Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation (2015)

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78 This Appendix contains sample transit fare payment system goals from the following transit agencies: • Chicago Transit Authority (CTA), Chicago, Illinois • Metropolitan Transit Authority (MTA), New York, New York • City and Tri-County Metropolitan Transportation District of Oregon (TriMet), Portland, Oregon • Southeastern Pennsylvania Transportation Authority (SEPTA), Philadelphia, Pennsylvania • Washington Metropolitan Area Transit Authority (WMATA), Washington, D.C. These goals were included as part of each transit agency’s publically issued official documen- tation (e.g., a request for proposals or RFP) prepared as part of a study or acquisition process for a new transit fare payment system. The excerpts are reprinted verbatim, with minor editing to remove any specific references to suggest endorsements of particular third parties, or to comply with editorial guidelines. A P P E N D I X B Examples of Transit Agency Fare Payment System Goals

Examples of Transit Agency Fare Payment System Goals 79 Chicago Transit Agency (CTA) Chicago, Illinois Source Document: Open Transit Fare Payment Collection System Request for Proposals - Step One Chicago Transit Authority August 24, 2009 Link: http://www.transitchicago.com/assets/1/solicitations/9OP03968.pdf EXCERPTS Section I. Overview INTRODUCTION The Chicago Transit Authority (the “CTA”) has been a leading innovator in the area of transit fare collection technology, and was one of the first American public transit systems to implement a contactless payment option for its patrons. While individual transit payment transactions may be small, collectively these payments represent a significant market opportunity. Generally known as “micro-” or “low-value” payments, consumer transactions valued at less than $5 accounted for an estimated $1.7 trillion in consumer spending in 2005. The potential revenue opportunity from using technology to efficiently manage micro-payments, coupled with the desire of businesses and consumers to improve transaction speed and convenience, is driving the replacement of cash transactions in many venues with electronic payments, particularly using contactless payment options. … [The] CTA and other public transit systems are well positioned to drive the rapid and widespread adoption of innovative contactless payment systems. Contactless fare collection systems are being implemented across the world in order to achieve more efficient public transit operations. The CTA’s vast physical infrastructure and extensive transit routes, like many other American public transit systems, are surrounded by thousands of retail and other service outlets that thrive on micropayment transactions. Accordingly, innovative contactless fare collection systems may profoundly influence more general consumer payment use for everyday retail purchases. Public transit offers private sector businesses (“Prospective Partners”) a huge opportunity for converting payments from cash to electronic payment methods. Currently, the CTA conducts an average of 1.6 million payment transactions per day, or nearly 500 million transactions annually. However, budgetary constraints and competition from other modes of transportation are prompting public transit systems like the CTA to find innovative ways to reduce expenses, fund needed capital costs and increase revenues by improving customer travel experiences. Contactless payment technologies offer a way to achieve these goals, but cost is still a major consideration in the decision to utilize this new payment technology. The challenge for the CTA

80 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation is determining how to best balance the long-term benefits against the considerable near-term capital investment required to introduce innovative transit fare payment options. With this in mind, the CTA has engaged … [advisors]… to assist the CTA in connection with the solicitation and evaluation of proposals from prospective partners for an open transit fare payment and collection system (the “Open Fare System”). An Open Fare System is any automated fare collection system that accommodates several types of contactless media; some of which may also be used to purchase consumer goods from retail vendors other than the CTA. These include bank-issued contactless cards, cost-effective open and closed loop reloadable stored value contactless cards, and general purpose reloadable gift cards. The CTA’s goals for an Open Fare System include: Enhancing the customer experience by making it more convenient to pay for fares by utilizing various forms of contactless payment media. Upgrading the existing fare collection system to provide for modern fare collection technology, including forward compatible contactless readers, kiosks, and the appropriate back-office systems necessary to accommodate a more cost-effective non-proprietary fare collection solution. Developing a new and unique relationship with the private sector to shift implementation expenditures, servicing functions, and associated costs involved with fare collection, so as to minimize the capital and operating costs directly incurred by the CTA. Providing flexibility for the future with regards to emerging technology, contactless and mobile payment options, and changing transit fare structures. Section III. CTA Goals and Expectations for Prospective Open Fare System The Prospective Partner chosen by the CTA to operate the Open Fare System will be charged with designing, installing, operating, and servicing an Open Fare System throughout the CTA’s entire system of rail and bus services. This system must address the specific needs of the CTA’s entire customer base: the banked, the underbanked, and the unbanked. Any successful project will include the following elements: Fare collection terminal technology must: 1) Provide contactless media that adheres to Type A/Type B international standards of open collection, with the eventual goal of supplanting all other current media. 2) Be located alongside all 3,622 existing fare collection terminals, coexisting with CTA’s existing magnetic stripe and contactless media technology. 3) Be installed at the rear doors of all 2,222 buses to accommodate for simultaneous fare collection and entrance from both front and back doors. 4) Provide for the potential use at a later date of other contactless media such as cell phones, Tags, or other types of open payment structures. 5) Possess real-time authorization communication on both bus and rail, to the extent possible. 6) Improve upon the CTA’s current standards for transaction processing speed.

