In about two weeks, Transport for London expects to record its one-millionth ride paid for by contactless bank cards, and the authority says it’s on track to hit its deadline for launching open-loop fare collection on the rest of its transit network, including the busy London Underground, by the end of the year.
But Transport for London, which in December became the first major transit authority in the world to launch acceptance of contactless credit and debit cards, appears to have no plans to introduce mobile NFC services anytime soon.
“Despite all of the work that we’ve done with NFC, the infrastructure of the mobile industry has not caught up with the contactless (card) payments areas of banks yet,” said Peter Lewis, external initiatives manager for Transport for London, who was speaking at the NFCP Global Summit conference Friday in London. “So, I don’t see mobile being an effective use in the world I’ve just described for some time yet, until more phones are in people’s pockets and until it’s fast enough to achieve the time scales and get people through gates, as well.”
Transport for London has held at least a couple of NFC trials, including a high-profile pilot launched in late 2007 that stored an Oyster application on the embedded chip of a Nokia NFC phone model.
Lewis is not the first Transport for London representative to question the readiness of NFC for mobile transit ticketing, especially the speed of putting credit and debit cards or the authority’s own Oyster application onto NFC SIM cards in NFC phones.
That includes the authority’s director of customer experience, Shashi Verma, who oversees the Oyster program and who last year said he did not believe SIM-based NFC could achieve a transaction time of 500 milliseconds or less that the authority says it needs to allow customers to flow through its busy metro gates and past bus validators at peak hours. Lewis quoted tests that showed 600- to 800-millisecond transaction times.
Verma had told NFC Times in May that the tests of the speed of SIMs were a couple of years old, though he did not believe transaction times had changed. It’s not clear whether Lewis was quoting more recent tests. The pilot with Oyster on an embedded chip did hit the required transaction times, he said.
But others involved in NFC transit fare collection speaking at the NFCP conference said transaction times are hitting 300 milliseconds with current technology for closed-loop transit applications on SIM cards. While different from standard credit and debit bank applications, Transport for London is not doing full EMV transactions for accepting fares and is keeping the transactions offline, so the speeds should be similar with those of close-loop ticketing.
Coupling Problem
The experts added, however, there are still potential problems with communication between NFC phones and readers for transit ticketing because the antenna on phones and the one in the transit readers do not always couple properly–depending on the location and size of the antennas and how fast riders move the phones across readers on gates or bus validators. The problem would mean users would have to hold their phones on the readers longer to allow the antennas to connect.
“We have done testing in the UK, and we’ve done testing in Spain and had it under 500 milliseconds,” said Steve Bryant, UK-based head of product, NFC Transport and Ticketing, at France Telecom-Orange Group. “If it actually couples, I’ve seen it do it under 500 milliseconds. The problem is, they don’t always couple so easily.”
A coupling problem has apparently delayed introduction of a few planned NFC transit ticketing services, including the ez-link fare-collection service in Singapore that is supposed to be part of a government-sponsored roll out of NFC services. The NFC services in Singapore, launched last summer, mainly involve retail payment.
An EZ-Link Pte. executive told NFC Times last month that two Samsung NFC models with antennas located in different places behind the back covers of the devices caused inconsistent reading of the ez-link e-purse on the SIM with the readers.
Gemalto, the largest supplier of NFC SIMs, did not immediately respond to a request for comment from NFC Times on questions about transaction speeds for SIM-based NFC transit ticketing.
Meanwhile, there have been some problems reported in implementing SIM-based Mifare transit applications on SIM cards, and software from vendors to make this implementation easier, Mifare4Mobile 2.0, is late to the market.
But more importantly, transit authorities, at least those in Europe, are having difficulty making a business case for NFC-based mobile ticketing, notes Bryant and other observers. The transit authorities, which are government or quasi-governmental agencies, mainly look to mobile ticketing as a way to cut costs rather than raise more revenue, and they are having trouble finding prospects for a timely return on investment in rolling out NFC.
Full-Speed Ahead on Open Loop
Cutting costs is the reason Transport for London is moving to open-loop card payment of fares and is planning to phase out Oyster, which in 2008 was costing the authority at least £100 million (US$195 million) per year. But Transport for London apparently sees no direct benefits to adding contactless-mobile payment yet.
Contactless bank cards might not always be fast enough for the London Underground either, however. Recent tests by Cubic Transportation Systems–Transport for London’s systems integrator for both its Oyster card program and its move to open-loop acceptance–showed that contactless credit and debit card transaction speeds ranged from 450 milliseconds to 900 milliseconds, “depending on which bank, which card issuer, were actually issuing the cards,” said Lewis.
But Transport for London says it is moving full-speed ahead with the next phase of its open-loop payment project, which will expand contactless bank card payment to the fast-paced London Tube and, more importantly, move the transactions to its back-office system to calculate fares and handle payment.
