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TfL set to extend Cubic’s contactless fares licensing deal after netting £15m in royalties in just two years

October 11, 2018 - Martin Hoscik@MayorWatch

The roll-out of contactless fares systems to cities around the world has netted London taxpayers £15m thanks to Transport for London’s licensing deal with payment solutions provider Cubic.

In 2016 the two organisations announced a five-year, non-exclusive deal which entitles Cubic to include software developed in-house by TfL as part of the contactless ticketing systems it provides to other transport operators.

TfL took the decision to develop its own software after an assessment of commercial offerings concluded that no off-the-shelf package would provide the flexibility needed in a city where the Mayor can annually adjust the level of fares, as well as introduce new ticketing products.

The system automatically calculates the lowest fare for the customer’s total journeys throughout the day, billing them a single fare at the end of the day. Fares are also capped throughout the week, ensuring passengers get maximum value without having to buying a travelcard.

And, unlike Oyster there’s no need for passengers to manage a separate card, making it quicker and easier to travel.

More than one billion journeys have now been made using contactless and London’s adoption of the technology has been cited by the banking industry as a key driver of consumer take up and acceptance of it.

Initially compatible only with debit and credit cards, TfL has since upgraded the system to work with smartphones and watches, allowing passengers to pay using Apple Pay and Google Pay.

In the two years since signing its licensing deal with TfL, Cubic has won contracts to upgrade ticketing systems in Brisbane, New York and Boston, all of which will see it deploy elements of Transport for London’s code.

The firm’s success means that TfL has already received the maximum £15m payable under the deal and managers are now seeking board approval to extend the tie-up so that the agency can earn additional royalties.

A paper requesting formal approval will be submitted to the board’s finance committee next week.

The value of the potential extension has yet to be published due to commercial confidentiality but it’s understood that the £15m received to date covers a significant portion of TfL’s initial development costs.

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