Multimodal Fare Payment Integration (2020)

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29 Case Examples To provide better understanding of opportunities and challenges and to demonstrate a variety of approaches to multimodal payment convergence, the synthesis team selected case examples from U.S. and international agencies. These case examples range from simple pro- grams to extremely complex programs with a heavy reliance on technology applications. Build- ing on the outcomes of the survey, a more exploratory approach was applied to writing the case examples. Because their aim is to demonstrate different approaches to payment conver- gence, the case examples include a mix of national and international options. The synthesis team looked for representative examples from the United States in terms of size, location, and services provided. Both large- and medium-sized agencies were included. International exam- ples were chosen to show the universal nature of the challenges and to provide inspiration for applying new perspectives. As part of the preparation for conducting the case examples, the synthesis team collected relevant information on participants and conducted phone interviews with them. Participants received a list of questions before the phone interview occurred. Interview questions also left room for more exploratory conversation. After the interviews, write-ups were created and shared with the transit agencies to review and approve. Each case example starts with a description of the characteristics of the case example partici- pant and the fare collection systems of the area to establish relevant contextual conditions. The agency’s experience with payment convergence and the process to get there are introduced in detail. Each case example participant also shared its future development plans and the lessons learned on the way to achieving payment convergence. Four transit agencies, one municipality, and Translink, the settlement and clearinghouse for the nationwide ticketing system of the Netherlands, were selected as case examples for payment integration with nontransit service providers. The transit agencies selected are based in the United States and provide examples of (1) convergence anticipated but not yet planned, (2) convergence underway, and (3) convergence established. The other two examples are European and feature the experience of a city administration and a private national fare payment service provider. Both international examples provide interesting insights into how to develop a functioning multimodal payment convergence policy framework and deep integration driven by transit. Across the case examples three factors emerged as key to influencing the decisions made by transit agencies: (1) the state of the current system, (2) the cost of implementing a new system, and (3) maximizing inclusion and addressing equity issues. Even agencies with well-functioning legacy card-based systems face issues related to integra- tion of emerging technologies in an effort to enable multimodal fare integration. Many agencies C H A P T E R 4

30 Multimodal Fare Payment Integration currently feel that existing smart card systems are a barrier to integration with emerging tech- nologies, especially in relation to convergence with new mobility service providers. In par- ticular, the cost of designing, procuring, implementing, and maintaining a new fare collection system can be significant. With these constraints in mind, agencies have sought out comple- mentary or hybrid solutions. Some, such as the Los Angeles County Metropolitan Trans- portation Authority (LA Metro), explicitly discussed that taking smaller, incremental steps toward payment convergence made the overall transition less painful. While comparing options for achieving multimodal payment convergence, agencies pay a lot of attention to addressing issues that may hinder some communities from accessing services, including those that are unbanked or that lack reliable access to smartphones. Overall, the transit agencies interviewed have a unified view that next generation fare system architecture ought to be account-based, but their approaches to transitioning to an account- based system vary greatly. Currently, the agencies prefer mobile solutions because of the rela- tively high rates of smartphone penetration and low implementation costs. As can be seen in the case examples, transit agencies are open to integrating new mobility service providers and typically follow an inclusive approach in an effort to offer more choices to their customers. 4.1 Case Example 1: Regional Transportation District The Regional Transportation District (RTD) is the regional authority provid- ing public transportation to eight counties in the Denver-Aurora-Boulder area in Colorado. RTD provides for the transportation needs of more than 2.8 million people within 2,400 square miles through bus, rail, shuttle, ADA paratransit, demand response services (FlexRide), special event services, vanpools, and more. 4.1.1 Fare Collection System RTD launched its smart card system in January 2013 to pass program participants (businesses, colleges, universities, and neighborhoods). The cards are branded Eco- Pass, CollegePass, and NECOPass. Cards are available to eligible riders through their employer, college, university, or neighborhood organization participating in the pass program. Smart cards issued under the Pass Program are issued with a multiyear pass and are not reloadable. RTD’s reloadable smart card (MyRide) system became available in May 2017 for the general public. The cards can be purchased, and value can be loaded on the cards online, at selected Safeway and King Soopers stores in the metro area, and at RTD sales outlets. MyRide offers only 3-hour tickets at this point. RTD has no plans to expand the MyRide program with additional fare products such as a day or monthly pass. RTD’s mobile ticketing application was launched in November 2017. The app allows users to purchase 3-hour tickets and day and monthly passes that can be used in all zones (local, regional, and airport). The purchased tickets or passes must be activated in the app before boarding. Inspection of the tickets happens via visual validation of mobile QR code tickets or passes. The mobile app and the account-based back office were developed by Masabi, a soft- ware company. The app was created as an alternative for nonfrequent users: 49% of app users purchased one-way tickets as their primary fare medium before the app was launched. RTD expected to generate 2.25% of its fare revenue through the app. By June 2019, however, the share of mobile app sales compared to the overall fare revenue had reached 10.7%. RTD conducts fare inspection for both smart card and mobile ticketing—using the same device (e.g., an iPhone). Because the systems are not integrated, fare inspectors must use a Regional Transportation District Type of agency Regional transportation planning agency and operator Service area Eight counties in the Denver-Aurora-Boulder Combined Statistical Area in Colorado Public transit modes Urban and suburban bus, bus rapid transit, urban and suburban rail, ADA paratransit, and vanpool Daily ridership 0.27 million Ticketing system Smart card system and mobile app Other mobility providers in operation Bike sharing, scooter sharing, parking, and ride hailing

