are digital wallets that can be accessed through a mobile device such as a mobile phone or a tablet for making fare payments. In September 2013, Vodafone s mobile wallet became the first European mobile payment service built on the GlobalPlatform open standard. The wallet uses a special SIM card with embedded NFC technology for payment at terminals. Vodafone has enabled more than 300,000 terminals for Visa contactless payments. Several European cities have started using advanced mobile technologies: Oslo, Norway: The fare system in Oslo is integrated, zone based and managed by Ruter, a common management company for public transportation in Oslo and Akershus. The mobile ticket application RuterBillett enables smartphone users to buy single tickets and period passes online. After making the purchase online, the user has to visit one of the pick-up locations to download the ticket or the pay-as-you-go credit on the Travelcard, a plastic card for fare payment. Online purchases are still under a pilot programme and the pick-up locations are limited. In September 2013, Ruter announced the success of its ticket application, with over 350,000 downloads and sale of over 3 million tickets since its launch before Christmas in Currently, one in five passengers buys tickets using the mobile application. The Norwegian State Railways (NSB) also has a mobile application to sell tickets for its lines in the Oslo and Akershus regions. Since its launch in February 2013, this application has gained 80,000 registered mobile ticket buyers. It is only available for iphone and Android-based phone users (not for Windows-based smartphones). Frankfurt, Germany: The regional transport association, Rhein-Main-Verkehrsverbund (RMV) launched the HandyTicket NFC infrastructure in It allows riders to download single tickets and day passes, for both individuals and groups, using their mobile phones. Subsequently, in October 2010, US-based Cubic Transportation System introduced a smartphone application and mobile ticketing solution for iphone, Android and BlackBerry smartphones. By June 2012, 2 / 4

3 RMV had sold about 1 million mobile phone tickets through this application. The HandyTicket system uses radio chip touch points known as ConTag points. These are attached to ticket machines at busy stations on the RMV network. The round plastic modules store passive data and provide an interface between the customer and the new ticketing service. The ConTag automatically activates the ticketing programme on the mobile phone and registers the departure point of the journey. It can be used to access real-time travel information on RMV s website and to purchase tickets through the transport operator s mobile website. Deutsche Bahn (DB) launched the NFC-based Touch & Travel system in Berlin, Frankfurt, and Hamburg in February 2012, in partnership with Cardag Deutschland GmbH, NXP Semiconductors, Atron and Giesecke & Devrient. The service is available to subscribers of Telefónica O2 Germany, Vodafone and TMobile. Passengers present the NFC phone to Touch & Travel touch points at the start and end of their journey. The fare is automatically calculated and charged to their DB account, which is settled on a monthly basis via direct debit. In March 2011, RMV and DB agreed to create a single interoperable ticketing system based on their existing NFC projects. The two firms will combine their systems such that passengers can use NFC-enabled mobile phones to buy tickets for both local (Frankfurt-based services with RMV) and long distance (DB) train travel. The existing ConTag and Touch & Travel touch points in Frankfurt will be replaced by new touch screen ticket machines that allow users of NFC-enabled mobile phones to purchase tickets for RMV and DB. The way forward In September 2014, MasterCard announced plans to establish contactless acceptance as a standard by 2020 for merchants accepting MasterCard and Maestro across Europe. This will allow consumers to pay with their contactless cards and NFC-enabled devices at all PoS terminals across Europe. To further explore the utility of smartphone applications, the European Union is funding a project called MobiCloud. The project aims to promote the use of mobile-based services on the cloud and support the emergence of a European ecosystem of mobile cloud-based applications. It is a collaborative platform for developing, deploying and managing mobile cloud applications for 3 / 4

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