Smart Cards in Motion updated 9/12/03 Fall 2003 Conference. MICHAEL LAEZZA VP Sales Americas

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1 Smart Cards in Motion updated 9/12/03 Fall 2003 Conference MICHAEL LAEZZA VP Sales Americas

2 AFC System Elements System Architecture Cards, Readers Security Back Office Functions Clearinghouse Business Model Centralized Outsourced

3 Smart Card System Major Roles & Core Functionality Clearing House Card Management Application Management Financial Management Reporting Personalization Call/Help Centres

4 Smart Card Central System SCHEME MANAGEMENT CENTRAL SYSTEM ISSUER MANAGEMENT Generate Central Body Management Reports AGENCY MANAGEMENT Manage Card Blocking Transactions Manage Central Body System Parameters Manage Configuration Data and Program Monitor Station SERVICE LOCATION MANAGEMENT Consolidate Cardholder Transactions CARDHOLDER SERVICES Sell Cards Monitor Station Reconcile Revenue Set Policy Manage Card Personalization Request Generate Issuer Management Reports Administer Returned Retention Distribute Fare Card Hotlist Operate Service Location Handle Card Usage Manage Devices Administer Card Hotlist Manage Device Administration Generate Service Location Report Receive Returned Cards Generate Agency Reports Administer Card Stock Manage Charts Manage Cash Service Lost or Stolen Cards Control Agency Stock Administer Autopay Manage Settlement Control Service Location Stock Acquire Card Information Maintain Agency Parameters Manage Issuer System Parameters

5 Central System - Card Management Card Management Core Functions Procurement Security Manage Status Distribution Stock Control Manage Applications Reports

6 Central System - Clearing House Process Receive Transactions Validate Transactions Apply Business Rules Apply Fees Process Claims Update Databases Generate Settlement Items

7 Service Bureau - Where the operations take place: Staff, facilities, desks, management

8 Service Bureau - Operations Overview

9 Centralize - share infrastructure costs Objective is to amortize infrastructure investment over a greater number of transit transactions or to use infrastructures already in place for other purposes Possible shared functions include: Card management services card issuing card distribution and revaluing - expanded reload points card operation and customer service Reconciliation and settlement clearinghouse services through shared use of a common back end Procurement savings cards - common card family common equipment specification

10 Business Models - Centralized - DESIGN BUILD Many participants - single lead agency or jointly managed consortium Revenue and costs shared/apportioned according to usage. Participating agencies jointly finance the implementation and operation or lead agency provides the bulk of the funds Consortium manages the scheme

11 Example: Octopus Smart Card System - Hong Kong 130+ Service Providers Transport, Retail, Parking, Vending, Access Control 8.6 million cards in circulation 7.2 million+ transactions per day- settled by 6AM 10% of transactions non-transit Pursued Business Growth - Earn attractive transaction fees with low marginal costs - Greater card base, more valuable to all participants

12 Outsourcing Personnel Financial Performance Equipment Risk

13 Business Models - Centralized OUTSOURCED DBOM A centralized clearing house is run by a third party Allows for private/public partnership Private contracting for overall operation Costs of system and/or services paid by - Transaction Fees - Card Management Fees - Fixed Asset Fees - Service Fees - Combination of the above

14 Example: Metropolitan Transportation Commission - TransLink (also Seattle, Washington DC) Multi Year supply/operation contracts Opportunities - Shared card management costs - Shared transaction processing costs - Integration of other applications such as leisure, campuses, parking, and banking with transit

15 Rome - Transaction Fee Financing Agenzia per i trasporti autoferrotranviari del Comune di Roma DBOM completely financed by vendor Fully outsourced vendor financed project with cost recovery through transaction fees Multi year contracts

16 Wide Area System - benefits both large and small

17 Outsourcing - Benefits -- Reduces the Need for In-house SPECIALIST AREAS unrelated to the Core Business -- Maintains high SERVICE STANDARDS by tying Outsourcing Fees to Performance -- Keeps Systems and Equipment UP-TO-DATE -- Obtains the TECHNOLOGY and Service Benefits otherwise not available to single organisations

18 Multi Applications Expansion into Non-Transit Multi Applications Build on large Transit Card Base Lease Application space on card Shared cost of System Infrastructure & Services Financial and non-financial applications

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