Case Examples 31 different app for each media type. Fare validation for smart cards is done by tapping the cards on validation devices installed on all fixed-route buses and at all rail stations. Smart card vali- dation devices are not integrated with fare boxes on buses or with ticket vending machines at the rail stations. 4.1.2 Experience with Payment Convergence In April 2018, Uber and Masabi announced a strategic partnership to add public transit mobile ticketing to the Uber app. Subsequently, in January 2019, RTD announced that the Uber app will show Denver transit as an option for its users, effectively allowing transit trip planning in the Uber app. By May 2019, RTD’s transit tickets had become available for purchase in the Uber app for a limited group of users (see Figure 5). RTD does not have a contractual agreement or data sharing agreement with Uber. Tickets purchased in the Uber app are processed by Masabi’s back office, which is integrated with the back office of RTD’s mobile ticketing app. This integration was made simpler because Masabi is the private party contracted to provide the RTD app and back-office functions for RTD. RTD has no direct relationship with Uber in terms of transaction settlements. RTD pays Masabi the same commission fee (2.5%) for tickets sold through the Uber app as it pays for tickets sold through RTD’s mobile ticketing app. RTD found that extending the functionality of its card-based system was complicated and dependent on RTD’s directly managing (and paying for) those changes. The agency looked Source: Regional Transportation District. To Denver Buy tickets Riders will be prompted to purchase tickets in the app. Select a ticket Riders can checkout once a ticket is selected. Active ticket Riders can present their ticket from the Uber app. Figure 5. RTD ticket in Uber app.

32 Multimodal Fare Payment Integration for an alternative fare payment method and identified mobile applications as a potential solu- tion to match its needs. To ensure accessibility for all transit users, RTD first researched the smartphone penetration in its service area, which was found to be high. Subsequently, RTD selected the Software as a Service (SaaS) platform from Masabi to cater to its mobile ticketing needs. RTD rolled the mobile ticketing solution out next to the existing contactless smart card and kept a cash fare payment option. Having built up experience with the solution for more than a year, RTD indicates that one of the bigger advantages of the SaaS platform is that the product road map is owned by the supplier, which leads to regular updates and improvements to the platform—with the integration of Uber as one of the most visible benefits. 4.1.3 Future Development Plans RTD would like to fully migrate to an account-based system in the future. Because of its positive experience with SaaS, RTD aims to procure a fully integrated account-based fare collection system, which integrates with smart cards and other contactless cards, validation devices, ticket vending machines, fare boxes, and other back offices via application pro- gramming interfaces (APIs). With migration to a fully account-based system, RTD envisions accepting a wider variety of media including mobile phones (contactless and QR); contactless EMV cards; smart cards; student IDs; and cash. RTD also plans to include other mobility providers (e.g., bike sharing) in its fare payment system. The implementation road map is still being discussed internally. 4.1.4 Lessons Learned 1. RTD stated that a challenge to working with private technology companies is that they typically roll out new capabilities in small test groups. Private companies see these small beta roll- outs as an opportunity to test capabilities and quickly solve issues, but this practice meant that RTD had to manage the expectations of all of its customers when the transit ticket purchase option in the Uber app was rolled out to only a select group of Uber users. 2. RTD emphasized the importance of conducting a full company vision exercise that includes consultants to align the interest of every department within the organization. 3. RTD subscribes to the vision of open fare payment systems wherein certain customer-facing aspects may be provided by third (private) parties, leveraging their existing customer bases and innovation. 4.2 Case Example 2: Los Angeles County Metropolitan Transportation Authority LA Metro was formed in 1993 to serve as a transportation planner and coordinator, designer, builder, and operator for the Los Angeles metropolitan area. LA Metro’s service area covers 8.36 million people and has four light rail and two subway lines and a metro bus fleet with 2,308 vehicles. As a multimodal transportation agency, LA Metro transports about 1.3 million passengers daily. 4.2.1 Fare Collection System Transit Access Pass (TAP), managed by LA Metro, is a regional transit ticketing system that provides riders a single, reusable, reloadable card that works across 26 public transit agencies in populous Los Angeles County. TAP is a closed-loop smart card system that runs on Nextfare, an RFID-based software and hardware Los Angeles County Metropolitan Transportation Authority Type of agency Regional transportation planning agency and operator Service area Los Angeles County, California Public transit modes Subway, light rail, bus, bus rapid transit, and ADA paratransit Daily ridership 1.3 million Ticketing system Transit Access Pass (TAP) administered by LA Metro; works across 26 public transit agencies in the area Other mobility providers in operation Bike sharing, scooter sharing, parking, and ride hailing

