Implementing Smart Card Payment Systems for Transit with Mulitpte Partners: Examples from Germany and the United States



Implementing Smart Card Payment Systems for Transit with Mulitpte Partners: Examples from Germany and the United States

Authors

KUESTER C, TransTec America, Inc., USA

Description

The emergence of new developments in smart card technology has created the potential for transit operators to implement innovative fare collection systems. Transit operators around the world are experimenting with various ways to utilize these .new techno

Abstract

The emergence of new developments in smart card technology has created the potential for transit operators to implement innovative fare collection systems. Transit operators around the world are experimenting with various ways to utilize these .new technological options to their greatest advantage.

Although smart card payment systems offer the potential for savings in some areas (e.g. reduced cash handling costs), system components and operations nevertheless require a significant investment. Increasingly, transit operators are seeking project partners both within and outside of the transit industry to cooperate on the implementation of new card systems. The goals of establishing such partnerships include reducing system capital and operating costs for each partner, accessing a wider market of clients and cardholders, and taking advantage of partners' experience and infrastructure (ticket vending machines, ATMs, public telephones, etc.).

In recognition of the trend toward partnerships in this arena, the United States Department of Transportation issued a Request for Letter of Interest last November for projects to identify and evaluate

"issues associated with the establishment of partnerships between public transit service providers and other entities in the development and use of multiple-application electronic payment systems...specifically...an operational test of a payment system that includes a variety of applications, with preferred emphasis on multiple transportation applications, government benefits applications, and retail applications. "

Though these kinds of multiple-application electronic payment card systems and systems accepted by multiple operators appear to hold great promise, operators in the United States and Europe continue to struggle with their implementation. Experience with previous attempts to establish partnerships for developing new payments systems reveals how great the challenges can be.

This paper looks at the challenges and pitfalls in developing multi-agency or public-private partnerships to implement smart card systems for transit. First, the advantages and disadvantages of cooperation among multiple transit operators within a region is considered. Then, partnerships between transit operators and providers of other types of goods and services are reviewed. Recent experiences with smart card system development and implementation in the United States and Germany are presented. In each example, the complex challenges to implementation of smart card payment systems are revealed. Though new technologies open up a wide range of possibilities for various agencies to mutually address business goals, the related organizational and institutional issues can result in unforeseen and sometimes insurmountable barriers to project implementation.

Publisher

Association for European Transport