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OCR for page 7
Introduction 7
Table 2. Shared application
structure.
Transit Application Functions
Purse (Pre-Tax $)
Transit Products
Transit Benefits
Characteristics
Shared Value
Identification
Trip Data
Purse
Card
· Procedures for exchanging data, and
· Processes for clearing transactions.
The primary reason interoperability has not proliferated beyond transit is the proprietary
nature of fare payment systems. Proprietary point of sale (POS) terminals purchased from an
automatic fare collection (AFC) supplier for a retail application cost too much for a small mer-
chant to acquire (i.e., approximately $1,200 to over $5,000 per unit).
1.5 Evolution of Interoperability with Open Payment
Systems
Now that financial institutions are implementing contactless payment products, a baseline
architecture may be used to begin developing an interoperability strategy for transit with open
payment systems. Given the recent activities associated with the financial institutions migrat-
ing their credit and debit card product offerings to contactless smartcards, the following sce-
narios for interoperability begin to emerge:
· Acceptance of contactless bank cards on buses and at faregates,
· Two or more transit entities arrange to accept each others' closed stored-value payment prod-
ucts, and
· Acceptance of multiple-payment-enabled devices.
To determine the interoperability requirements with an open payment system, the charac-
teristics of the existing transit payment architecture need to be identified. Currently, all fare
collection systems combine payment with the fare calculation into a single application, and
payment is embedded in every layer of the system. This type of architecture substantially
increases fare system complexity, and allows equipment suppliers to control the application
software. Figure 3 illustrates a current conceptual fare payment system architecture.
1.5.1 Acceptance of Contactless Bank Cards
As contactless credit cards proliferate, transit agencies become increasingly attractive cus-
tomers for financial institutions. The most likely relationship that will emerge between the finan-
cial institutions and transit agencies is similar to a merchant in the retail space. Under this type
of relationship, transit agencies accept a bankcard for transit fare payment and pay a transaction
processing fee to the financial institutions. The key issue is that the bankcard data structure is not
designed for conducting fare calculations. Therefore, two baseline system architecture configu-
rations emerge for using a bankcard to pay a fare:
· Transit and credit card applications both reside on the same chip or
· The credit card application only resides on a contactless chip.
OCR for page 8
8 Smartcard Interoperability Issues for the Transit Industry
Ridership and
payment data
Sales
and
payment
data
Payment
Figure 3. Current conceptual fare payment system
architecture.
The transit application residing with a credit card application on the same chip has been the
vision for smartcards since the early 1990s. Though technically feasible, the institutional barriers
still make this configuration economically infeasible. However, using a contactless credit card prod-
uct for fare payment is technically feasible in a cost-effective manner if some of the institutional
constraints can be modified. The architecture for this configuration is illustrated in Figure 4.
Payment
data
Ridership
data
Sales
and
payment
data
Payment Payment
Figure 4. Disaggregation of payment from ridership
and fare calculation.
