Silvester Prakasam 8 September 2017 Land Transport Authority

Silvester Prakasam 8 September 2017 Land Transport Authority

Cloud-Based Ticketing Ecosystem 1) Reduction in Back Office Costs 2) The Account-Based Ticketing (ABT) Business Proposition for Transit Operators 3) Managing the risks for ABT improved front-end security 4) Mobile Ticketing as the ABT solution for emerging markets 5) Fully Franchised model for Ticketing - Manila 2

Traditional Transit Architecture Tier 5 Card Manager Central Computer (NETS) Card Manager Central Computer (EZL) Card Manager Central Computer (TL) Tier 4 Transit Acquirer Central Computer Tier 3 Bus Operator Central Computers Rail Operator Central Computers Tier 2 Depot Computer System Station Computers Tier 1 On Board Bus Equipment Rail Station Equipment - Gates and Sales Machines 3

The Requirement of Stakeholders in Transit Ticketing Commuter ease, convenience and speed Transit Operator efficiency better economy fit for purpose Payment Provider sound sustainable business model, cost of providing supporting technology <0.5% of revenue 4

Attraction of Closed Payment Transit Operator is Payment Provider Transport Operator in full control Media is the traditional stored value card Anonymous The apparent benefits of closed system are the opportunity for float retention and penetration into non-transit 5

The Catalysts for Open System high performance microprocessor at touch points enabling more complex cryptography such as EMV more powerful and cost-effective back office including hosting in cloud 6

Consolidated Back-Office CM TA TL Data Center (MND Complex) Consolidated Servers NSEW Line 1 BO Line 2 BP CCL NEL Line 3 SKG Line 4 PGL Line 5 DTL Line 6 BO Data Center 1 SBST Data Center 2 TL 7

Private Cloud Tier 5 Card Manager 1 Card Manager 2 TA BO RO CM (TL) AV TA BO RO CM (TL) AV Tier 3 and 4 Disaster Tier 2 DCS SC Tier 1 On Board Bus Equipment Rail Station Equipment - Gates and Sales Machines 8

Benefits of Cloud Back-Office Meets Security and Performance Requirements of Stakeholders Cost savings Overall lifecycle savings 24% (over 7 years) comprising Capital, Maintenance, and Operation Costs Optimized hardware resources Flexibility & Lower cost in adding new operator Complete Disaster Recovery Centre Replicating the entire production environment Up and running within 24 hours (previously 72 hours) 9

Account-Based Ticketing (ABT) Account-based Ticketing (ABT) A backend system where the fare calculation and transaction is performed against an account in the back office Open Payment Compliant media (EMV / token) for fare payment on point of entry and exit Use public electronic payment media, credit / debit cards, virtual cards, digital tokens, Mobile Digital ID 10

ABT a) all complexities of ticketing validation shifted to Backend b) front-end just authenticates the validity card c) no top-up points required d) risk with non-payment if post-paid or even stored value 11

ABT System Step 3: The account is linked to a funding source designated by user where fares are postpaid Step 2: Fares are charged to an account in the back office Step 1: Different payment media just serve as identifiers for payment Our focus here! 12

Drivers of ABT More payment options Cost savings through reduced cash top-ups No queuing for top-ups Checking of transaction history online Convenience for tourists 13

Players in ABT Model Transit Acquirer & Operation Issuing banks Acquiring banks Scheme Owner Manages commuter s travel enquiries Negotiate rates with acquiring banks and scheme owner in capacity as merchant similar to retail model Manages relationship with cardholders Manages card configuration Bad debt risk Processes payment on merchant s behalf Negotiate agreement with issuing banks Interface payment gateway with merchant Owner of financial switch network Set common standards with foreign banks Example: 14

Transaction and Settlement under ABT Frontend Backend Online ABT Portal (2b) Travel information uploaded Fare Settlement with Operators (1) Taps-in* Fare Calculator Engine Commuter Offline Authentication (4) Send aggregated** fares for settlement (7) Acquiring bank pays to transit acquirer (2a) Send card information to acquiring bank for pre-authorisation Acquiring Bank(s) Aggregated Settlement (5) Send aggregated fares for settlement (6a) Pays Acquiring Bank (3) Request for preauthorisation (6b) Bills Commuter Card Issuing Banks Online Authorisation * Note: Instant communication for station gantries. Delayed communications for bus readers. ** Fares aggregated for 5 days or up to $15, whichever earlier. 15 15

Risk Management further opportunities for cloud Fare Engine Payment & Risk Engine Parameter Management Apportionment Management D B Risk Management EMV Hotlist Management Fare Computation Settlement EMV Txn Stitchings Debt Management Check card is genuine Eg. Blacklist Expiry Reader Devices 16

