FYI | Aug 24 2022
Achieving Mobility as a Service (MaaS) is a lot more complex than everyone realises, explains Arthur D Little's Mickael Tauvel. Is account-based ticketing (ABT) the pragmatic solution?
By Mickael Tauvel, Arthur D. Little
Mobility as a Service (MaaS) is an ambition that most cities, public transport authorities (PTAs), public transport operators (PTOs), and private mobility solutions providers (MSPs) are keen to deliver on. However, the complexity of current transport infrastructure is high. In an ecosystem with numerous actors, each generally with different IT backends in place, it is often difficult to work out where to start.
The ability to provide integrated ticketing is a key prerequisite for the roll-out of MaaS. To overcome complexity issues, account-based ticketing (ABT) represents a pragmatic option going forward and will be a key factor in accelerating MaaS deployment around the globe.
Issues with existing AFC systems
For the last quarter century, contactless smartcards have reigned supreme as a means of paying for public transportation. They are quicker than previous ticketing systems, offering a better customer experience and more flexibility than paper tickets, thus making them more desirable to stakeholders.
However, automated fare collection (AFC) system deployments are long and costly. In essence, they are complex, distributed IT systems where years can pass between tendering to operation. This has resulted in a market-driven, bespoke approach as the norm. As such, and due to a lack of standardization, AFC generally relies on the long-term capability and solidity of a prime supplier.
Suppliers often develop their own system, software, and hardware architecture. But solutions are often reused from an initial baseline via a cut-and-paste approach, without sufficient funds to improve architecture flexibility and maturity. This has led to the predominance of monolithic solutions, where subcomponents overlap within a complex integration that has been designed by outsourced contractors.
Interoperability is also a problem, for both operators and transport modes. The main issue worldwide is that most contactless smartcard-based AFC systems are heavily siloed. They lack data interoperability, with each having its own fare media with specific, local rules.
Open-loop Vs closed-loop payment
To reduce the cost and complexity of maintaining siloed AFC systems, and also improve customer experience, industry players have been pushing EMV open-loop payment as a way of replacing current contactless smartcards. EMV open-loop payment enables people to pay for travel with bank-issued contactless credit and debit cards or smartphones, just like they do when purchasing items in stores.
However, it’s generally accepted that current payment media i.e. closed-loop systems, will be around for years. Closed-loop systems safeguard the independence of PTAs/PTOs and offer more flexibility to adjust seasonal tickets. Plus, there’s the need to address inclusivity objectives, with PTAs/PTOs responsible for population groups without smartphones or bank accounts, or those just unwilling to use them for travel – for example, children, nonbanking individuals, and the elderly.
The reality is that even if EMV open-loop payment becomes a strong trend, it must coexist with closed-loop solutions. Thus, there is a need to maximize legacy investment and existing ecosystems. However, running both closed- and open-loop systems often leads to an increase in operations and maintenance costs. To optimize the running of a dual ecosystem, PTAs and PTOs should consider a strategic upgrade to an ABT architecture.
The advantages of ABT
The last decade has seen an accelerating use of ABT architecture to modernize existing AFC systems through the integration of EMV open-loop payment with current ticketing models, with the ultimate goal to move towards greater MaaS adoption.
Within an ABT architecture, the fare media is used mainly as an identifier, with the actual fares being processed in the backend. Overall, this model provides many benefits:
It removes complexity from the fare media. By just serving as an identifier, the media can be simplified to a strict, secured identifier, or “token”, with a central backend system managing the fare data. Only security features that authenticate the fare media remain necessary.
It increases token choice flexibility. Removing the need to process data inside the fare media means the validation device can smoothly integrate several kinds of sensors and logic eg. NFC reader, barcode reader, Bluetooth, UWB protocol, camera etc. The ABT system can thus manage multiple tokens to compute fares.
It reduces front-end complexity. By removing a large part of fare media processing, the front-end device is less complex to develop and qualify, with a positive impact on integration and maintenance costs, along with operational efficiency.
It improves software upgrade and fare rules management processes. Traditional smartcard-based ticketing architectures require regular, time-consuming updates of business parameters. Reducing the number of parameters improves reliability. In addition, centralized fare processing facilitates and accelerates parameter updates while enhancing promotional fare capacities.
It improves capabilities for upgrades and scaling. ABT architecture exchanges data via APIs. With front-end hardware less of a limitation, upgrading processing capability and adding features is much easier. In addition, sales channels can be managed with a centralized server, connecting sales machines, web portals, and mobile applications for improved customer experience.
Real-time integration of data. An API-oriented architecture means the system can connect to others with greater ease. Fare processing can be enhanced with additional services, such as real-time travel notifications, journey optimization, disruption management, carbon footprint tracking etc. It can also be used to enhance loyalty programs.
The core vision of MaaS is to provide customers with outstanding travel experiences and frictionless journeys i.e. not worrying about fare product or selection, thus encouraging them to use public transport and more sustainable mobility systems, while steering them away from regarding individual cars as the default mode of travel. The numerous benefits to PTOs, PTAs and MSPs enabled by ABT architectures are key to the MaaS vision becoming a widespread reality.
Mickael Tauvel is a Principal and Global Head of Mobility Competence Center at Arthur D. Little.
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