Multiagency Electronic Fare Payment Systems (2017)

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24 The decisive reference on fare policies was TCRP Report 94: Fare Policies, Structures and Technologies: Update (Multisystems Inc. et al. 2003). In the study, the authors identified the relationship between fare policies and structure, and technologies implemented using electronic fare payment systems. With the advent of auto- mated technologies, the potential for expanded fare policy oppor- tunities that took advantage of equity and environmental justice concerns could be realized. The SCA Planning for New Fare Pay- ment and Collection System white paper (2010) also recognized the relation ship and dependence between fare policies and technologies: “Fare policy and structure decisions have traditionally been made independent of payment systems and technology; however, advancing technologies and payment industry trends have increased the fusion between the two.” The SCA white paper goes on to state the reasons for these influences: • Ability to offer a wide variety of fare options using a single payment medium; • Expanded adoption of electronic stored value, including replenishment of a transit account; • Increased flexibility to consider distance-based or time-of-day pricing options; • Regional fare integration; and • Influence of the banking industry and the use of bank-issued media to pay transit fares (SCA 2010). In the interim between the publication of TCRP Report 10 (1996) and the publication of TCRP Report 94 seven years later, several trends were identified that showed agencies moving away from transfers and replacing them with lower prices or period passes, and simplified fare structures and products (Multisystems Inc. et al. 2003). This is consistent with survey responses indicating agen- cies were adopting simplified fare policies in order to reduce software complexity and ultimately the overall cost of EFPS. TCRP Report 10 definitions (see sidebar) make sense from a policy perspective; however, new sys- tem models and customer viewpoints drove a different model for describing fare policies and structures. In 2005, the first version of the International Standards Organization’s Interoperable Public Transport Fare Management System Part 1: Architecture built a data model that separates application, application ownership, product and product owner, respective retailers, and service operator, as shown in Figure 6. The standard was updated in 2014 (ISO 24014-1, 2014). The model decouples the product and media. It also shows the independence and modularity that new technologies bring to developing fare policies. Using the framework of the ISO model, electronic fare payment systems may be represented by separate classes such as: • Fare structure by mode or service, • Fare customer categories, chapter four INTEGRATED FARE POLICIES AND SALES IN A MULTIMODAL ENVIRONMENT Definitions from TCRP Report 10 Fare Policy—the principles, goals, and constraints that influence the management of a transit agency in setting and collecting fares. Fare Strategy—a general fare collection and payment structure approach; possible approaches include flat fare, differential pricing (by distance traveled, time of day or type of service), market-based or discounted payment options, and transfer pricing. Fare Structure—combination of one or more fare strategies with specific fare levels. Ref.: Multisystems Inc. et al. (2003, p. 6)

25 • Fare products, and • Fare media. The survey adapted this framework for survey questions on fare policy integration. Respondents were asked about fares not only for traditional modes of service, but also whether their EFPS incorporated fee structures for non-traditional modes and partners. FARE POLICY SURVEY RESPONSES Respondents were asked to characterize their fare policies and payment methods. The survey enumer- ated a set of responses for each category: • Fare structure by mode or service—flat, zone, distance, other. • Fare rider categories—regular, discounted, senior, other. • Fare products—single use, period pass, stored value, fare capping, institutional pass with restrictions (school, event); other. • Fare media—paper/ticket (MiFare Lite), branded proprietary smart card, bank card (credit/debit/ prepaid), mobile NFC, printed bar code, mobile bar code, other. Respondents were also asked about special rates or discounts associated with the combined ser- vices or use of distribution and information dissemination channels; for example, if discounts were offered to customers based on the product purchase location or channel, parking when riding transit, or other “opt-in” benefits. Fare Structure Respondents were asked about the fare structures applied to modes in their regional payment system. The data provides information about fare structures assigned to mode; modes included in the common fare payment system; and diversity of fare structures supported by the multiagency EFPS. Fare Structures Assigned to Mode The survey data (Table 4) revealed the following observations: • Most transit modes use a simple flat fare. • Majority of bus systems have a flat fare (95%), although a significant number of them use zone-based fare structures, particularly commuter bus service. • Almost an equal number of commuter rail service use a flat (30%), zone (30%), or distance- based (40%) fare structure. Product owner Application owner Collection & Forwarding Customer service Service OperatorCustomer Application Retailer Product Retailer FIGURE 6 ISO model of the interoperable fare management system (Source: ISO 24014, 2014).

