2009 Fare Collection Workshop

Transcription

1 2009 Fare Collection Workshop Emerging Technologies Near Field Communications and Credit Card Based Transit Payment Scott Rodda Booz Allen Hamilton March 16, 2009 GROWTH AND RENEWAL

2 Emerging standards for cell phones and bank cards employ contactless technology to facilitate transit payments NFC Cell Phones Near Field Communication (NFC) is a set of standards enabling cell phones to communicate securely at ranges of up to 1.5 inches NFC can be used for payments, information transfer and access Standards for NFC, cell phone and payments architectures are solidifying Handset makers have NFC handsets in Europe U.S. will follow when the demand is there Contactless Credit Cards Contactless bank cards are supported by all the major card types and associations As bank cards move to smaller payments contactless provides added speed with increased security 50 million contactless bank cards have been issued in the U.S. projected to grow to million in 2009 This will represent about 5% of all cards Both technologies have adopted ISO/IEC as the communication standard which is compatible with most contactless card readers

3 Both technologies are a natural fit for transit payments For the Rider For the Operator For the Telco For the Bank Most riders already carry cell phones and credit cards Don t have to worry about transit tickets Cell phones may have higher penetration amongst transit riders Lower media distribution costs Lower cash handling costs Better data Can drive acceptance of NFC technology Can add stickiness for customers Value added services may be built around transit payments Can drive acceptance of contactless technology Can add revenue from transaction fees

4 There are some downsides For the Rider For the Operator For the Telco For the Bank Riders without cell phones or credit cards will be left out Credit card transaction fees will be required Must build a solid business case Chip cards are more expensive than magnetic stripe cards Ride history for credit card use could be confusing Cell carriers will likely look for fees too Retailers must obtain readers

5 Bank card transit payments have been piloted worldwide Contactless bank payments Dual Chip Chip Transit Mag Stripe Credit UTA has graduated to a production system Mag Stripe bank payments

6 Similarly NFC pilots have been carried out worldwide Transit Information Posters Access Hotels Fast Food Transit Payment Verification Sports Convenience stores

7 Transit operators considering either technology for fare payments need to make key decisions Application Dedicated transit application Bank card application Card Based Account Based Transactions Works well with smart card systems Could use APTA s CFMS standard Currently US banks do not support nonbank applications on bank card chips Less overhead complexity and risk for the operator Simplicity for the rider Robust and relatively fail-safe Very fast transaction times Operator takes fraud and theft risk New in mobile environments Technical advances on the horizon Less risk and risk switches to card issuer which may not be the operator Enables debit and pre-paid debit cards

8 Other elements to consider when beginning a project A Transit operator will need strong business relationships with: Telcos Banks Point of sale outlets Additional acceptance locations The customer experience must be held foremost throughout the process The user experience should be consistent regardless of payment means or mode of travel Speed of transaction is critical

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

10 Thank you Scott Rodda Booz Allen Hamilton (415)