Public transit smart cards may be a catalyst

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By: Wise Marketer Staff |

Posted on October 24, 2003

Public transit smart cards may be a catalyst for cross-industry payment and loyalty programme opportunities, according to a new white paper from the Smart Card Alliance (SCA).

Many programmes are already underway with major transit operators throughout the United States to implement contactless smart card-based fare collection systems. But this trend may be a catalyst that creates new collaborative opportunities between transit operators, the retail payments industry, and other sectors.

The SCA's new white paper, Transit and Retail Payment: Opportunities for Collaboration and Convergence, examines the business interests and technological foundations that will have to be aligned to capitalise on those opportunities.

Increasing popularity
Smart card technology is rapidly becoming the standard for new automated fare collection (AFC) systems because it meets the customer's need for quick entry and exit, ease of use and convenience, and it delivers a number of operational advantages over traditional ticketing methods.

"Smart card infrastructure is going in all across the country, and three years from now millions of public transit riders will be carrying contactless smart cards," said Greg Garback, executive officer for the Washington Metropolitan Area Transit Authority's department of finance. "And SCA's working group decided to look ahead and see what broader opportunities might come from this new payment card in the hands of millions of Americans."

Many transit authorities in the US appear to want to replace old ticketing systems with smart card-based systems. Of their entire operation, the customer interacts most with the ticketing system, so transit executives want the fare card to be something that can offer enhanced customer service and even attract new riders. "Contactless smart cards presented the ideal solution," said SCA executive director, Randy Vanderhoof.

Smart payments and loyalty
To date, more than 17 million smart cards have been issued for use as payment cards in the US, with recent initiatives focusing on loyalty applications and contactless cards in trials. Furthermore, the smart card industry has quietly enhanced many of its payment transaction processing and card issuance systems to help lay the foundation for the evolution to standards-based smart bank cards.

The white paper presents the state of the industry from both the transit and retail payment viewpoints, examining the opportunity to converge on a common card for transit, retail payment, loyalty and other applications. The paper also identifies and explores the technical and commercial considerations that need to be addressed to make such a scheme a reality. Profiles of numerous implementations and research from relevant studies are also included.

Individuals from 13 organisations were involved in the development of the white paper, including Cubic Transportation Systems, Inc., Datacard Group, EDS, ERG Group, First Data Corporation, IBM, Infineon Technologies, MasterCard International, Smart Commerce, Inc., Vivotech, US Department of Transportation/Volpe Centre, and Washington Metropolitan Area Transit Authority.

The report, aimed at executives and managers, has been made available for free download from the SCA's web site.

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