To date, the authority only accepts credit and debit cards for single-ride fares on the 8,500 London buses it manages. Riders only tap once to pay, and they do not get volume discounts as they do now with the Oyster card.
“It’s a very simple scheme at the moment,” said Lewis. “It’s an alternative to cash. What that basically means is that there is no daily (fare) capping.”
Since it began to accept contactless credit and debit cards Dec. 13, Transport for London has estimated riders have tapped about 750,000 times for rides. At that rate, the taps will total 1 million on or around April 9.
That would be a significant milestone after fewer than four months, contends Lewis, considering the number of contactless payments made elsewhere in the UK for retail purchases.
“It just shows you simply how dominant London transport could be in the whole of the infrastructure of contactless payments compared with the rest of the retail world,” he said.
Visa Europe estimates there were 2.5 million contactless transactions per month nationwide in the UK at the end of last year at retail locations, which it predicts would grow by four times this year.
Barclaycard, which led the UK launch of contactless payments at retail in 2007, announced last week that its figures show riders are paying an average of 11,000 contactless bus fares per day and the total is growing fast. There are about 31 million contactless credit, debit and charge cards from all issuers in the UK that could be used to tap to pay bus fares.
But contactless bank card payment on buses are dwarfed by the total number of payments riders make with Transport for London’s popular Oyster card, which accounts for around 14 million transactions per day on all modes of transport, said the agency.
Account-Based Fare Collection to Come
The transit agency hopes to increase riders’ use of their contactless bank cards as it seeks to get out of the business of managing its own fare currency, with Oyster.
But the more difficult part is to come, centered around a sophisticated back-office system, which Transport for London calls its fares and aggregation engine.
This system calculates fares and charges the users credit or debit cards. The system gives riders a price break by capping fares after a certain number of rides on a given day or week. It means they would not have to buy separate weekly fare passes or daily travel passes supporting Oyster or use standard Oyster cards for daily fare capping. And the centralized system also will handle pay-as-you-go rides, including those by tourists or other occasional riders, though these transactions might be considered riskier. Later the authority would introduce an EMV-compliant TfL card for riders without bank cards.
With the fares engine, the intelligence moves away from the card, which stores the Oyster value, and the terminal, which calculates the fares. It moves this intelligence to the centralized back-office account system. And the bank credit or debit card apparently becomes similar to an ID token for the rider to access this account system.
“So this is a considerable investment that TfL (Transport for London) has been making, and when we roll out to the whole of the Tube network, at the end of the year, this will be delivering contactless payments across the whole of the transport network in London.”
He and others at Transport for London contend the authority will hit its deadline to launch phase II of the project on the Underground, light rail and trams with the account-based system by the end of the year, even though it missed the deadline for launching the much simpler phase I on the buses by six months. The authority says it will also add fare collection on the buses to the centralized system by the end of the year.
Some observers expect Transport for London to only introduce part of phase II by the end of the year, since it is an ambitious project.
Other major transit authorities, in Chicago, Philadelphia, Washington, D.C., and New York City, also are moving toward accepting contactless bank cards for fares. And other transit agencies that are not planning to accept credit or debit cards are still expected to make the move to account-based ticketing, which would allow them to more efficiently calculate fares and handle payment.
With the Transport for London system, the rider will tap his banking card to the reader, and it will go to a “middle office,” which will identify whether the card can be accepted for payment, said Lewis.
The authority is aiming for that step to take about 15 minutes, he said. If the back office system determines the card is fraudulent or the rider has insufficient funds, it will add the bank card number to a denial list, which the system will send regularly to store on the readers.
There is not enough time to do an immediate online authorization when the rider taps the card at a transit terminal and unlike contactless bank card transactions at terminals in retail stores, the system will never ask the customer to enter a PIN code to reset security counters.
The open-loop transit system will allow the rider to enter the gate the first time he taps the bank card–before any authorization–and the system would not know if the card was fraudulent.
“This is the way we are working with banks,” Lewis said. “So the banks are accepting a certain level of risk.”
It's not clear whether banks or the card schemes are actually accepting this risk.
Mobile NFC Payment Still Possible
Despite Transport for London’s apparent coolness to mobile NFC at present, riders still may be able to tap their NFC phones to pay fares, if those phones store a standard EMV application supporting payWave, PayPass or ExpressPay.
But most implementations of mobile NFC payment appear to require the application to go online every time for authorization, including Quick Tap, the small NFC payment service launched by Orange UK and Barclaycard in 2011. So riders would not be able to use these applications to pay for fares in London.
In addition, Barclaycard’s PayPass application on the Orange SIM cards is prepaid, which Transport for London does not accept on buses; it only accepts credit and debit applications–at least for the first phase.
The situation could change next year, according to Barclaycard, though it likely would mean mobile NFC applications would have to support an offline mode.
“Next year, in phase II, we fully expect people to be using their mobile phones to travel on buses and (the) tube,” said a spokesman.