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18 Smartcard Interoperability Issues for the Transit Industry The function may need to scale up or down, depending on demand or utilization levels. There is potential for the provider to share the service across multiple projects. Table 6 identifies the primary card service functions that need to be addressed in an inter- operable smartcard-based fare payment system. For many implementations, a mix of centralized and decentralized approaches will be the most beneficial. By adopting this hybrid approach, a region can take advantage of existing capabilities and maintain individual agency culture while also maintaining consistency of service across the region. 2.1.3 Establishing a Framework for Program Funding Interoperable fare payment systems require a substantial capital investment for required equipment and systems. Funding for a project of this magnitude will likely come from multiple sources because of multiple agencies' participation. The challenge with multi-jurisdictional funding is to arrive at an equitable formula that each of the participating agencies can endorse. Project funding requirements need to be determined early in the project life cycle to pro- vide adequate time to meet the requirements for securing the funding. Member agencies also need to evaluate the benefits derived from the capital investment. The cost-benefit analysis helps to identify expensive features that do not create value. However, regional systems need to be sufficiently flexible to scale as the participating agencies needs change and grow more sophisticated. Table 6. Primary card service functions. Function Description Card Management Includes issuance and fulfillment of all smartcard stock and management of patron account systems Distribution Management Involves managing card inventory and deployment to merchants, employers, and other institutions Security Management Includes management of all system security, including key and secure access module (SAM) management, fraud management, negative list management, application blocking, system access and controls Patron Services Includes providing support to the transit agencies participating in the regional system, cardholders who use the regional smartcard, and retail/distributor merchants providing third-party services Financial Management Includes: clearing and settlement services, funds movement processes and services, funds pool management services, revenue collection activities, general accounting for the smart card program, financial reporting services for the smartcards, and auditing services for the smartcard program Infrastructure Systems Includes management of the systems interface, and Operations network, application software, configuration control, Management device management, upgrades, and disaster recovery Program Management Includes management of the regional program, including brand management, regional program administration, policy shifts, and non-financial reporting