Case Examples 33 system developed by Cubic Transportation Systems, Inc., and maintained jointly by Cubic and LA Metro. When LA Metro started to consider including new mobility service providers—such as bike sharing or ride hailing—on its system, it found that it needed to update its existing TAP card system with account-based ticketing capabilities. Because LA Metro had a well-functioning card-based system but sought the flexibility provided by newer technologies, it decided to implement a hybrid system that included account-based capabilities in addition to card-based functions. The fare collection system developed and co-maintained by Cubic was originally bundled with bus equipment, station hardware, and back-office software; customer service was excluded from Cubic’s system contract in 2002 and initially managed externally under another contract. LA Metro later decided to bring customer service agents and the entire customer relationship management (CRM) system in-house, developing and incorporating a new CRM, built-in Salesforce with Cubic integration support. Successfully bringing this part of the system in-house empowered LA Metro: whereas many agencies continue to outsource, LA Metro handles features such as TAP marketing, settlement, testing, configuration changes, and cer- tain software development in-house. LA Metro intends to continue this strategy and regularly evaluates opportunities to take on operation and management of additional automated fare collection system features. 4.2.2 Experience with Payment Convergence LA Metro kept the legacy smart card fare collection system but built an account-based layer on top of it by providing software connections (APIs) between the two systems. The systems communicate with each other to enable the account-based platform and the associated TAP card system to use a TAP Wallet as a payment device for nontransit mobility services. This account- based layer, called TAPforce, is an engagement layer on Salesforce’s CRM system that allows new mobility providers to integrate through standard APIs with the TAPforce platform and to accept the TAP Wallet as a means of payment. Bike sharing has already been integrated, and many other programs such as microtransit, scooters, electric vehicle car charging, and more are planned for integration in 2019–2020. After completing the hybrid system, LA Metro was able to implement incentives across customer groups such as seniors, students, low-income groups, and customers with disabilities. Transportation providers have two ways to integrate with the TAP system: a light inte- gration or a deep integration. A light integration allows vendors to accept TAP as a form of payment, such as a ride hailing app that allows TAP as a payment option. A deep integra- tion involves vendors transferring all customer data into the TAPforce system through APIs, with TAP serving as the account manager. Both deep and light integrations will allow for the incentives that LA Metro offers on transit such as student, senior, or low-income fares to be applied to the new vendor’s pricing for services. Metro Bike Share, LA’s public docked bike share system, has a deep integration with TAP—all Metro Bike Share customer information sits within the TAP system. LA Metro expects most integrations with outside companies to be through light integration. Data sharing between LA Metro and transportation providers integrated into the TAP system varies by company and the type of integration. For example, because Metro Bike Share has a deep integration with TAP, the data shared between Metro Bike Share and LA Metro is richer compared with other transportation options with a light integration—such as parking, where a TAP card number simply serves as an identifier of the customer’s account. LA Metro noted that currently it has few major issues related to data sharing agreements with private companies because not many integrations have been completed. The Los Angeles

34 Multimodal Fare Payment Integration Department of Transportation, however, has published a Mobility Data Specification that provides API and data standards for dockless bike sharing, electric scooters, and shared ride providers. LA Metro invested heavily in understanding how to address challenges related to equity and access to its TAP system. For example, LA Metro conducted research to understand the rate of smartphone penetration in its service area. The agency found that, because of government support programs, smartphone penetration is still high, even for low-income and unbanked customers. For customers without access to a bank account, LA Metro uses PayNearMe, a cash payment service that allows customers to load their TAP accounts with cash by going to a PayNearMe location. Cashiers will scan a PayNearMe bar code that can be either displayed on the customer’s mobile phone or printed from a computer (available to low-income patrons in public libraries). Once the bar code is scanned at checkout, the customer pays the cashier and the cash payment is loaded in near real time into the customer’s TAP Wallet, where it can be either pushed down to the physical TAP card for transit fares or used directly to purchase fares for new, account-based programs such as bike sharing. LA Metro can now provide special fares and pass programs to any number of new account- based services that can be included in TAP payment, and the agency reports no difficulty with coordinating with private parties on the TAP system. In fact, the agency reports that new sys- tems are lining up for inclusion. In an effort to serve the diverse, multicultural communities in Los Angeles County, LA Metro makes all communications about the TAP program available for translation upon request in 10 languages. 4.2.3 Future Development Plans Integrating new modes. LA Metro is currently in talks with more than 20 different service providers to integrate them in the TAP system. Ride hailing service providers are also interested in partnering with LA Metro. The agency is open to a light integration with these companies to offer first and last mile services for transit users, and it intends to incentivize shared-ride modes for this purpose. Offering additional payment methods. LA Metro has already incorporated digital payment methods such as PayNearMe (for loading cash into the TAP Wallet) and PayPal. The agency is also exploring additional opportunities to incorporate modern digital payment means for maximum customer convenience. The agency is open to accepting EMV bank cards; however, because of the low penetration of contactless bank cards in its service area, LA Metro is not cer- tain about the advantages of incorporating EMV bank cards at point of sale on the fare equip- ment if doing so necessitates major changes to its current system. EMV bank cards can still be used on the TAP website to purchase fares. Developing more flexible fare structures. LA Metro is considering different fare structures based on modality and is investigating new pricing options such as dynamic pricing. 4.2.4 Lessons Learned 1. Leverage existing assets. Transit agencies do not always have to purchase a whole new system. For LA Metro, it was a strong financial decision to implement a hybrid system that leverages the existing smart card system and augments it by layering on account-based features. 2. Take small incremental steps. LA Metro took many small incremental steps to improve its fare payment system, which made the transition to account-based much less painful than a full replacement.

