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EMV in public transport: Need and benefits [free access]

September 1, 2014

EMV is the technical standard that ensures chip-based payment cards and terminals are compatible around the world. The term refers to Europay, MasterCard and Visa, the three organisations that originally developed the specifications in 1994. The EMV standard is currently managed by EMVCo LLC, which is equally owned by American Express, JCB, MasterCard and Visa. EMVCo and the specifications can be found at www.emvco.com.

 

EMV is more than secure retail payments. It opens the door to a range of innovative secure payment and identity solutions across multiple platforms, whilst offering widely available and low-cost infrastructure through which to deliver complementary services. There is no need for expensive infrastructure to reload the cards as the information is held in a central account and not locally on the cards.

 

EMV provides the following functional capabilities:

 

 

Use in public transport

 

Public transport operators are keen to maximise revenues and generate increases in ridership by making fare payment simple and convenient for passengers. Several technologies exist that can be used in automatic fare collection (AFC) systems, ranging from paper tickets, smart cards, mobile phones and identity (ID) cards.

 

Transaction speed and customer convenience are priorities for public transport operators. With the introduction of contactless payment cards by banks, transit authorities are finding it attractive to adopt EMV-enabled bank cards in an open payment system whereby the cards are directly used for fare payment. This improves passenger convenience and reduces the card-issue and management cost for transit authorities.

 

‘Pre-issued’ media such as bank credit or debit cards make use of a device that passengers already carry and that is fully interoperable worldwide.

 

Once EMV technology is available to transit operators, a number of model options become available to meet fare policy requirements. For example, machines can be installed on buses to authorise simple and fixed fares against the balance on the card. Conversely, complex transit agencies can use the authenticated tap as an ID and perform delayed online authorisations and aggregations.

 

Benefits

 

The primary benefit of the card-based mode is to operate completely offline. The reader and middle-office models can also work offline but they may need occasional network access to pass data, such as hotlists to manage fraud and payment card authorisation requests.

 

The introduction of payment cards helps transit authorities save costs by eliminating the cost of issuing cards as well as issues raised around the management of a proprietary system. The payment processing fee is passed to the transit merchant through the acquirer.

 

Working of EMV payment system

 

An EMV payment system uses a microprocessor embedded in a plastic card or a mobile device to connect to an EMV point-of-sale (POS) via a contact or contactless interface. The chip securely stores information about the payments application and performs cryptographic processing. This provides an additional level of card authentication, which validates the legitimacy of the payment type being used.

 

Any organisation considering deploying EMV infrastructure should consider how its products will be used in the POS, in ATMs, at kiosks and through mobile phones, set-top boxes, and personal computers (PC).

 

The three key areas to consider when designing new ticketing infrastructure include:

 

 

In the spring of 2011, Visa issued a road map for the US adoption of a smart card-based payments ecosystem. Since then, the other three major US payments networks have followed suit. These road maps provide milestones for merchants, acquirers, and processors along with dates on which these milestones are expected to be met.

 

Transaction models

 

The operator can choose to use the card to collect a payment at the ‘point of tap’ or sometime later. In this case, a new ‘middle-office’ infrastructure collects the taps and charges an ‘end-of-day’ amount.

 

In smart cards based on MIFARE technology provided by NXP Semiconductors, the card is the primary device and shadow data is maintained in the back office. In this case, all tickets and value are held on the card and the fare calculation is carried out by the reader at every tap.

 

With the use of payment cards, two basic transaction models are available:

 

 

Reader certification

 

For handling payments data, the Payment Card Industry Data Security Standard (PCIDSS) must be considered. Payments data cannot be held or transmitted in a format that would allow it to be intercepted in plain text form. The most secure method for securing compliance would be to encrypt all transactional data at source before it is stored and transmitted.

 

Reader design is critical to the successful implementation of any new fare media. The reader is required to support numerous applications, so the software for each one – be it card detection, payment card applications such as Visa, MasterCard, American Express, Discover or a proprietary application – should be developed and installed separately (this is similar to loading applications onto a mobile phone). Otherwise, changes to one application could result in a need to retest the complete reader.

 

The high cost of reader certification is the reason developers seek to minimise the number of times the reader is submitted, both initially and when changes are made to specifications and code.

 

There are many challenges in implementing readers that are capable of accepting cards from several schemes as contactless EMV is introduced and older technologies are phased out. Developers need to prototype the system and test the more complex processing that the reader must undertake. This includes activating the card, selection of the correct application, deny-list processing and other management processes required to meet PCIDSS.

 

Conclusion

 

The key to successful development is the ability to have standardised and interoperable transport applications. As the convergence of payment methods begins, bringing together payment card schemes and transport operators, there are many institutional issues that need to be addressed. But in the long term, convergence is expected to benefit all stakeholders and passengers.