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

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T R A N S I T C O O P E R A T I V E R E S E A R C H P R O G R A M TCRP REPORT 177 TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2015 www.TRB.org Research sponsored by the Federal Transit Administration in cooperation with the Transit Development Corporation Subject Areas Public Transportation • Data and Information Technology • Finance Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation Eric York Wallischeck w i th Tim Weisenberger Andrew Berthaume Michael G. Dinning John A. Volpe nAtionAl trAnsportAtion systems Center U.s. DepArtment of trAnsportAtion Cambridge, MA

TCRP REPORT 177 Project J-06/Task 83 ISSN 1073-4872 ISBN 978-0-309-30860-1 © 2015 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FTA, or Transit Development Corporation endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Transit Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. 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C O O P E R A T I V E R E S E A R C H P R O G R A M S AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under TCRP Project J-06, Task 83 by the Center for Transportation Logistics and Security at the John A. Volpe National Transportation Systems Center (Volpe Center). The Volpe Center was the contractor for this study. Mr. Eric York Wallischeck, Principal Technical Advisor at the Volpe Center, was the Principal Investigator and primary author. Contributing investigators and authors for portions of this report were: Mr. Michael G. Dinning, Director, Center for Transportation Logistics and Security; Mr. Tim Weisenberger, Program Analyst, Volpe Center; and Mr. Andrew Berthaume, Community Planner, Volpe Center. The work was done under the general supervision of Mr. Dinning and Mr. John Wojtowicz, Chief, Security and Emergency Management Division, Volpe Center. The Volpe Center team acknowledges the input from the many transit agency leaders and industry professionals who contributed their knowledge and expertise to this report through reports, agency documentation, and personal interviews. Thank you. CRP STAFF FOR TCRP REPORT 177 Christopher W. Jenks, Director, Cooperative Research Programs Dianne S. Schwager, Senior Program Officer Jeffrey Oser, Senior Program Assistant Eileen P. Delaney, Director of Publications Maria Sabin Crawford, Editor TCRP PROJECT J-06/TASK 83 PANEL Field of Special Projects Kathryn Coffel, Kathryn Coffel Consulting, LLC, Portland, OR George Kocur, MIT, Cambridge, MA Alex Lu, Metro-North Railroad, New York, NY John F. McGee, Jr., LTK Engineering Services, Ambler, PA John McLaughlin, Keolis North America, Boston, MA Michael C. Nash, Xerox State and Local Solutions, Inc., Palo Alto, CA Craig Roberts, InComm, Taylorsville, UT Jeffrey L. Spencer, FTA Liaison

TCRP Report 177: Preliminary Strategic Analysis of Next Generation Fare Payment Systems for Public Transportation addresses how next generation transit fare payment (NGFP) systems can be designed to improve the customer experience, streamline transit system operation, and integrate transit more effectively within the broader context of mobility management. With their legacy fare collection systems approaching the end of their useful life and emerging tech- nologies expanding fare payment options, many transit agencies are seeking information and solutions for NGFP systems. The report will assist transit agencies and other practitioners involved in decision-making related to NGFP systems. Fare payment technologies for public transit have evolved from paper tickets and tokens to magnetic stripe cards, smart cards, and mobile devices. These NGFP systems can include payment media issued by both the transit agency as well as organizations outside the transit agency. A major innovation is the movement toward non-proprietary payment systems, meaning systems that use open interfaces and standardized devices. TCRP Project J-06/Task 83 was conducted by the Volpe National Transportation Systems Center, U.S. Department of Transportation to provide a targeted, state of the practice review of emerging fare payments options for public transportation; develop a typology of available and anticipated options for NGFP that can serve a broad range of transit agencies and stake- holders in the United States; and evaluate the pros and cons (opportunities and barriers) of the options presented in the typology. This report was developed through a targeted literature review and interviews with professionals involved in the public transit fare payment industry, including public transit agencies, private sector vendors, consultants, and experts from the transportation, financial, and mobile payments industries. This research presents four sets of design attributes in transit fare payment system design: (1) single versus multiagency operating environments; (2) proprietary fare payment systems versus standards-based systems that comply with the data and technology specifications used by the financial payments industry for contactless bankcards; (3) card versus account-based fare payment systems; and (4) closed fare payment systems versus open loop systems. The report then evaluates the relative capabilities of different NGFP system design and technology approaches, and concludes with a discussion of implementation strategies and best practices. The report concludes with an evaluation of the relative capabilities of NGFP systems and a discussion of implementation strategies and best practices. F O R E W O R D By Dianne S. Schwager Staff Officer Transportation Research Board

1 Chapter 1 Introduction and Research Approach 1 Background 1 Research Approach 2 Report Overview 4 Chapter 2 Planning for a Next Generation Transit Fare Payment System 4 Chapter Overview 4 Defining a Next Generation Transit Fare Payment System 5 Planning Considerations for New Transit Fare Payment Systems 6 Align Fare Payment System Goals with Transit Agency Objectives 8 Fare Program: Pricing, Payment, Control, and Collection 11 Fare Media 12 Chapter 2 Review 13 Chapter 3 Design Attributes of Transit Fare Payment Systems 13 Chapter Overview 13 Typology: the Architecture of Transit Fare Payment Systems 14 Transit System Scope: Single Agency or Multiagency 14 Design and Technology: Proprietary or Standards-Based 16 Fare System Architecture: Card-Based or Account-Based Systems 17 Payment Architecture: Closed Payments or Open Payments 19 Chapter 3 Review 20 Chapter 4 Transit Fare Payment System Typologies 20 Chapter Overview 20 Typology Framework 20 Descriptions of Fare Payment System Typologies 23 Chapter 4 Review 24 Chapter 5 Transit Fare Payment System Technology 24 Chapter Overview 24 System Components 25 Fare Media and Readers 29 Chapter 5 Review 30 Chapter 6 Emerging Payment Technologies and Payment Convergence 30 Chapter Overview 30 Availability and Security of Contactless Bankcards 31 Prepaid and Reloadable Payment Cards 32 Mobile Technology C O N T E N T S

37 Acceptance of Smart Card ID Credentials on Transit 39 Payment Convergence of Public Transit and Travel 44 Enhanced Data Analytics 45 Chapter 6 Review 46 Chapter 7 Next Generation Transit Fare Payment System Case Studies 46 Introduction 46 Case Study 1: Utah Transit Authority (UTA) 53 Case Study 2: Southeastern Pennsylvania Transportation Authority (SEPTA) 57 Case Study 3: Whatcom Transportation Authority (WTA) 61 Chapter 8 Evaluating Public Transit Fare Payment System Typologies and Implementation Strategies 61 Chapter Overview 61 Evaluating Options 65 Implementation Strategies and Best Practices 70 Observations and Conclusions 70 Chapter 8 Review 71 Endnotes 75 Appendix A Definition of Terms 78 Appendix B Examples of Transit Agency Fare Payment System Goals