26 Modes in a Common Fare Payment System Most regional systems support more than one mode and therefore support more than one fare structure. Figure 7 shows the number of multiagency EFPS (vertical axis) that support the specified number of modes (horizontal axis) using one (orange), two (grey), or three (yellow) fare structures. For example, there are two programs that support two fare structures, one systems offers only one mode, and the other has four modes. The chart shows that most regional/multimodal fare systems are complex, having more than one type of fare structure: Orange represents agencies with a single fare structure (31%); two fare structures are represented in gray (46%); and three fare structures (23%) are represented in yellow. Common fare payment systems with a large number of modes adopt more fare structures; all systems with six or more modes have two or more types of fare structures) (Figure 7). Specific details Mode Flat Zone Distance Responses % count % count % count count Bus 95.2 20 38.1 8 21 Commuter Bus 73.3 11 53.3 8 6.7 1 15 BRT 90.9 10 27.3 3 11 Commuter Rail 30 3 30 3 40 4 10 Light Rail 85.7 12 7.1 1 7.1 1 14 Heavy Rail/Subway 77.8 7 0 0 33.3 3 9 Ferry 100 2 2 Vanpool/Rideshare 100 1 1 ADA Paratransit 85.7 6 28.6 2 14.3 1 7 Other 75 3 25 1 4 Source: Data from survey responses, native Word table. TABLE 4 FARE STRUCTURE TYPES ASSOCIATED WITH MODE TYPES FIGURE 7 Number of fare structures in a common fare payment system. This is a three-dimensional chart showing the number of multiagency EFPS (vertical axis) vs. the number of modes in the system (horizontal axis) versus number of fare structures, which is color coded as: one (blue), two (orange), or three (grey).

27 for each system and the distribution of fare structure by mode are shown in Table 5. Figure 7 was derived from columns 2 and 3 of Table 5. Comments on Fare Structures Respondents were asked about the challenges and weaknesses of their fare integration approach. Many of the respondents pointed to the need to implement multiple fare structures as well as use multiple technologies to implement those fare structures. Some of the responses were seemingly contradictory: Some respondents indicated that tariffs and fare changes were easy, however, in those cases, the agencies involved either simplified their structure (e.g., MetroCard) or integrated their fare policies (e.g., ORCA). Respondents were asked about challenges, strengths, and weaknesses in their approach to develop- ing an integrated fare strategy. The comments concerning challenges include issues with the lack of homogeneity and complexity of the business rules associated with fare policies and structures. Respondents also pointed to the variety of products and difficulties with aligning or accommodat- ing the diversity. One of the respondents observed that the fare policy should be in place prior to R es po nd en ts N o. M od es /F ar e Sy ste m N o. F ar e St ru ct ur e B us Co m m ut er B us B R T Co m m ut er R ai l LR T H ea vy R ai l/S ub w ay Fe rr y V an P oo l Pa ra tra ns it O th er MetroCard 5 1 flat flat flat flat flat (aerial tram) LA TAP 6 2 flat, zone flat, zone flat flat flat M-Card (Milwaukee) 1 2 flat, zone Gateway 4 3 flat, zone flat flat, zone, distance CapMetro 4 1 flat flat flat flat flat CharmCard 6 2 flat zone zone flat flat, flat SmarTrip 3 2 flat distance PRESTO 7 3 flat, zone flat, zone, distance flat, zone distance flat flat, distance zone ORCA 8 3 flat, zone zone flat distance distance flat flat (street car/ water taxi) ConnectCard (PA) 4 1 zone zone zone zone Go-To 4 2 flat flat distance flat GOPass 5 1 flat flat flat flat flat flat Metro Q 4 2 flat zone flat Star Card 3 1 flat flat Hop Fastpass 4 1 flat flat flat flat Clipper 7 3 flat, zone flat zone flat distance flat flat (cable car) Ventra 2 1 flat flat Easy Card 6 2 flat flat flat zone flat flat FarePay 5 2 flat flat flat distance flat Breeze Card 4 1 flat flat flat BusPlus+ 1 2 flat, zone Source: Survey data, table format is native to Word. TABLE 5 DETAILS OF FARE STRUCTURES ASSIGNED TO MODES IN RESPONDENT COMMON FARE PAYMENT SYSTEM

