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NFC-based Mobile Ticketing: Key takeaways from the VISIONFC Transport Summit [free access]

July 1, 2017

NFC Forum organised the VISIONFC Transport Summit on June 20, 2017 in Ho Chi Minh City, Vietnam. The half-day summit featured presentations and a moderated discussion on the use of near-field communication (NFC) technology in mobile ticketing and public transportation, with focus on Asia. The summit was well attended by public transport operators and associations, mobile network operators, systems integrators, government officials, technology providers, etc. The key takeaways from the summit are noted below.

 

Adoption of NFC

 

Alexander Rensink, Co-Chair, NFC Forum gave an introduction to NFC Forum activities in the transport market and major milestones. The NFC Forum stands for the open and interoperable implementation of NFC technology. It empowers organisations to deliver secure, tap-based interactions that provide an intuitive, reliable experience to users around the globe. The NFC Forum represents chip vendors, payment service providers, smart phone manufacturers, mobile operating system providers and 150 member companies.

 

There are approximately 2 billion smartphones in the world that read NFC Tags anytime and anywhere. In near future, consumers will see an explosion of NFC use in the Internet of Things, retail, automobiles and public transportation.

 

By 2020, 2.2 billion of NFC-enabled handsets are expected to be shipped. Further, the rate of NFC adoption across all handset original equipment manufacturers (OEMs) and covering all operating systems is expected to reach 72 per cent by 2020, up from 52 per cent in 2016 and 18 per cent in 2013.

 

Figure 1 depicts the real and expected growth in global shipments of cellular handsets and NFC attach rate over the period 2014-2020.

 

Figure 1: Global shipments of cellular handsets and NFC attach rate (million units)

  gmt1_420_01

Source: IHS, Markets and Markets, Strategy Analytics, Juniper

 

The mobile ticketing market is expected to grow at a compound annual growth rate (CAGR) of 16.71 per cent during 2017-2021. The growth drivers will be:

 

 

The NFC Forum public transport RF interoperability initiative aims to accelerate the implementation of NFC-enabled mobile ticketing. Its areas of focus include market feedback and technical specification alignment.

 

Ticketing trends in Asia Pacific region and opportunity for NFC

 

Namrta Bangia, Associate Director, Global Mass Transit spoke about transport and ticketing trends and outlook in Asia. Some of the key public transport trends include:

 

 

Globally, there has been an increase in the uptake of electronic ticketing and the trend is similar in Asia. Cities with well-developed public transit systems are switching to advanced ticketing options for greater customer engagement and operational efficiency. Cities with new systems underway are directly adopting off-the-shelf products for the deployment of electronic ticketing. 

 

Global Mass Transit Research analysed fare systems in 105 cities. Of these, 26 cities have deployed integrated NFC technology in mobile phones and 21 cities have deployed mobile point-of-sale solutions (mPOS). Europe leads the way, followed by North America. The market in Asia Pacific has a lot of growth potential. Of the 27 major cities analysed in Asia, 10 use mobile ticketing (NFC-based and mPOS based).

 

Figure 2 depicts the public transport ticketing trend in Asia for 27 cities.

 

Figure 2: Fare media in 27 cities in Asia (2015-16)

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Source: Global Mass Transit Research

 

Some of the upcoming trends include the following:

 

 

Despite these opportunistic trends, firm plans for deployment of mobile ticketing are limited in scope and hence there is huge unexplored opportunity for the deployment of NFC in Asia Pacific.

 

Experience in Singapore

 

Kelvin Lim, Senior Manager and Assistant Chief Specialist, Land Transport Authority (LTA) spoke of the challenges in the deployment of NFC for mobile ticketing, with the example of Singapore.

 

The existing mass rapid transit (MRT) network in Singapore spans 200 km. The city-state reports 3.2 million daily trips on the MRT and LRT network. Figure 3 depicts the upcoming MRT network.

 

Figure 3: Singapore MRT expansion plans

  

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Source: Presentation by Kelvin Lim, Senior Manager and Assistant Chief Specialist, Land Transport Authority at the VISIONFC Transport Summit

 

Singapore launched the first account-based ticketing system in Asia. The MRT system uses contactless credit and debit cards with EMV chips to pay for bus and train rides.

 

The benefits for commuters are:

 

-          No top-up required

-          Pay-as-you-go

-          No need for a dedicated travel card

-          Easy self service

-          Convenience for tourists.

 

The benefits for the transit industry include:

 

-          Reduced top-up infrastructure

-          No card issuance cost

-          Flexibility and faster turnaround time for implementation of new fare policies

-          Operational cost savings.