Case Examples 35 4.3 Case Example 3: Port Authority of Allegheny County Port Authority was created in 1956. In 1959, the Pennsylvania Legislature authorized Port Authority to acquire 33 private transit carriers. In 1964, Port Authority established the first unified transit system in Allegheny County by centralizing operations and combining fare structures. Today, Port Authority is the second-largest public transit agency in Pennsylvania and the 27th-largest in the United States (APTA 2018). Port Authority provides bus, light rail, bus rapid transit, incline, and ADA paratransit service in Allegheny County, with some longer distance routes that extend into neighboring counties. 4.3.1 Fare Collection System In 2010, Port Authority started to implement its electronic fare collection system, called the ConnectCard. ConnectCard is a reloadable plastic smart card that can be loaded with stored cash value or passes. Loading value onto the ConnectCard can be done online but may take up to two days to process. In addition to Connect- Card, Port Authority also accepts cash and ConnecTix—a limited use paper ticket designed for visitors and occasional riders that can be purchased at ConnectCard machines. Both ConnectCard and ConnecTix can be validated at the fare box with a tap. Reduced fare riders such as senior citizens, riders with disabilities, and college students are eligible for specialized ConnectCards. In addition to accepting cash across the system, Port Authority sells prepaid ConnectCards at retail partner locations—more than four dozen Giant Eagle supermarkets, Goodwill stores, and other independent retailers. Keeping in mind that not everyone has a smartphone, Port Authority has integrated multiple options for users to access the mobile ticketing system, including ticket purchases at retail outlets where QR codes can be printed, and printing via home computers or at public buildings. Additionally, Port Authority is considering offering gift cards that function like current stored value options. As mentioned previously, Port Authority currently offers specialized ConnectCards for reduced fare riders such as senior citizens, riders with disabilities, and college students. Three universities in Pittsburgh—University of Pittsburgh, Carnegie Mellon University, and Chatham University—offer ID cards with embedded ConnectCard smart chip IDs. The enabled ID cards allow eligible students, faculty, and staff to travel on the Port Authority system for free. Users of Port Authority’s system have expressed interest in a mobile ticketing system that will allow them to purchase transit tickets through a mobile app. In October 2018, Port Authority requested proposals for a mobile ticketing application and supporting services. In May 2019, the Port Authority Board formally approved a 3-year contract with Masabi to launch mobile ticketing. The new mobile ticketing system is scheduled to go online for buses in early 2020, with light rail soon after. Single ride tickets and passes will be available via the mobile app, and payment via credit card, Apple Pay, and Google Pay will be accepted. Users of the mobile ticketing system will be able to validate their tickets via QR code readers on transit vehicles. This mobile payment system is designed to work alongside the existing ConnectCard system, and cash will continue to be accepted. A data use agreement is in effect between Port Authority and Masabi such that Port Authority is the owner of customer data and Masabi cannot use customer data for additional sales or the like. As part of the contract, however, Masabi offers some data analytics capabilities that will provide Port Authority with analysis of anonymized linked trips. Port Authority of Allegheny County Type of agency County-owned, state- supported transportation agency and transit operator Service area Allegheny County and bordering portions of Beaver, Washington, Westmoreland, and Armstrong counties Public transit modes Light rail, buses, bus rapid transit, ADA paratransit, and incline (funicular) Daily ridership 220,000 weekday average (2017) Ticketing system ConnectCard— electronic smart card; ConnecTix—limited use paper tickets Other mobility providers in operation Ferry, vanpool, ridesharing, car sharing, ride hailing, and bike sharing

36 Multimodal Fare Payment Integration 4.3.2 Experience with Payment Convergence Healthy Ride is Pittsburgh’s docked public bike sharing system, operated by Pittsburgh Bike Share, a nonprofit organization. The Healthy Ride system was launched in 2015 and by 2018 operated a fleet of 700 bicycles and 175 stations. Healthy Ride approached Port Authority with the idea of using the ConnectCard on the bike sharing system in an effort to help with simplifying the rental process and getting more users onto the bike sharing system. In 2017, Healthy Ride and Port Authority launched the first transit integration with bike sharing by offering ConnectCard users free, unlimited 15-minute rides on the Healthy Ride system. ConnectCard users can simply unlock bikes with their ConnectCard. To use a ConnectCard on Healthy Ride, first-time users visit a bike sharing station with a touch screen kiosk, create an account, and then tap the ConnectCard to link the two accounts. After successfully linking the accounts, riders can simply tap their ConnectCard to the rear of a bike to unlock it and use it for 15 minutes. To use Healthy Ride for more than 15 minutes, riders need to complete the full payment profile in their Healthy Ride account, which requires entering credit or debit card information. To offer this integration, Port Authority provides Pittsburgh Bike Share with a regular dataset of valid ConnectCard chip IDs. Port Authority and Pittsburgh Bike Share do not share