Examples of Transit Agency Fare Payment System Goals 81 Card Technology must have the ability to be: 1) Purchased in a prepaid, reloadable format. 2) Accommodate existing fare offerings; i.e., Full fare, reduced fare, transit benefit, U- Pass, Monthly, and Seniors Ride Free pass formats. 3) Easily and cost-effectively accommodate future fare policy changes, including distance-based fares, peak and off-peak fares, etc. 4) Purchased at a greater number of points of sale than current fare media; e.g., self- service kiosks, retail outlets, and online. Additionally, data on ridership, revenue, use trends, and other currently examined information must be available for use in real-time by the CTA.

82 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation Metropolitan Transportation Authority (MTA) New York, New York Source Document: Concept of Operations for MTA New Transit Fare Payment System and NYCT Deployment Phase Metropolitan Transportation Authority (MTA) October 17, 2011 Release No. 1.2 Link: http://www.smartcardalliance.org/resources/pdf/ MTA_NFPS_Concept_of_Operations_R1.2.pdf EXCERPTS [Note: in this particular excerpt, the underlining and italics reflect emphases or highlights used by the MTA in the original source document.] 7.1 Vision, goals, objectives and gaps The vision, goals and objectives for NFPS are listed below. Limitations of current practice are in italics. NFPS will be a single, regional fare payment system capable of use across modes and agencies. It provides for seamless travel across agencies by taking advantage of the payment technology and communications infrastructure that customers already know and use in their daily lives. – This vision encompasses the new fare payment system to be deployed on the MTA commuter railroads in the future. Significant differences exist in commuter railroad fare collection environment that will be addressed in a future phase. – The system must scale to accommodate future growth in NY/NJ regional travel via public transit. – The current MetroCard is not interoperable on MTA commuter rail services, or with several other regional agencies. The system will reduce costs associated with fare collection, revenue processing, and reconciliation. – The current cost of revenue collection is 15% of each $1 of revenue collected. The NFPS goal is to reduce this materially. – MetroCard card life is relatively short, which increases card production and distribution costs. – MetroCard is a proprietary system with increasing maintenance and operational costs. NFPS will provide a customer experience that is superior to the MetroCard experience.

Examples of Transit Agency Fare Payment System Goals 83 – A customer will be able to choose his or her own contactless payment device. Most customers will not have to acquire and carry an additional card as is required with MetroCard. – A customer with a bank-issued contactless payment card will not be required to pay his/her fare in advance as is required with MetroCard. The MTA may allow MTA Card holders who link their card to a bank-issued payment card to pay as they go. [NFPS should be configurable to permit MTA Card holder to use PAYG if MTA decides the risk and operation of such policy is manageable.] – Customers will pay for MTA fare products in the same way they purchase other products; the same payment media, online account access, billing, dispute resolution, and rewards programs are used as for other merchants, instead of an MTA-specific set of procedures that is likely to be less familiar. A customer may register for an account with the MTA, either providing personal information or anonymously, and will have online and telephone access to his or her own account, including the ability to view payment transactions, and trips taken in near-real time. – This provides a high degree of account visibility and transparency. Users registered with personal information may have protection on products purchased if their card is lost or stolen. – MetroCard account information provided to riders is limited to balance, expiration date and insufficient funds information. – MetroCard currently provides fare being charged, and balance and expiration date information at turnstile and farebox units. NFPS does not envision providing this information at points of entry. NFPS will also not provide information on the fare product used at points of entry; a customer will not know from the turnstile or farebox indication if his or her pass covered the trip, or whether it was a PAYG trip. An example is a rider who purchases a subway/bus pass but boards an express bus where subway/bus passes are ineligible. Improved signage may be required on express buses and other situations where this may be an issue. For unbanked customers (those who do not have bankcards), banked customers without a contactless bankcard and banked customers with a contactless bankcard who prefer not to use their bankcard to directly pay their fare, MTA will make available the MTA Card. Customers with cash only can purchase fare products through a network of station kiosks, (which may include ATMs), and retail reload network. It gives the MTA Card holder the ability to use the same services the bankcard holder enjoys, with the exception of using PAYG fares. – Both MetroCard and MTA Card support unbanked riders with capabilities equal to banked customers. The NFPS will be a server- and account-based system that is more capable than a card- and reader-based system, in terms of software reconfiguration and transaction processing parameters. This architecture is more flexible to implement fare policy changes, to access system data, and to manage the system for the benefit of customers and MTA alike.

