Later this year Transport for London is likely to extend contactless fares – also known as ‘wave and pay’ – to Tube, DLR, London Overground and Network Rail services.
It’s been possible to use a contactless debit or credit card to pay for your bus journey since 2012, but the system currently used is pretty limited and doesn’t support fare capping which makes it less attractive than Oyster for regular bus users.
From ticket hall to back office
This will change when contactless fares are introduced to rail services at which point the system deployed on buses will get a major upgrade, central to which is how passengers are charged for their journeys.
The current Oyster system stores your ticket type or pay as you go balance – termed ‘customer information’ in the image below – on the physical card.
When you tap the card on the reader, the computer inside must work out what type of journey you’re doing, check whether you have a season ticket, if not calculate your fare, then work out if your trip qualifies for capping and finally debit the correct amount from your PAYG balance.
This calculation has to be done every time you tap onto a bus or in or out of a station along your journey.
Unlike Oyster and the contactless system currently used by buses, the new contactless system won’t debit your card as you enter and leave stations or when you board buses.
Instead the card reader will simply record that you’ve tapped in or out and pass that information to TfL’s central IT system – dubbed ‘the back office’ – which will collate details of your journeys throughout the day and charge your card overnight with the total fare due.
As part of the fares calculation, the system will try and autocorrect for any missing taps by working out the possible interchanges or using details of previous trips between the same starting point and destination.
This means fewer customers should be charged the maximum daily fare for having an incomplete journey and so should reduce the need for TfL to process refunds.
Passengers will still be able to check their journey history online and any system added tap ins or tap outs will be highlighted so that they can query any incorrect assumptions.
A new payment model
Normally retailers are required to charge a card at the time a customer buys a product or service but when paying for lots of journeys this would generate a succession of individual charges on the passenger’s card and make it harder to support capping.
To be able to record where cards are used and then store that information for later use, TfL has worked with the card issuers to develop a new payment method known as the Transit Transaction Model.
This permits TfL to process what are known as ‘zero value transactions’ – transactions in which no money is actually taken from the card – in order to capture journey details for later billing.
At a briefing on Monday, TfL Director of Customer Experience Shashi Verma said the card industry were so happy with TTM that they’ve mandated its use across Europe for any transit organisations wanting to accept contactless payment.
This is potentially very good news for London farepayers because the software used to power TfL’s new contactless system has been developed entirely in-house.
TfL say this allowed a more flexible and responsive approach than using contractors who’d seek to charge for every change and meeting and that the £11m price tag compares favourably with the £35m-£60m which the commercial sector would have wanted.
This gap in costs makes London ideally placed to sell its software to other cities, with Verma suggesting the entire development costs could be recouped through commercial exploitation.
As with other commercial revenue, any money raised from software sales would be reinvested in the transport network and could be used to reduce future fares increases.
It’s not just cards
While the system will initially be used to accept contactless card payments, TfL says the way it’s been developed means it can be easily adapted for other schemes.
Although users will use a credit or debit card to tap in an out, the information sent to the back office converts the card details into a virtual ‘token’ – a unique identifier which will always be associated with that card.
The back office part of the system can just as easily assign a token to a car registration number captured by cameras, opening the possibility of TfL and other cities using it to power congestion charge schemes.
For the past couple of months I’ve been one of 5,000 people taking part in a trial of the new system.
During this time I’ve become a big fan of not having to manage a PAYG balance on a separate card or having to visit a station to collect an online top-up and having already had one missed tap scare it’s reassuring to know the system will default to assuming my honesty and bill me only for the journey I’ve done.
TfL say customers will only ever pay the lowest fare for their journey but to get the best overall value and benefit from capping they’ll need to ensure they don’t use different cards on different days.
If you do have to change cards – perhaps because you’ve lost the original or it’s expired – you’ll be able to contact TfL and claim a refund for any capping entitlement you would otherwise have accrued.
What about Oyster?
Despite occasional Mayoral claims to the contrary, Oyster will remain a key part of London’s fares system.
Not everyone will be eligible to have a contactless payment card and some will prefer not to use them, either for privacy or security reasons or because they’re an international visitor and want to avoid being hit by foreign transaction fees by their bank.
So an Oyster branded card will continue to exist, but at a future date it’s likely that cards will stop holding credit balances and journey billing will move to the new back office system described above.
TfL seem to have pulled off a rare thing – a public sector IT project that works and one which could see the capital undercutting major companies to become the ‘go to’ provider for smart ticket billing software.
Having used the system it seems quicker and easier than Oyster and I can’t imagine moving back to Oyster with its fiddly top-ups and the risk of running out of credit.
But for all the obvious and understandable pride at TfL HQ, and despite all the talk of London being a global trendsetter, the extension of contactless payment to the capital’s rail services was supposed to take place in financial year 2012/13.
So they’re seriously behind where they predicted they’d be by now.
Yet the customer benefits are sufficiently obvious that TfL have a good chance of making up for lost time and seeing contactless quickly move from a handy fallback when the Oyster balance is depleted to the payment method of choice for large numbers of commuters.