Operators Are Poised To Reap Smart Card Benefits

International Railway Journal, Feb, 2000 by Trevor Crotch-Harvey

Hong Kong's Octopus system, covering the metro, commuter rail, light rail, and buses, demonstrates the system's multimodal scope (see following article). Several operators share revenue and were able to cooperate in the implementation, which in turn led to increases in personal convenience and ridership. Since the system was implemented more than two years ago by the ERG Group, a total of 5.9 million contactless smart cards have been issued and the system processes more than 4 million transactions every day.

The San Francisco Bay Area's implementation of TransLink--the largest smart card contract awarded in the United States to date--demonstrates the trend towards outsourcing. The 26 operators commissioned the ERG Motorola Alliance, the smart card AFC provider, as the collection agent.

A new contract calls for Amtrak and Motorola to test two smart card applications. In one pilot project, frequent users of the new Acela Express travelling first class will be able to use the Motorola M-Smart smart card as an e-ticket. In the other pilot, the smart card will be used to track on-board meals on Amtrak's long-distance trains. The results of the pilots will enable Amtrak and Motorola to refine the requirements for a larger scale rollout of smart cards.

One important capabiliry of smart cards is multi-applications. This underlying technology allows several applications to reside in the card, thereby increasing utility and acceptance to the consumer. The original fare collection applications are likely to expand first to include mobility-related applications such as parking, and later city applications such as an access card for city services, electronic purse applications, and private loyalty schemes. In fact, any application that makes commercial sense to the partners could be placed in the card, creating a world of business possibilities.

The transport industry's rapid deployment of contactless cards, coupled with its large urban rider base gives the industry an inside track in the future evolution of smart cards in other industries. One important opportunity is to work with the new financial smart cards that are in various stages of development around the world. One technology issue that had to be tackled is to couple contactless transit technology favoured by the transit industry with a contact chip favoured by the financial industry. To bring these two worlds together Motorola has developed the M-Smart Venus dual-interface platform, a single chip with both technologies. This means a bankcard can operate using the contact feature with insertion at ATM's or merchants, and the same card can operate in a contactless way in rail and other transit systems.

With these technical barriers eliminated, new forms of partnership become possible between financial card issuers and transit operators. In many markets, transit systems will probably be fully deployed before financial systems, giving rail and other operators a base of cardholders that would be attractive to financial institutions.