84 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation NFPS will have minimal customization to meet transit needs; it will be based on a mainstream merchant payment model. – MetroCard System has limited flexibility, is difficult to upgrade, and is not “future proofed.” 7.2 Economic objectives Lower required capital investments in the long-term. Capital expenditures for the NFPS in the long-term should decrease relative to currently planned capital spending for MetroCard. Lower operating costs. The NFPS should have an operational model and cost structure at least as efficient as current payment systems of agencies covered by NFPS, and to show improvement over the long-term. Generate net integration savings across MTA agencies and modes. This applies when the NFPS is deployed at the commuter railroads, but the implementation for subways and buses should be done so that a future system operating across all agencies will reduce total operating costs at each agency by merging redundant functions and infrastructure and total costs when combined with NFPS costs at MTA. Minimize implementation costs. – Manage NFPS implementation to use off-the-shelf components and existing processes as much as possible – Use existing gate and other infrastructure as feasible – Use existing payment processes where possible; MTA has substantial credit and debit card operations under current MetroCard and other fare payment systems – Avoid interfaces between NFPS and MetroCard during NFPS implementation period – Implement NFPS as rapidly as possible – MetroCard is reaching the end of its useful life. NFPS should be implemented before significant MetroCard renewal costs would have to be incurred. Enable the MTA to negotiate business relationships that reduce reliance on single vendors, and ensure competition among potential partners for most needs. – MetroCard is a proprietary system from single vendor Have an appropriate technological lifecycle so that MTA can take full advantage of future technologies, ensured by: – Implementing technology that is at the appropriate stage in its life cycle, – Using open standards-based hardware, software and processes to promote competitive procurement, and – Managing systems integration to allow competitive, cost-effective migration and upgrades of components and vendors through time.

Examples of Transit Agency Fare Payment System Goals 85 – MetroCard components cannot be upgraded independent from each other or from sources other than the single vendor. MetroCard is not standards-based. 7.3 Customer objectives Increase the ease, speed, convenience and flexibility with which customers may purchase fare products and use self-service to allow customers to directly manage accounts. – NFPS sales channels are more flexible and easier to use and operate than MetroCard channels Acceptance of wide range of standard payment media, such as pretax benefit cards, employer-issued ID cards, or non-traditional payment cards and other devices as they evolve. – MetroCard is sole payment medium currently (except on buses). Customers will choose their payment media with NFPS. Simplify how customers pay for fares – For contactless bankcard holders, there is no requirement to know, select and purchase fare products in advance to enter any of MTA bus and subway services. – MetroCard users must select and prepay fares and MetroCard required for entry on bus and subway, although coins accepted on bus. Ensure all customer groups, such as unbanked, reduced fare and others, have equitable access to fare payment options. – Users have no obligation to use a bankcard or third-party card to access public transit. – MTA Card supports all PIA fare products. MetroCard at retail outlets supports only a subset of fare products. – MetroCard and MTA Card equally available to all groups. Have no MTA-required customer fees for use of bankcard or MTA Card for fare payment. – MTA Card will have one-time cost to obtain. Deliver a flexible access experience for families and groups. – The MTA may allow families/groups access from the same card by accepting multiple PAYG or PIA value taps on one card for the same ride. – MTA can increase the limit from today’s four MetroCard swipes per group, but it still needs a cap to minimize fraud. This will require a tap for each person making a transfer in the group on same card. – NFPS can be more flexible than MetroCard for group travel.