revenues or costs for this integration, although Port Authority provided advertising space on buses and handouts for customers as part of a marketing effort for this partnership. Data sharing between the two organizations focuses on ridership, mainly information associated with chip IDs that have accessed the free 15-minute Healthy Ride option, including date and time. 4.3.3 Future Development Plans On May 31, 2019, the Port Authority Board formally approved the contract to launch the mobile payment system. At the time of the case example interview (June 2019), Port Authority was focused on implementing mobile ticketing and did not have plans to upgrade the ConnectCard system. In the past, Port Authority has analyzed the option of migrating to an account-based ticketing system but found it to be cost-prohibitive. Over the next 2 to 3 years, Port Authority anticipates that it will need to decide whether to upgrade ConnectCard to a new system and what exactly that system will be. 4.3.4 Lessons Learned 1. Payment convergence can work with a smart card–based system. Although many forms of pay- ment convergence occur on an account-based system, the experience of Port Authority and Healthy Ride shows that convergence with an outside entity is possible on a smart card–based system. Despite this experience, some of the issues remain with respect to how payments are or are not shared between the two accounts. 2. Smart card systems can coexist alongside mobile solutions. Port Authority is another example of how a transit agency has found a way to go at least partially account-based without a complete upgrade of the smart card system. For some agencies, this partial solution can be a more cost-effective way to offer some of the benefits of an account-based system. 4.4 Case Example 4: Bi-State Development Agency Metro Transit is an enterprise of Bi-State Development Agency of the Missouri– Illinois Metropolitan District. Metro Transit owns and operates the Greater St. Louis metropolitan region’s public transportation system. Metro Transit oper- ates bus, light rail, and demand response services. It serves a 558-square-mile area with a population of 1.6 million. Bi-State Development Agency Type of agency Regional transit agency Service area Greater St. Louis region of both Missouri and Illinois Public transit modes Urban and suburban bus, urban and suburban rail, tram, and ADA paratransit Daily ridership 0.13 million Ticketing system Smart card system Other mobility providers in operation Bike/car/scooter sharing and ride hailing

Case Examples 37 4.4.1 Fare Collection System The Gateway Card project was started in 2010 with the award of a contract to develop and maintain a contactless smart card system for MetroLink and MetroBus. The winning supplier had already supplied the ticket vending machines and validators for Metrolink. Another sup- plier was selected to replace the fare boxes on MetroBus. The Gateway Card is currently available for use by full fare and reduced fare passengers as an optional medium choice. To date, Metro Transit has issued 3,600 full and reduced fare extended use Gateway Cards and more than 4,000 limited use Gateway Cards. The system approach selected required integration from three suppliers to provide a seam- less smart card fare collection solution. Integration proved to be an ongoing challenge for the project. Metro Transit eventually had to act as the integrator and ensure alignment between the suppliers and the systems. Because of the complexity of the integrated system and availability of other media options, Metro Transit does not foresee making the smart card mandatory for all its customers. Metro Transit is still evaluating opportunities for additional smart card deploy- ment where it makes the most sense for specific customer groups and business partners. 4.4.2 Experience with Payment Convergence Metro Transit’s 2017 research found that 92% of Metro Transit customers have a smart- phone, so having more features and services available through apps was a priority. In early 2019, Metro Transit made the Transit app the official real-time information and trip planning app for the agency, replacing its old Metro On The Go app. In addition to real-time informa- tion and trip planning, the Transit app offers first and last mile connections in the metropolitan region through Transit+. For certain trips, the app will suggest taking a ride hailing service to connect to MetroBus or MetroLink service. This feature allows customers to plan, book, and pay for a ridesharing trip all in one app. 4.4.3 Future Development Plans Metro Transit is exploring a mobile ticketing pilot with visual validation for special events in the summer of 2019. In the long term, Metro Transit would prefer a mobile ticketing solu- tion that links to a form of machine validation instead of visual validation in an effort to keep drivers focused on their core responsibilities and to decrease opportunities for conflicts or disputes between customers and drivers. To achieve machine validation on buses, Metro Transit will need to add more equipment to its fare boxes or buses. Specific options are being assessed at this time. Convergence in the St. Louis metro area is currently being driven by third parties (the Transit app). For future developments, Metro Transit sees value in third parties providing the customer inter- facing aspects of fare payment, based on an open architecture/API-based mobile ticketing solution provided by Metro. Confirming this approach, however, requires ongoing studies. Integration with bike and scooter sharing companies active in the St. Louis metro area is not yet complete. The main issue for any fare payment solution is that Metro Transit serves a large rural and suburban area with many unbanked customers. Ensuring accessibility and equitability for the unbanked makes it difficult to move away entirely from cash as a payment option. Permits for bike and scooter sharing providers to operate within the area include requirements that the providers ensure that at least 20% of vehicles are available in low-income areas. This availability, however, does not necessarily address issues of access for the unbanked. 4.4.4 Lessons Learned 1. Facing major, ongoing challenges during deployment of a card-based system can discourage transit agencies from relying on a card-based system in the future when considering technical options for future developments and payment convergence.