28 implementation. Another respondent indicated that the costs increase when there are a variety of fare structures and products. Other survey responses included: • Lack of homogeneity in fare payment and structure when the system was launched; • Fare integration (defining concession parameters, fare payment types, transfer/co-fare rules, etc.; • Building consensus among providers on the best approach to fare policy resulting from different types of primary customers (i.e., inner-city, local route focused at [our agency] versus primarily serving the express/suburban commuter at the opt-out providers); • Complexity of business rules [one aspect of business rules related to fare policies]; • The greatest weakness is that the rules were not set in the very beginning for a unified fare payment structure across all transit agencies; • High cost (due to customization across agencies) [of accommodating differences in fare payment structures]; and • At this stage in the development, the biggest challenge has been in designing a customer inter- face that accommodates different types of fare products . . . We expect interlining to become a significant challenge from governance and technical perspectives. Easily Addressed Issues Some multiagency EFPS found that tariff and fare structures were easy to accomplish. Many of these organizations primarily offered bus services with flat fare structures and simple transfer rules. Transfers and Multimodal Coordination Discounts Coordination among agencies, particularly among organizations that had not have coordinated fare systems in a regional setting in the past, is difficult. Second-generation projects already have gover- nance rules and integrated fare policies defined. The survey asked respondents for information on transfer polices among modes and agencies: types of policies/discounts, who is authorized to make policies, special rules, and non-traditional multimodal partners (e.g., parking, tolls, and mobility services). The responses to the survey questions are discussed in this section. Transfers and Discounts Discounts may be offered to customers based on reasons such as rider class, free or reduced transfers fees, etc. About half the respondents offer discounts for numerous reasons (Figure 8). The types of discounts that are offered may be by: • Rider class (seniors, ADA customers, veteran, youth) • Linked trips capped for the highest fare • Transfer rules between agencies (based on transit agency agreements) • Transfers from bus to rail and rail to bus • Free or reduced transfers to bus (from express buses, subway, or other local bus service) • Transfer credits applied to subsequent legs of customer journey. FIGURE 8 Response when asked about discounting transfer between modes (sample size = 17, yes = 8, no = 9).

29 Common Set of Fare Rules Respondents were also asked if there are a single set of rules which agencies participating in the multiagency EFPS follow (Figure 9). A majority of the respondents (63%) that there is a common set of rules. Special Transfer Rules Between Pairs of Agencies A similar question was asked to respondents about whether pairs of agencies in the system could create separate transfer policies (Figure 10). To this question, respondents said that agencies were not allowed to create their own rules (71%). Many systems that responded they were able to created their own rules, then qualified their comment with a statement such as: • Each agency has their own passes and rules on how it is used. • Coordinated fares, time-based transfers and directional transfers. • Transfers are determined by the individual agencies. Example: Low income fare transfers are allowed between three agencies. There is a 2-hour window between agencies with the exception of the . . . ferries. • Different pricing occurs for transfers. Our system allows different fares and reduced fare rules for each agency. • Special rules apply to [t]ransfers between [specific] agencies. Transfers Between Transit and Non-Typical Transportation Services Respondents were asked about whether they provide transfers or discounts between transit and non-typical transportation services such as tolling, parking, or on-demand mobility services such as ride-hailing, car-sharing, or bike-sharing providers. At the time of the survey, very few multiagency EFPS provided transfers or discounts with non-typical partners (Figure 11). Only one agency indicated that it offered discounts. At three WMATA parking lots there are non-rider fees attached; users must have a rail transaction to pay the base fee or otherwise be charged a higher fee. This practice is designed to discourage using the lot for other commercial parking. FIGURE 9 Response when asked if there are a common set of fare policy rules in the system (sample size = 16, yes = 10, no = 6). FIGURE 10 Response when asked if pairs of agencies can create transfer rules (sample size = 17, yes = 5, no = 12).