86 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation 7.4 Operational objectives NFPS must support the allow/deny decision at readers with transaction speeds that do not exceed 500 milliseconds for subway turnstiles/gates and 600 milliseconds on buses. Lower bus boarding times. – NFPS on-bus payment should result in no increase in SBS dwell time. – MetroCard bus fare payment times are slower than with a contactless card. – MetroCard mis-swipes are relatively high compared to most fare systems. Operation at high levels of reliability and availability, meeting transaction speed and quality standards for MTA passenger volumes and operational characteristics. The MTA will set values based on typical payments and transit industry practices. – NFPS must support real-time monitoring of readers, servers, communication networks and other key components. MetroCard reader, turnstile and gate monitoring is based on aging equipment. – NFPS new hardware will be more reliable than MetroCard, which is at end of life. NFPS components must be tested/verified for ruggedness/durability in bus use. – MetroCard MVM and MEM reliability is less than their goal levels as they near end of life. NFPS station kiosks will have newer hardware but must be designed to counter vandalism and fraud. Facilitate regional (MTA and outside MTA) transit interoperability through seamless transfers using the same fare media. Minimal or no fare coordination across agencies is required on ongoing basis: regional fares will be the sum of local fares unless agencies adopt joint fares. – MetroCard has limited ability to cover commuter rail, NJT, etc. – With NFPS based on open payments, it creates potential for interoperability. Compliance with ADA, egress standards, and other safety and service standards across all components. 7.5 Security and risk management objectives Robust risk management processes based on payment industry practices will be used for the administration of card acceptance, accounts, cash, audits and other safeguards. Measures to prevent fare evasion or uncollected fares will be implemented based on transit best practices from MetroCard and other agency experiences. NFPS will support more frequent updates of Deny Lists, better passback control with server authentication, and other improvements. Meet card security standards, including compliance with payment industry security standards (PCI-DSS and PA-DSS). [Payment Card Industry Data Security Standard and Payment Application Data Security Standard]. – MetroCard vending machines must meet prevailing security standards.

Examples of Transit Agency Fare Payment System Goals 87 Provide security measures to protect all components from viruses, hacking (to steal credit card and personal account data), code-breaking, card replication, and others. – Both MetroCard and NFPS must meet prevailing security standards. 7.6 Planning objectives Capture rich and valuable insights into customer behavior through improved operational data. NFPS will provide MTA with increased knowledge of customer behavior and habits through increased granularity of travel data and potential access to payments industry databases. Knowledge of travel and fare payment patterns and preferences will help management improve service planning, trafficking and service adjustments. As a result, services can be better targeted and marketed to customers to improve the travel experience and potentially increase ridership. – MetroCard data is captured at six-minute intervals; NFPS data will be more flexible. – Cash payment provides little data on the users of MTA services. NFPS will lower cash usage. – NFPS data can more easily be used with other planned projects (such as Bus CIS and Bus Camera project) for even richer set of data. 7.7 System architecture objectives The NFPS supports the following system elements: Use of commercial off-the-shelf components and existing payments industry processes. – MetroCard uses proprietary, custom cards, readers and server software. Open architecture that defines interfaces between components that can be separately procured and upgraded. – NFPS will allow MTA to procure readers, communications, server software, sales channels, MTA Card, and other components from different vendors. MTA can replace or change these components at different times, since they will meet standards to interface to other components. – MetroCard is a single, proprietary system in which all components are delivered and integrated by a single vendor. Support of key standards for payments: – North American contactless payment standards, implemented as PayPass, PayWave, Blink, Express Pay and others. – North American magnetic stripe payment standards, at devices other than entry readers (turnstiles/gates, farebox units or validators). – Standards for transactions between merchants, acquirers and bankcard associations: ISO/IEC 8583 Standard for Financial Transaction Card Originated Messages and others.