38 Multimodal Fare Payment Integration 2. The combination of dissatisfaction with a legacy ticketing system and large smartphone pen- etration can increase the likelihood that the agency will choose a mobile ticketing solution instead of deploying a new, complex ticketing system to achieve payment convergence. 4.5 Case Example 5: Translink, Netherlands The Netherlands covers 16,040 square miles and has 17.3 million inhabitants. In 2016, about 50% of all trips in the Netherlands were made by car, 27% by bicycle, 18% by walking, and 5% by public transport (Statistics Netherlands 2016). About 9% of all distance was traveled by public transport, with the majority of that by train (Harms and Kansen 2018). The principal passenger railway operator is Dutch Railways (Nederlandse Spoorwegen, or NS), a state-owned company. Because of the extensive rail network, most long-distance service is provided by rail, with limited long-distance bus services available. The three largest cities of the Netherlands (Amsterdam, Rotterdam, and The Hague) all operate their own metro, tram, and bus systems through local transit authorities. Outside the larger cities, regional transport authorities provide bus service (typically through contracted services). In the Netherlands, transit agencies and authorities offer bike sharing, bike parking, car sharing, tolling, and parking services. Private parties operate ride hailing, car sharing, electric scooters, and parking services. Undocked shared bike or scooter services are also available. In the Netherlands, all transit opera- tors use a nationwide ticketing system, operated by a private company called Translink. Although the system started out as a card-based system, Translink and public transport operators started to add account-based features as early as 2009. 4.5.1 Fare Collection System In the early 2000s, transport operators and authorities attempted to start local or national contactless ticketing systems. It was the establishment of a new governance structure, how- ever, that paved the way for success. NS, along with the four largest public transport operators, founded a private company—Translink—to establish and operate a new nationwide fare collec- tion system. The transit agencies remained the shareholders of Translink. At that time, NS and the four operators provided 80% of the public transport trips in the Netherlands. Translink was established to issue smart cards (called OV-chipkaart), manage clearance and settlement of transactions, and provide customer service. Transit operators across the nation were invited to be part of the nationwide ticketing system by becoming customers of Translink. The open architecture of the system allows for each individual transit operator to source its own fare payment equipment from its preferred vendor. The OV-chipkaart, introduced in 2005, is a stored value card. Value can be loaded on the cards at ticket vending machines, online, or using automatic top-up. As with most smart card deploy- ments, rail and metro stations were equipped with gates accepting both smart paper tickets and smart cards. Validators were installed on all buses and trams. Paper tickets can be purchased onboard most vehicles. Nationwide implementation of OV-chipkaart was complete by 2012. By 2017, all cash was phased out from most vehicles. 4.5.2 Experience with Payment Convergence After introducing the standard smart card, transit operators started to develop the con- cept of a “business card.” Business cards are postpaid account-based smart cards used on all transit modes (trains, subways, trams, and buses) and nontransit modes offered by business Nationwide Ticketing System of the Netherlands Type of entity Operator of national ticketing system (organized as a joint venture) Service Area The Netherlands Public transit modes Lightrail, heavy rail, subway, and bus Daily ridership 8.2 million Ticketing system Hybrid—transition from card-based to account- based Other mobility providers in operation Bike sharing, car sharing, parking, tolling, and ride hailing

Case Examples 39 card providers such as NS (bike sharing, bike parking, car sharing, and parking) across the Netherlands. Translink also opened up the system to allow for other companies to issue busi- ness cards. Five other (private nontransit) companies joined the system to become business card providers and started issuing business cards and integrating public transit services with an increasing number of other related services, such as car rental, gas payment, and elec- tric vehicle charging. Business owners can request the cards for their employees, manage the cards using online tools, or integrate with their own enterprise resource planning systems and receive a monthly invoice. This type of payment convergence was achieved through the following measures: • A dedicated interoperable business card product loaded onto the business cards ensured that the front-end infrastructure in public transport did not need to be upgraded to accept these account-based business cards. This