30 Fare Rider Categories Respondents were asked about the rider categories they support. In multiagency systems, definitions of senior, student, youth, and low-income riders may be inconsistent. The metropolitan New York region has been trying to consolidate its rider categories for many years. This is difficult when the definition of a child ranges in age from 3 to 11, and may also include a height restriction, as documented in a study by New York State Department of Transportation (Okunieff 2010). Figure 12 represents responses on the question of rider categories. All systems support regular riders (100%), most include seniors (95%) and discounted riders such as ADA, students, and youth (87%). (Seniors may be included among the discounted riders and vice versa.) Responses to “Other” included college and secondary students, youths, low-income passengers, children, and other insti- tutional categories. Fare Products and Media The approach to defining fare product and media differ in this report from other TCRP reports. Previ- ously, products and media were not explicitly separated. As these multiagency EFPS and worldwide standardization efforts have matured, industry understanding of the relationship between products and media has also been refined. As noted in the discussion on the ISO Interoperable Fare Management System (IFMS), architecture separates products, applications, and media (ISO 24014, 2014). Media are physical instruments that contain applications and products. An application on a smart card or mobile device performs func- tions such as encrypting/decrypting data, loading or using a product (e.g., adding/deducting value), validating fare product rules, or transmitting product information. Fare products may be single use, period passes, stored value, or other. FIGURE 11 Response on transfers between transit and non-traditional transportation services (sample size = 18, yes = 1, no = 17). 100%, 22 86.4%, 19 95.5%, 21 45.5%, 10 0 5 10 15 20 25 Regular Discounted Senior Other - Write In (Required) FIGURE 12 Response on rider categories (sample size = 22).

31 The fare product is controlled by a set of rules that defines who, when, where, how, and how often access to service is allowed or concisely denoted as “access rights” (ISO 21724-1, 2016). For example, rules may define rider category and multiple riders, allowed transfers, and even usage such as fare capping. On the other hand, product sales methods (e.g., the number of purchased products, location of purchase) are differentiated from product type (the services that allowed by the product holder). The distinction is between payment method versus rights inherited by presenting or possessing the product—i.e., access to local bus or subway or transfer to any transit service of a certain ride value. Payment method may change the cost of the product; prepaid may be cheaper than paying on board, and bulk buys (multiple tickets) may be cheaper than single use. In light of these definitions, respondents were asked about the fare products and media that are used in their multiagency EFPS. They were provided with a list of fare products and media to choose from. Their responses are described in this section. Fare Products Respondents were asked about the types of fare products they offer. The product types included: single use, period pass, stored value, restricted pass, and other. In addition, a product rule—fare capping—was also included in the list. Some respondents identified other rules such as passes with restrictions (student or institutional products). As shown in Figure 13, all systems support pass products (100%), most offer single use products and stored value (86%). Most systems have pass products with restrictions or fare rules (77%). Two agencies reported that they have fare capping rules while one system indicated that it will apply fare capping rules by 2017. Other products include bulk passes and multi-ticket passes. These product results show significant differences from the TCRP Report 94 study, which despite not counting the number of pass products offered by agencies, did point to this as a trend (Multisystems Inc. et al. 2003). The report also identified that the new media facilitated the use of stored value; however, 86.4%, 19 100%, 22 86.4%, 19 13.6%, 3 77.3%, 17 13.6%, 3 0 5 10 15 20 25 Single use Period pass Stored Value Fare capping Instuonal pass with restricons (school, event) Other - Write In (Required) FIGURE 13 Response to available fare products (sample size = 22).