88 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation – Best practices for Web and call center sales sites. – EMV contactless standards, used globally but not widely implemented in the US. MTA may implement EMV (Europay MasterCard and Visa) in its readers and processing to support foreign cards, and it may adopt EMV for the MTA Card to provide a higher degree of security and risk management. – MetroCard MVMs and MEMs support magnetic stripe payment cards. MetroCard readers support only MetroCards. No contactless or phone payment capabilities currently exist. Near Field Communications (NFC) for mobile phone payments: – The NFC standard supports payment applications that have not gained wide acceptance. The MTA may implement NFC in its readers to be prepared for mobile phone payment, which is expected to become a mainstream technology in the next few years. NFC introduction has been slower than expected by many in the industry; the MTA will support NFC in anticipation of deployment of viable products and services in the mobile phone industry. Wireless telecommunication standards. – NFPS will initially use 3G wireless, from either the CDMA or GSM family of standards. 4G services may be specified in the future. – MetroCard uses older telecom services in subway environments, and does not use networks for communications with bus fare payment equipment. All fare payment is done off-line, and bus and subway collection are separate processes. Public transportation specific software. – Open payment public transport software is being developed by Transport for London (TfL). TfL is developing end-to-end server software for authentication services, authorization services and a fare engine. MTA may be able to obtain the major elements of the open payment fare system from TfL through license, build or operating agreements. TfL is also developing readers for fare payment for its own system. – Opportunities for sharing software and reducing costs will be higher in the open payment architecture than in a vendor architecture. 7.8 Other objectives Facilitate potential non-transit business development and revenue. – NFPS allows card issuers and others to offer rewards programs for MTA travel as a marketing strategy. – If a user has a contactless payment card, joint product offerings such as concert or event promotions with MTA travel, and others, are feasible. – These options are difficult to implement with MetroCard.

Examples of Transit Agency Fare Payment System Goals 89 Leverage, don’t duplicate, existing or planned MTA or NYCT investments to maximize scale and cost efficiency, where possible. – NFPS can share its on-board bus equipment with the bus CIS, as an example Support of staged implementation of the new system for customers, MTA and agency staff and MTA operations and management.

90 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation City & Tri-County Metropolitan Transportation District of Oregon (TriMet) Portland, OR Source Document: Fare System Migration A White Paper on Electronic Fare Collection November 17, 2011 Link: http://portlandtransport.com/documents/Fare%20System %20Migration%20white%20paper_V10%20FNL_11%2017%202011.pdf EXCERPT New Fare System Objectives The new fare payment system would have the following objectives for fare policy and fare payment: 1. Easy to understand, simple to use and convenient for customer 2. Easy to understand and convenient for operators and fare inspectors 3. Reduce the cost of fare collection and equipment maintenance 4. Work on all transit modes, including bus, MAX light rail, and WES commuter rail 5. Accommodate seamless transfers between vehicles, within the TriMet system, as well as with partner providers including C-TRAN and the Portland Streetcar 6. Bring TriMet into the mainstream of next generation payment technology 7. Reduce fraud

Examples of Transit Agency Fare Payment System Goals 91 Southeastern Pennsylvania Transportation Authority (SEPTA) Pennsylvania, PA Source Document: Request for Information RFI No. 133 SEPTA New Payment Technologies System March 27, 2008 Link: http://floridaapts.lctr.org/RFPs/EFPS/ SEPTA%20REQUEST%20FOR%20INFORMATION.pdf EXCERPT 6. NEW PAYMENT TECHNOLOGIES SYSTEM The New Payment Technologies (NPT) System is envisioned as an integrated, state-of-the- art electronic fare vending, payment, distribution, collection and processing system utilizing new payment technologies capable of interfacing with both bank and non-bank financial clearing systems for transaction settlement. SEPTA intends to deploy the NPT System across all modes of transportation operated as part of the SEPTA system, including buses, light rail vehicles (trolleys), rapid transit, commuter rail, paratransit services and parking. SEPTA’s strategic business interests for replacing its existing fare vending and collection system with one based on state-of-the-art technology are as follows: To provide SEPTA’s customers with a modern system that enables convenient and secure fare payment options and improved customer services; To provide additional operating and cost efficiencies; To improve SEPTA’s fiscal position and transit services with enhanced revenue security and accountability and readily available and accurate ridership and revenue data. The successful implementation of the NPT System will provide SEPTA with the opportunity to not only update the present fare payment and collection systems, but also will enhance the level of customer service provided to its passengers. This will include the ability to offer fare plans tailored to changing customer needs and travel patterns. SEPTA wishes to leverage the new market opportunities available through emerging new payment technologies offered by the banking and wireless industries. By moving to a modern payment technology system, SEPTA intends to provide customers with new, more efficient, convenient and secure fare payment options. This 6.1 Major System Goals and Constraints for NPT System section identifies major system goals and constraints that must be considered in the design of the NPT System.