pass allows travel throughout the Netherlands without using the e-purse. In back-office systems, the transactions are aggregated for journey recon- struction and fare calculation based on the account information residing in the Translink back office. The journeys and fares are forwarded to the business card provider, which sub- sequently includes them in the invoices to employers. Note that the fares charged by and paid to the public transport operators may be different from the fares charged by the busi- ness card providers to the employers, as the business card providers can offer their own propositions. This account-based usage of the OV-chipkaart allows business card providers to easily integrate the public transport usage in their broader mobility propositions. • Translink started a service that links the visible card number (engraved ID) to the machine- readable chip number (chip ID) and vice versa (ID-link services) (see Figure 6). This link Business Card Provider Domain Transit Domain Engraved ID - Chip ID Journey reconstruction and fare calculation Full OV- chipkaart reader Customer interfacing systems Account management system Any reader Postpaid product Card + engraved ID Chip ID Non-transit domain Figure 6. Business card and postpaid consumer card solutions.

40 Multimodal Fare Payment Integration enables all types of service providers—including public transit operators and business card providers—to use the chip number for easy access to nontransit services that do not implement the OV-chipkaart system. Early implementations of the business card used a magnetic stripe and a barcode on the card to allow services such as off-street parking; however, after this ID-link service was introduced by Translink, all nontransit usage migrated to using the contactless chip ID. After successful implementation of the business card, NS began to extend this proposition to consumers. The concept of a postpaid consumer product was introduced as NS Flex. Travelers can use their personal OV-chipkaart and purchase a service package online including parking, bike sharing, and car-sharing, and can pay for these services with a monthly invoice. During the NS Flex online onboarding process, the customer creates an account and links the card (through the visible identifier) to the account. The NS system subsequently receives the chip ID from the Translink system that is enabled for all nontransit services. NS Flex is fully enabled only after the consumer postpaid pass is loaded onto the card. 4.5.3 Future Development Plans The public transport sector in the Netherlands is preparing to gradually migrate away from its legacy card-centric smart card system to a full account-based ticketing system that can support multiple payment methods and multiple identifiers. In this new system, contactless bank cards, QR codes, and EMV tokens will all be accepted. The Netherlands also faces the challenge of how to serve unbanked, low-income customers or those without a smartphone when the account-based system takes effect. Solutions such as 2-D barcodes and closed-loop contactless tokens are currently being explored, piloted, and rolled out. 4.5.4 Lessons Learned: Relevance for the United States 1. Offering additional products, such as access to bike sharing on smart cards while using cards as identifiers, is a viable way to satisfy the changing needs of customers even during the transition period between old (card-based) and new (account-based) systems. 2. When many nontransit modes (such as bike rental, bike sharing, and bike parking) are owned by transit authorities, operators, or municipalities, the need for cooperation with private parties is limited, potentially resulting in an easier payment convergence process. Agencies that already provide multiple nontransit modes can therefore take advantage of this and focus first on making sure that all existing modes are integrated into their fare payment systems. 3. Allowing private parties to issue smart cards and offer new mobility service packages can lead to a robust business card market. Private parties are incentivized to provide the best offerings for their customers, which can grow the customer base for public transportation while driving payment convergence among various transport modes. 4.6 Case Example 6: City of Antwerp, Belgium This case example introduces the perspective of a city working in a coordination role to organize the many players within a changing transit ecosystem. The City of Antwerp, home to more than half a million people, is the second-largest metropolitan region in Belgium. The two main public transportation providers are De Lijn and the National Railway Company of Belgium (Société nationale des chemins de fer belges, or SNCB). De Lijn operates buses, trams, and demand response services in multiple regions, including the City of Antwerp. In addition, De Lijn cooperates with other mobility mode providers such as car sharing (Cambio), carpooling, and bike sharing at stations (Blue-bike) and within the city (Velo). SNCB operates heavy rail City of Antwerp Type of agency Municipality Service area Antwerp, Belgium Public transit modes Bus, tram, suburban rail, and demand response services Daily ridership 0.54 million Ticketing system Smart card system and mobile app Other mobility providers in operation Bike/car/scooter sharing and ride hailing

