Does revolution bring returns?
Smart ticketing and contactless payments have revolutionised fare collection in the last decade. While there’s little doubt over the ways in which the new wave of frictionless ticketing and payments has elevated passenger experience, transport operators and agencies are searching for evidence of return on investment.
They want to know how buying into account-based ticketing and open payments will create cost efficiencies and boost revenue. Historically, it’s been hard to quantify the commercial impact of reliable, easy-to-use ticketing infrastructure. However, as systems become increasingly digitised, the industry has more data available. It paints a clear picture of passenger approval of ‘tap to travel’, and of cost-savings resulting from the shift towards account-based and card-based ticketing.
Happy riders, higher revenue
We’ve seen this in our own deployments. Take Edinburgh, where the introduction of account-based ticketing and open payments on Lothian Buses in 2019 triggered a change in passenger payment behaviour. In four years, cash was reduced from a 42% share of total payment volume to 13%. Contactless EMV adoption accelerated rapidly and now accounts for 50% of payment volume.
In our experience, systems that simplify fare collection and cater for all passengers’ preferred payment methods tend to see increased ridership and revenue as a result. But the latest evolution of ticketing technology can go further, creating headroom for efficiency and productivity gains.
5 STEPS TO BOOST THE EFFICIENCY OF FARE COLLECTION
1. Reduce dependence on costly cash handling
When passengers use their bank card, mobile wallet or m-ticket as their token for travel, the cost associated with cash handling plummets. Collection, reconciliation, secure storage, and transportation of cash carries a hefty price tag. Even if cash can’t be eliminated from a transport network, the expense can be reduced by offering and promoting the use of digital payment methods, which have relatively low overheads.
2. Introduce account based ticketing
Social inclusiveness is a common goal for cities and regions as they modernise their transport networks. Account-based ticketing (ABT) systems help operators and agencies succeed in their mission to ‘leave no one behind’.
ABT empowers all passengers, whether they have a bank account or not, to use a digital or card-based travel token to access transport with a simple tap on a validator. These include bank cards, mobile wallets, m-tickets, transit smartcards, and private label EMV cards.
When a passenger uses the system, a user profile, which can be registered or anonymous, is created and stored in the back-office. Travel logic, including any configured fare caps and concessionary rules are configured and managed there, and the ‘best value fare’ is automatically calculated.
The net effect of this simple experience, particularly when combined with open payments and fare capping, has been shown to incentivise ridership and drive revenue. When ABT enables an operator or agency to phase out closed loop transit cards, there’s an opportunity to cut the considerable cost of smart card issuance and maintaining smart card infrastructure.
3. Drive adoption of fraud-resistant open payments
‘Reimagining Ridership’, a survey from the VISA Economic Empowerment Institute, recently found that 80 percent of transit agencies adopting open-loop schemes saw increased ridership, driving up revenue, with the potential to lower the transactional percentage cost of fare collection.
Creating an open-loop environment that capitalises on the investment of the financial system in contactless EMV card issuance makes economic sense. Closed-loop cards, paper tickets – and ticket desks, vending machines and kiosks needed for distribution and top-ups – can be a money drain.
By contrast, open-loop systems have a leaner physical infrastructure. They also make use of the banks to issue cards, promote adoption, and shoulder ‘first ride risk’. This is the rule by which issuing banks cover the cost of a trip when a payment method is not validated, after which it is put on a ‘deny list’ and the rider can’t travel until the debt is cleared.
Open-loop payments benefit from ultra-secure processing. Contactless EMV cards use smart microprocessor chip technology, which safeguards the cardholder’s credentials. Payment tokenisation limits the risk associated with compromised, unauthorised or fraudulent use of primary account numbers (PANs). This decreased vulnerability to fraud, and robust debt recovery processes, means that open-loop fare collection results in remarkably low loss rates.
In terms of productivity, open payments win again. For passengers, there’s no queuing for tickets or topping up smartcards. They simply turn up, tap on, and get onboard. Speeded-up transaction and boarding times make schedule adherence easier, with buses and trains getting from A to B faster.
Finally, open payments create a pool of passenger behaviour and payments data that can be used by operators to analyse passenger flows, peak travel times, and popular routes. This insight can help them to optimise services, deploy staff efficiently, and allocate resources effectively.
4 Future-proof fare collection investment
Some of the buzzwords of modern ticketing systems are:
Flowbird’s CloudFare® back office and management system is a great example of these attributes. Using open standards and interoperable technologies, it is device agnostic, making upgrades simpler and cost-effective. It offers modules for fares and topology and account-based ticketing, and is integrated with our open payment platform, benefiting from multiple acquirer and card scheme connections.
CloudFare® is the core of a scalable, future-proof system where fare collection is managed in the cloud, rather than at a device level. Its user-friendly portal enables operators and agencies to devise rules for fares and topology and roll them out to their estate of ticketing devices.
Simple, real-time management reduces the cost of field support and fares configuration.
CloudFare® offers many other modules including one for asset management. This enables remote monitoring of ticketing hardware and quick identification and resolution of issues, without the need for on-site inspections. Maximum uptimes are great news for productivity.
5. Explore the potential of MaaS
As Mobility-as-a-Service (MaaS) gains momentum, cities are beginning to explore how multi-operator, multi-modal fare systems can drive ridership and revenue. The industry is responding with digital platforms that create potential for appealing commercial offers and cost-savings through shared infrastructure.
Flowbird’s white-label MaaS app, used in Monaco as ‘Monapass‘, is one of the more advanced solutions. It enables planning, booking and payment for public transport, shared transport and mobility, and tourist services – all through one single-sign-on application. Once payment is made, m-tickets are stored in the app, to be validated to access services.
It’s possible to devise ‘bundle deals’ to incentivise behaviour change – for example, drivers who park out of town can receive a discounted bus fare, and bus travellers can get a reduced museum ticket.
Our MaaS app is built on a platform that’s designed to be shared. Multiple cities and regions can develop their own white-label apps using this foundation. This means the cost of fare collection, and of ongoing mobile development, can be spread across many partners. All parties benefit from increasing integrations and functionality as the platform grows.
Cutting fare collection costs and boosting efficiency
Delivering better passenger experiences, modern account-based and card-based fare collection systems help operators and agencies to cut costs and ramp up efficiency. Modular solutions are an ideal ally for cost-crunching. Open architecture allows fast, cost-effective deployment and upgrades, and promotes competitive pricing of all component parts.
Find out more about our modular transport solutions!