92 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation Major System Goals SEPTA’s major system goal for customers is to provide an electronic fare payment system that: Is secure and reliable; Is easy to understand; Enables customer self-service; Is convenient and useable by all customers; Provides customers with modern and convenient payment options across all transit modes; Facilitates seamless customer transfer among adjoining transit agencies at intermodal connection points. SEPTA’s major system goal for internal stakeholders is to provide an electronic fare payment system that: Provides accurate revenue management and accountability; Provides accurate and timely ridership and revenue data; Reduces cash handling; Replaces tokens, paper transfers and printed paper tickets; Fosters fare policy innovation; Significantly decreases or eliminates SEPTA’s role as transit-specific fare media issuer, transaction acquirer and processor. Major System Constraints The NPT System must be deployed in a manner that minimizes the impact on SEPTA’s on- going operations and passenger handling capabilities. The NPT System must interface with SEPTA’s existing infrastructure, specifically the physical conditions at stations and their associated parking facilities; the existing communications and data network; and the equipment and facilities that support and maintain the existing fare system and data networks. The NPT System will be designed and deployed within an ongoing program of improvement projects on the SEPTA rail and bus systems. Several projects currently underway or planned will affect the NPT System and must be considered in the design, including SEPTA’s Customized Community Transportation Mobile Data Terminal upgrade program, the Smart Stations Initiative, and numerous upgrades to SEPTA’s communications infrastructure, including the Fiber Optics Platform.

Examples of Transit Agency Fare Payment System Goals 93 Washington Metropolitan Area Transit Authority (WMATA) Washington, D.C. Source Document: Technical Specification New Electronic Payments Program Washington Metropolitan Area Transit Authority (WMATA) June 30, 2011 RFP Step-2, RFP FQ 11248-2 Link: http://wmata.com/business/procurement_and_contracting/ solicitations/uploads/NEPP%20Tech%20Spec%20Step%202%20Rev%2 02%2006302011.pdf EXCERPTS 1 SYSTEM DESCRIPTION 1.1 Overview The Washington Metropolitan Area Transit Authority (WMATA) plans to modernize and replace its fare collection system and is currently preparing to procure a new electronic payments system in 2011. The New Electronic Payments Program (NEPP) shall be based on centralized accounts with fare calculations being performed by a Central Data System (CDS) rather than by field devices. More than a decade has passed since WMATA, the first US transit agency to adopt contactless smart card technology, introduced SmarTrip®. The time has come to modernize WMATA’s fare collection system and provide a broader array of payment alternatives to its customers. Expanded payment alternatives shall include providing functionality additional to that available today and the acceptance of multiple forms of smart media. This shall afford customers the opportunity to make fare and parking fee payments through various forms of contactless smart media, including credit and debit media. While the NEPP represents a key opportunity for WMATA to modernize its legacy fare collection equipment and practices, the primary goal of this project is to significantly enhance customer convenience, experience, and service. However, the NEPP shall also be procured and implemented in a cost-effective manner. The NEPP shall also provide WMATA a substantially greater degree of flexibility to introduce innovative concepts and features to its patrons. This includes, but is not limited to, the acceptance of new forms of payment, increased variety and types of media that can be processed, improved methods of communication and customer services, and more rapid integration of emerging technologies. Through the NEPP, WMATA wishes to leverage new market-driven opportunities for fare payments and fare media by interfacing with the financial and wireless industries to accept a variety of contactless, open standard, fare payment media. The NEPP shall be