 

Singapore has piloted NFC-based mobile ticketing in collaboration with telecommunication companies and EZ-link. There are more than 30,000 acceptance points across the island. The deployment of NFC in mass transit necessitates high performance, high reliability, ability to cope with passenger flow of 40 passengers per minute and smooth passenger flow even during the peak period, etc. Table 1 provides the transit acceptances.

 

Table 1: Transit acceptance criteria

Description

Acceptance criteria

Unconfirmed transactions

<1.2%

Failure to detect CSC

0%

Card transaction time only

<140 cms

Detection range

0 to 8.5 cm

Source: Presentation by Kelvin Lim, Senior Manager and Assistant Chief Specialist, Land Transport Authority at the VISIONFC Transport Summit

 

Singapore’s experience reflected that for approved cards, the effective maximum range was up to 10.5 cm with no failures; for newer handsets the effective maximum range was up to only 4 cm; and for older handset effective maximum range was up to just 2.5 cm.

 

The areas of concerns that emerged during the pilot are noted as follows:

 

-          Increase in waiting time

-          Variation in transaction time based on several factors including the Java platform, key length and user interface.

-          Involvement of too many stakeholders

-          Need to accept of many types of e-wallets and options (eSE, NFC SIM, HCE)

-          Differences in performance among handsets

-          Slow performance (< 1 second transaction time)

-          Gate freeze, handset freeze and few rejections

-          GTMs display intermittent error message

-          Problem of handsets hanging user interfacing device or themselves.

 

Experience in Hong Kong


Sammy Kam, Technical Director, Octopus Cards Limited spoke of Octopus’ journey into the mobile world. Octopus Cards Limited processes 14 million transactions worth USD24 million daily. There are more than 76,000 Octopus terminals in Hong Kong (as compared to 17,000 contactless cards terminals). Octopus card covers 20,000 retail outlets (compared to 6,800 outlets covered by contactless credit cards). Nearly 50 per cent of the Octopus payment value is contributed by retail.

 

In October 2012, Octopus Mobile App was launched. Thereafter, the Octopus Mobile SIM was launched in 2013 by Octopus, Sony and Gemalto. Octopus SIM with NFC handsets works on all 76,000 Octopus readers. Further, the online payment service was launched in 2014 and O! ePay (network-based stored value account) was introduced in 2016. 

 

There are different mobile payment options such as proximity payment, online payment and P2P payment for different customer needs. Octopus ID can be leveraged for a mobile loyalty scheme; allows remote mobile ordering with payment; and provides mobile wallet platform to manage and distribute marketing offers and mCoupons. QR Code payment for the small merchant segment is also available.

 

Mobile wallets are heating up due to:

 

-          Security concerns

-          Tipping point to change usage habit

-          Convergence of mobile payment applications

-          Market education

 

The key to mobile payments taking off are:

 

-          Customer experience

-          Value creation

-          Market confidence

-          Customer incentives

 

Experience in Japan


Hiroshi Iwamoto, Assistant Manager, IT & Suica Business Development, East Japan Railway Company (JR East) discussed Mobile Suica. The Suica service debuted in 2001 and 63 million cards are in circulation currently. Nearly 30 million transactions are made per day using Suica.

 

The Suica service started for railway ticketing but has since expanded to various services as indicated in Figure 4.

 

Figure 4: Expansion of Suica

 

gmt4_573

Source: Presentation by Hiroshi Iwamoto, Assistant Manager, IT & Suica Business Development, JR East at the VISIONFC Transport Summit

 

Ten transport smartcards were launched within 12 years of Suica’s launch and these were made interoperable by 2013. Currently, over 100 million smartcards of 142 operators are in use.

 

In 2006, Mobile Suica was launched. It can be used for:

 

-          Top-ups: It allows online top-ups by credit cards, money transfer from bank accounts, mobile network operators’ account (even over the air); in-store top-ups using cash; top-up at the ticket vending machines using cash; and automatic top-up at passenger gates at stations using credit cards.

-          Transaction history: It can be used for viewing transaction history.

-          Purchase of tickets: It can be used for purchase of commuter pass, purchase and validation of first class tickets, and reservation for high-speed rail

-          Check-in/check-out: It provides access at the ticket gates

 

JR East considers Mobile Suica to be better than plastic Suica.

 

Table 2 provides differences between Mobile Suica and Plastic Suica.

