Contactless bank cards

For many years now, contactless smart card technology has represented the best fare medium for transit agencies. Contactless payment systems have been used by many mass transit agencies across the world and the conversion from cash or magnetic stripe is accelerating. Indeed while contactless smart card systems initially were implemented in large metropolitan areas such as Hong Kong, Singapore, London and Washington, they are now being planned for single operator systems like Salt Lake City. And, in some cases, very small systems are opting for the technology such as in Saint John’s, Newfoundland, Canada where only 60 buses are involved.

Contactless smart cards streamline fare payment, reduce customer service costs, increase throughput, and decrease bus dwell times. Some of these benefits are now being recognized to benefit other payment systems. Bank card associations and their issuing members continue to increase their focus on markets that are based on processing of micro-payments and are now encouraging the use of contactless bank cards in low-ticket, high volume industries such as fast food.

As the association network rules are being amended to address pricing and procedural issues for their contactless bank card programs, the transit industry is hoping that the financial industry is finally working to develop solutions that support the unique requirements of transit agencies and their riders while providing profitable opportunities for bank card issuers. Already several agencies have issued RFI’s looking for input into how to migrate their fare collection system to accept contactless credit cards directly on the bus or at the gate.

The progression from today’s environment, where individual agencies are operating closed fare collection systems unique to each one of their operations, to an environment where transit agencies no longer have to be in the business of fare collection may have already started. Closed-to-open system migration for AFC in large centers, such as the New York region, is probably realistic within the next five-year time frame. Given the critical mass of bank-issued smart cards that could be in circulation in the major cities within the next two years this would give impetus to the development of an open system smart card infrastructure for fare collection.

Technologies and Standards

A major challenge facing contactless smart card deployments has been the necessity for flexibility and interoperability. The transit industry is pushing vendors on the issue of interoperability. Some standards, such as ISO 14443, have been adopted but interoperability needs to be assured before migration to a fully open system can occur.

The Port Authority New York New Jersey (PANYNJ) has taken the lead in developing a Regional Interface Specification (RIS) to define the necessary interfaces to allow various vendors equipment to function in a regional scheme. APTA has adopted the RIS as a major building block for APTA’s UTFS specifications that are expected to be completed in 2006.

The transit industry has been an early adopter of smart cards in the US. Standards such as RIS and UTFS, along with the integration of contactless bank cards into the transit environment, will facilitate the growth of smart card acceptance in transit even further in the coming year.

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