94 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation “form-factor agnostic,” accepting all forms of ISO/IEC-14443 compliant media, including, but not limited to: – Credit card-sized media; – Key fobs; – Watches; – Mobile phones; and – Adhesive labels. This NEPP shall accommodate and process Near Field Communications (NFC) based media (including mobile phones), which are based on an extension of the ISO/IEC-14443 standard. Further, the NEPP shall comply with contactless and EMV (Europay, MasterCard, Visa) standards. The NEPP shall also accept a number of media already common within the WMATA service area, including government-issued contactless identification media compliant with the Personal Identification Verification (PIV) standard. PIV media includes the Common Access Card, as well as numerous other federal government, corporate and school/university-issued media. For types of media where a payment mechanism is not directly associated with the media, including transit agency and partner-based media, the physical media shall act as the token for accessing an account maintained within a CDS. Within this account, customers shall be able to link their media with established payment mechanisms enabled by WMATA. This can include, but is not limited to: – Personal checking or savings accounts; – Bank-issued contactless credit and debit accounts; – PayPal accounts; – Electronic Benefit Transfer (EBT) accounts, including the Federal Transit Benefit Program; – Any account that is managed or administered in accordance with transit agency or partner arrangements; and, – Emerging financial and other account types. The architecture for the NEPP will transition WMATA from a proprietary, single supplier architecture to an agency-controlled, multi-supplier open architecture, with well- defined interfaces that are controlled by WMATA. When completed, WMATA envisions the NEPP as an integrated, electronic fare payment and collection system that incorporates new payment technologies capable of interfacing with both inter-bank and non-bank financial clearing systems for transaction settlement. WMATA intends to deploy the NEPP across all modes of transportation operated as part of the WMATA system, including Metrorail, Metrobus, barrier-free environments for forthcoming light rail/streetcar service, MetroAccess (paratransit) and to WMATA Regional partners.

Examples of Transit Agency Fare Payment System Goals 95 For this program, WMATA will employ a Systems Integrator with demonstrated expertise in implementing complex transaction-based systems and integrating the necessary hardware, software and ancillary components from a multitude of third-party suppliers. The Systems Integrator shall develop a system that utilizes an open architecture and WMATA-owned interfaces, allowing for equipment from a range of vendors to communicate with a single common CDS. The CDS shall monitor and control the functionality of all equipment; collect, store and report data; and clear/settle all customer transactions. The CDS shall utilize a set of Application Programming Interfaces (APIs) that allow multiple vendors to integrate into the NEPP. This shall also include all necessary interfaces to integrate the new system with WMATA legacy systems, including Trapeze and Peoplesoft applications. The Systems Integrator shall develop the necessary APIs for the NEPP and provide them to WMATA. These APIs shall become the property of WMATA for their exclusive and unlimited use. WMATA envisions the use of independent third-party firms to certify the open architecture and completeness of the APIs. The NEPP will be integrated with WMATA’s other Mission Critical Business Systems (PeopleSoft, Trapeze, Maximo), and provide robust reporting and business analytics capabilities, including a “dashboard” capability for executive management. All data that is generated or stored by the CDS shall also become property of WMATA, enabling the Authority to perform comprehensive reporting and reconciliation. The CDS shall feature a comprehensive risk management approach to identify fraudulent transactions, including possible areas of fare evasion, and other sources of fraud. This shall enable WMATA to make well-informed business decisions regarding transaction processing fees, settlement frequency, and loss mitigation. New features shall be incorporated to enable enhanced customer service, convenience, and usability. Upgrades and improvements shall address automated customer service channels such as Fare Vending Devices (FVDs), Web Services, Interactive Voice Response (IVR) systems, and automatic account reloads. These features shall provide customers with more convenient ways to obtain and reload smart media. In addition, new system applications shall allow WMATA to offer registered customers desirable new services including expanded web-based account management and transaction tracking. The NEPP shall be scalable, to allow for future adaptation and additions by WMATA. For example, the addition of the new Dulles airport extension and infill stations shall be easily incorporated into the system. The NEPP shall remain adaptive and responsive to customers’ changing needs. The system shall be capable of easily being configured to accept new forms of payment, and interacting with emerging new consumer electronics devices. Prior to implementation, WMATA and the Systems Integrator will solicit program input from all internal and external stakeholders. This shall provide customers with an opportunity to express their concerns and gather valuable stakeholder input regarding the