 

Table 2: Mobile Suica versus Plastic Suica

Parameter

Mobile Suica

Plastic Suica Card

Top-up

Yes

• Over the air

• Vending machine

• Retail shop

Yes

• Vending machine

• Retail shop

Automatic top-up

Yes

Yes

Commuter pass

Yes

• Over the air

Yes

• Vending machine

First car ticket on commuter trains

Yes

• Over the air

Yes

• Vending machine

Reservation for high-speed rail ticket

Yes (discounted)

No

Checking balance and transaction history

Yes

• Mobile Suica app

• PC

Yes

• Vending machine

Electric money at retail shops

Yes

Yes

Source: Presentation by Hiroshi Iwamoto, Assistant Manager, IT & Suica Business Development, JR East at the VISIONFC Transport Summit

 

The usage of Mobile Suica has increased over the years as indicated in Figure 5.

 

Figure 5: Increase in usage of Mobile Suica (2006 – 2017)

gmt5_476

Source: Presentation by Hiroshi Iwamoto, Assistant Manager, IT & Suica Business Development, JR East at the VISIONFC Transport Summit

 

JR East is keen to acquire more Mobile Suica users and introduce global interoperability.

 

Experience in the United States

 

Trevor Findley, Senior Program Manager, CH2M spoke about the experience in the United States (US). In the US, there are 6,792 transit agencies, 5,231 card issuing banks (1.1 billion cards issued and 453 million active accounts), and five mobile network operators (417 million mobile subscribers). The transit agencies vary vastly in the deployment of ticketing technology.

 

Table 3 provides information to compare the disparity in fare system technology deployment in the US.

 

Table 3: Disparity in fare system technology deployment in the US

Fare media

Category

Fare system/metropolitan area

Cash, tokens, paper tickets, magnetic tickets

Legacy systems

New York Metropolitan Transportation Authority (MTA)

First generation smartcards

First generation systems

Charlie Card (Boston), ORCA card (Seattle), Clipper Card (San Francisco), SmarTrip (Washington, D.C.), TAP Card (Los Angeles)

Contactless open payments, visual and bar-code mobile ticketing

Next-gen systems

Chicago (Chicago Transit Authority), Portland (TriMet)

Closed loop NFC

-

None

Source: Presentation by Trevor Findley, Senior Program Manager, CH2M at the VISIONFC Transport Summit

 

Most transit agencies in the US are moving towards NFC-based fare systems, but the path differs based on their current situation.

-          Legacy Systems have the most straightforward path to a Greenfield implementation

 

 

-         First-generation systems have to choose between upgrade or “burn and replace”

 

 

Agencies using non-NFC mobile ticketing can use NFC to gain the following advantages:

 

-          Efficient deployment as stand-beside solution

 

 

-          Shows innovation internally and to the public

 

 

-          Strategies for acceptance and transition vary

 

 

NFC Forum initiatives and future plans

 

Dr. Joerg Schmidt, First Co-Chair Transport SIG, NFC Forum spoke of the initiatives of the NFC Forum in the harmonisation of globally relevant contactless standards for NFC mobile devices. The NFC Forum Transport SIG coordinates transport industry stakeholders.  

 

The work of NFC Forum on interoperability has allowed: 

 

-          Harmonised specifications for NFC-interface of mobile devices and ISO-compliant public transport equipment 

-          Alignment of EMVCo standards

-          Synchronised test and certification for NFC mobile devices and public transport equipment

 

Interoperability between the mobile and public transport sectors can be established by:

 

-          Synchronising RF-interface specifications for NFC mobile and public transport devices 

-          Establishing synchronised test and certification processes for NFC mobile and public transport devices.

 

The other achievements of the NFC Forum include the following:

 

-          Completion of the technical work on interoperability with ISO/IEC 14443  by a joint working group of GSMA, CEN, public transport  stakeholders and NFC Forum

-          Acceptance of NFC Forum’s interoperability solution.

 

Figure 6 depicts the future potential activities of the NFC Forum.

 

Figure 6: Future potential activities of the NFC Forum

gmt6_586

  

Source: Presentation by Dr. Joerg Schmidt, First Co-Chair Transport SIG, NFC Forum at the VISIONFC Transport Summit

 

Conclusion


The summit provided a platform to discuss the current status of and future outlook for NFC-based mobile ticketing for public transport in Asia, which is one of the biggest markets for upcoming metro rail, light rail and BRT projects. Cities with new systems are directly deploying advanced fare collection technology and cities with legacy systems are moving towards advanced and integrated fare systems. These trends offer many opportunities for NFC technology providers; ticketing and validation equipment suppliers; mobile phone and chip manufacturers; consultants; etc. As the specifications are harmonised; ability to test and certify NFC systems improves; integration with financial industry standards is well established and turnkey solutions evolve, the adoption of NFC is expected to become more prevalent.