Case Examples 41 throughout Belgium. The City of Antwerp coordinates with these two public transportation providers but does not operate any public transit. At the time of writing, Whim (from MaaS Global Ltd.), Pikaway, and Olympus Mobility are the three companies that are the closest to offering MaaS in the City of Antwerp. Throughout this case example, “City of Antwerp” refers to the municipality of Antwerp. In recent years the City of Antwerp has experienced an increase in congestion caused by both more passenger cars and major construction that started in 2016 and is planned to be completed in 2030. At the same time, different card-based electronic fare collection systems have been unable to provide the functionality and flexibility city travelers need to swiftly switch between their cars, public transit, and other mobility services such as shared bikes. 4.6.1 Fare Collection System In 2015, the City of Antwerp tried to connect its smart card system (a loyalty system that encourages vulnerable groups to participate in culture and sports) with public transport and Velo, the city’s shared bike system. Unfortunately, the connection did not come to fruition because of a lack of cooperation from public transport companies. At the same time, the city launched a procurement to challenge the market to build a more efficient multimodal trip plan- ner because existing trip planning solutions offered by Google and Waze were not able to com- bine car trips with public transport and (shared) bike trips. 4.6.2 Experience with Payment Convergence In 2016, a representative of the City of Antwerp was introduced to the concept of MaaS by the City of Helsinki, Finland, where MaaS Global Ltd., a company focused on becoming an MaaS operator, had begun its operation. Seeing how MaaS Global operated in Helsinki, the City of Antwerp concluded that a third-party provider offering integrated mobile solutions would be the path forward for achieving integration of disparate transportation services. The City of Antwerp found that it needed to have the right regulations in place to broaden the market of shared mobility providers. It therefore created a regulation framework for shared mobility providers: any company that wants to enter the shared mobility market in the City of Antwerp must apply for a permit and comply with elements of a framework on service quality. The main elements of this framework focused on operational metrics (e.g., number of vehicles in the city center, number of companies per mode, acceptable level of customer complaints) and the willingness to interoperate with any other mobility as a service provider in the city. The City of Antwerp has the right to withdraw a permit from a company that does not perform to expected levels and give the operating permit to the next company on the waiting list. At the time of the writing, the City of Antwerp has a waiting list of com- panies that are eager to offer new mobility services. As a result, three shared bike, three free- floating scooter, three free-floating electric motor scooter, and multiple car sharing systems are operating in the City of Antwerp. Despite these successes, lack of digitization has arisen as a main obstacle to integrating the services and payments of new mobility mode providers. Significant amounts of the companies’ data are generated manually; therefore, other applications cannot access and rely on real-time information from different service providers. To facilitate the integration process, the City of Antwerp in 2019 put out a request for proposals to support and subsidize the digitization of new mobility service companies. Fifteen proposals were submitted, and seven contracts were awarded. The City of Antwerp is currently working with the seven selected companies.

42 Multimodal Fare Payment Integration 4.6.3 Future Development Plans The City of Antwerp has a dedicated budget to encourage citizens to participate in new mobility services and MaaS. Because the concept of MaaS is not yet mature enough to be launched in a big way, however, the City of Antwerp would rather support testing of new mobility and the MaaS applications first. The City of Antwerp believes that it will take another 3 to 5 years to establish MaaS because currently MaaS is fairly undefined and still taking shape. In addition, no single entity can offer a full MaaS experience such that users can confidently give up their access to cars and other means of transport. To provide MaaS, a proposition has to be made that meets the demands of customers: (1) the platform must offer a solution that lets users quit any other payment method and still get around the city and (2) the pricing must be justified for the services offered and must be transparent. As an additional next step, the City of Antwerp also decided to plan and implement a solution for the unbanked and travelers without smartphones to ensure equity and accessibility. 4.6.4 Lessons Learned: Relevance for the United States 1. When creating the right conditions for a payment solution that includes both transit modes and shared mobility services, one must understand the dynamics of the mobility market, the concerns and incentives of incumbents, and the possible new market players. Trans- port operators may fear losing customers in favor of the new mobility service providers and therefore hesitate to open up and think about transport from an ecosystem perspec- tive. New mobility providers have their own onboarding systems and want to control the platforms their service is sold on. Getting political buy-in from all who are expected to participate is crucial for creating an open and inclusive transportation ecosystem. 2. It is recommended that any party that aims to integrate payments for transit and shared mobility modes create a set of standards and minimum expectations for the technological approaches and sophistication of all participants in an effort to prevent less technologi- cally savvy companies from slowing down the process. Setting up data standards and APIs or subsidizing the digitization investments of service providers can facilitate the payment convergence process.