96 Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation project. It shall also serve to solicit input regarding equipment and applications. Pre- implementation customer input will be essential to a successful system deployment. 1.1.1 Fare Structure The NEPP shall be capable of accommodating the existing and future WMATA fare structures and business rules, as well as the business rules and fare structures used by the WMATA Regional Partners. The NEPP shall also properly process Federal transit benefits. As a minimum, the system must accommodate fares which may vary by: – Rail station entry/exit location – Bus boarding location – Time of day – Day of week – Distance traveled – Zones traveled – Individual user (affinity benefits) – User category (seniors, employees) – Mode transferred to/from – Specially designated days (holidays) – Variable parking fees by location and date – Special services (express buses) The NEPP shall accommodate all types of fare products available on current WMATA and Regional Partner systems. WMATA shall be able to modify the system to accept a different fare structure without Contractor assistance. This ability shall include the flexibility for WMATA to change fares for individual stations and routes, and through out the system, including parking on a scheduled or ad-hoc basis. Fare calculations shall be made by the CDS and when necessary, shall be completed before transmittal of payment information to the field device. Additionally, the system shall accommodate all fare rules required to support MetroAccess. The system shall support employer subsidies and pretax benefits for parking fee and fare payment. For these subsidies and benefits, payment shall not be deducted from the customer’s personal store of funds until the pretax amount is depleted. Partial payment with pretax benefits shall also be permitted. The system shall comply with the Internal Revenue Service (IRS) revenue ruling 2006-57 regarding the separation of transit benefits and parking benefits, and all other regulations that may be put into effect during the implementation of the System. A variety of WMATA-issued and third-party issued media, including PIV credentials, shall be usable by customers accessing such accounts.

Examples of Transit Agency Fare Payment System Goals 97 1.4.1 Major System Goals for the NEPP WMATA’s major goal for external stakeholders is to provide an electronic fare payment system that: – Is convenient and usable by current and potential customers; – Provides customers with modern and convenient fare payment options across all transit modes; – Facilitates and promotes customer self-service; – Is secure and reliable; – Is easy to understand; – Provides continued use of SmarTrip® media; – Facilitates seamless customer transfer among adjoining transit agencies at connection points, regardless of whether the adjoining transit agency has migrated to NEPP. WMATA’s major system goal for internal stakeholders is to provide an electronic fare payment system that: – Is secure and reliable; – Introduces enhanced fraud and risk mitigation mechanisms; – Provides accurate revenue reporting management and accountability; – Provides accurate and timely ridership and revenue data; – Reduces cash handling by WMATA staff; – Fosters fare policy innovation and tailoring; – Eliminates WMATA’s dependency on a single supplier for compatible fare collection equipment; – Eliminates WMATA’s role as the sole transit-specific fare media issuer; – Leverages market-driven capabilities to reduce WMATA’s role as transaction acquirer and processor; – Balances all other goals in the most cost-effective manner available.

Abbreviations and acronyms used without definitions in TRB publications: A4A Airlines for America AAAE American Association of Airport Executives AASHO American Association of State Highway Officials AASHTO American Association of State Highway and Transportation Officials ACI–NA Airports Council International–North America ACRP Airport Cooperative Research Program ADA Americans with Disabilities Act APTA American Public Transportation Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and Materials ATA American Trucking Associations CTAA Community Transportation Association of America CTBSSP Commercial Truck and Bus Safety Synthesis Program DHS Department of Homeland Security DOE Department of Energy EPA Environmental Protection Agency FAA Federal Aviation Administration FHWA Federal Highway Administration FMCSA Federal Motor Carrier Safety Administration FRA Federal Railroad Administration FTA Federal Transit Administration HMCRP Hazardous Materials Cooperative Research Program IEEE Institute of Electrical and Electronics Engineers ISTEA Intermodal Surface Transportation Efficiency Act of 1991 ITE Institute of Transportation Engineers MAP-21 Moving Ahead for Progress in the 21st Century Act (2012) NASA National Aeronautics and Space Administration NASAO National Association of State Aviation Officials NCFRP National Cooperative Freight Research Program NCHRP National Cooperative Highway Research Program NHTSA National Highway Traffic Safety Administration NTSB National Transportation Safety Board PHMSA Pipeline and Hazardous Materials Safety Administration RITA Research and Innovative Technology Administration SAE Society of Automotive Engineers SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (2005) TCRP Transit Cooperative Research Program TEA-21 Transportation Equity Act for the 21st Century (1998) TRB Transportation Research Board TSA Transportation Security Administration U.S.DOT United States Department of Transportation