To commuters, using EMV Contactless cards is no difference from proprietary cards *New* Commuter taps-in using credit/debit card Commuter travels Commuter taps out using the same credit/debit card Under ABT, commuter also able to check fares incurred on an online portal and mobile phone 17 17

ABT - Flexibility in Providing for Diverse Needs Diverse Needs Travel Demand Management Social Needs Compensation Details Details Details 18

5:00 5:30 6:00 6:30 7:00 7:30 8:00 8:30 9:00 9:30 10:00 10:30 11:00 11:30 12:00 12:30 1:00 1:30 2:00 2:30 3:00 3:30 4:00 4:30 5:00 5:30 6:00 6:30 7:00 7:30 8:00 8:30 9:00 9:30 10:00 10:30 11:00 11:30 Distinct Peaks for Overall Commuter Journeys 180000 160000 7.45 am, free travel for rail Overall Weekday Average (bus and rail) 9am 4pm 7pm 140000 120000 100000 80000 60000 40000 20000 0 19

Travel Demand Management - can achieve PP shift by 7% Provision for diverse needs Needs What Travel Demand Management To shift commuting pattern by pricing By Differential pricing, Discounts, Surcharge, etc. 1. Off-peak fare & pass 2. Flexibility for conditional discounts: a) Discount differentiated by more criteria # b) Re-imbursement by gov, and additional sponsors c) Trip Fare Cap, % Rail discounts 3. Bonus discount for next trip # # applied by patron, service grade, geographic, temporal, etc. 20

Social Needs Provision for diverse needs Needs Social Needs What To provide assistance to social groups By discounts, passes, fixed price, period fare cap, etc. 1. Timely reminder for Card Expiry 2. Period fare cap scheme to cap expenses # # by patron, service grade, geographic, temporal How Limit fare expenses by max fare. Discount by Patron Type 21

Period Fare Cap Commuter does not have to queue up monthly to buy passes Commuter can spread his expenditure over a month Commuter will not be penalized unlike passes, where s/he lose out if pass is not fully utilized for some reason Commuter does not have grapple with multiple ticketing products Objective to shift peak travel behaviour, and effectively ensure cap utilization Fare charges will be calculated to give the optimal of peak and off-peak fare 22

Near Field Communications - ABT in emerging market Cutting cost of station staff and machines. Ticket issuance, top-up and refund can be OTA Save space in stations Cater for the unbanked 23

iphone7 and iphone 6 Plus Apple Watch Series 2 Google Pixel Nexus 5X Samsung Galaxy S7 Samsung Galaxy S8 SamsungGear S3 Frontier (LTE) Higher the better Transaction Distance Across Various Handset Models cm 12 10 8 6 4 2

Observations Short transaction distance of certain handset/gear models which might increase the tapping retries Retries with different phone positions on reader are required sometime Antenna position is not obvious to phone user which might increase the tapping retries Higher error rate such as no detection and read error as compared to cards Implications Lower throughput on the public transport payment devices Longer queue especially during peak hours Users may require more assistance from operators

Processing Time of Different Products Shorter the better iphone 7 iphone 6 Plus Apple Watch Series 2 Google Pixel Nexus 5X Samsung Galaxy S7 Samsung Galaxy S8 Samsung Gear S3 Frontier (LTE) EMV Card CEPAS Card 200 400 600 800 1000 ms

Innovative Financing Approach for Transit Ticketing Outsourcing the entire Ticketing Function to the retailing industry at no cost to the Transit Service Provider 27

AFCS Overview Total of 755 units of Automatic Gates (AG) installed Line 1 (331 units)---- over 20 stations Line 2 (229 units) ----over 11 stations MRT 3 (195 units) ----over 13 stations Total of 138 units of Ticket Vending Machines (TVM) installed Line 1 (28 units) Line 2 (82 units) MRT 3 (28 units) Total of 219 units of Point of Sales Machines (POS) installed Total of 44 units of Stations Computers (SC) installed One set of Level 3 server for the 3 rail operators One set of Level 4 CCH server (Central Clearing House) 28

AFCS Concessionaire Agreement AFPI (AF Payment Inc) granted the Concessionaire Agreement (CA) by the DOTC (Department of Transportation and Communications) in Mar 2014 Requires delivery of the AFCS system, including the provision of single journey tickets (SJT) and maintenance of the system for a period of 10 years, commencing from Full System Acceptance (FSA) date AFPI entered a negative bid of P1.088 billion (SGD 32.42 million) AFPI awarded the Sub-Contract Agreement (SCA) to MSI on the 02 Apr 2014 for a total sum of SGD 30.87 million The Concessionaire will have the rights to operate the Level 4 Clearing House system and issue the Stored Value Card (now known as Beep card which can be extended to non-transit) for a period of 10 years before handing over the AFCS system back to DOTC AFCS started revenue on 16 Dec 2015 with 3 million cards issued and 2 million transactions daily 29

Thank you 30