32 the research did not anticipate the adoption of fare capping. Fare capping rules are typically applied as back office processes and are difficult to implement in a card-based system. Fare Media Respondents were asked to select the media types that are used by their system. They were also asked if the media is reloadable. Media type selections included: • Limited use media (LUM)—paper cards such as MiFare Lite • Smart cards (based on ISO 14443 a/b) • Bank cards (credit/debit/prepaid) • Mobile device (using NFC or using a bar code) • Printed bar code • Other. New forms of fare media are emerging in the marketplace, not least of which is a mobile ticket which is transmitted through NFC or displayed as a bar code. NFC and bar codes represent applications that encode a link to the fare product or represent a ticket. Closed-loop media such as contactless smart cards (based on ISO 14443a/b and limited use media) also contain applications that encrypt the identification number and data stored on the card. Open payment systems using bank-issued contactless cards have encrypted identification numbers that are validated through the banking network. Banking standards are moving toward Euro-Mastercard-Visa (EMV) conformance specifications, and this move may impact the approach used by open payment systems. Several agencies are beginning to adopt EMV bank cards for payment in open payment systems; see chapter six for more information on open payment systems. Results of the survey question are listed in Table 6. Although many systems only support one media type (27%), a majority of systems offer two or more media types. Most agencies offer either limited use media (LUM), smart card, or both. For the closed loop cards (LUM and smart card), the majority (55%) are reloadable. Many systems that support a smart card or LUM are now also offering mobile fare apps, so the media types are growing rather than shrinking (see Figure 14). SALES AND PROVISIONING CHANNEL SURVEY RESPONSES Respondents were also asked to select how customers purchased products. Options included: • TVM • Sales office • Retail outlet • Web or mobile store • Monthly autoload • Reload based on trigger amount • Other. The results are shown in Figure 15. Channels described for “other” include call-in center, mobile customer service terminal, bus reload device, self-service reload machine, and transit benefits. For card-based systems, when a customer does not pay at a reload machine or TVM, the process for loading, reloading or adding value to the card is more complicated. For that reason, the survey included a follow-up question about how a fare product is provisioned to the customer media. The results showed that most smart cards are replenished through the card reader, as shown in Figure 16. When answering “other,” respondents indicated that reloads were only available at reload machines or the customer service terminals or retailers.

33 ID LUM Smart Card Bank Card Mobile NFC Printed Bar Code Mobile Bar Code Other 11 R 16 X X 17 X R 20 X R 21 X R 22 R X X 24 X R X 25 R 30 R 32 R 34 X R 35 X R X 37 X X X 38 X R 39 R 43 X X 46 R R 48 X X X X 50 R 51 R R R 52 X X 53 X R Total 17 14 5 3 1 4 1 “R” indicates that additional value or fare product may be reloaded on the medium. Source: Survey data, format is native Word table. TABLE 6 RESPONSE TO MEDIA OFFERED BY SYSTEM FIGURE 14 Number of different media types offered by each system. Sample size = 22; media is selected by, 1 type = 6, 2 types = 10, 3 types = 5, 4 types = 1).

34 81.8% 90.9% 90.9% 86.4% 63.6% 72.7% 31.8% 0 5 10 15 20 25 Ticket Vending Machine (TVM) Sales Office Retail Outlet Web or Mobile store Monthly autoload Reload based on trigger amount through account Other - Write In (Required) FIGURE 15 Response on how customers purchase products (sample size = 22). 31.8%, 7 77.3%, 17 59.1%, 13 27.3%, 6 13.6%, 4 13.6%, 4 0 2 4 6 8 10 12 14 16 18 In the customer's account On the card through tapping the reader On the card through tapping the TVM Download to mobile app Download to web app Other - Write In (Required) FIGURE 16 Response on how products are provisioned to customers (sample size = 22).