A Guide to Fare Payments-as-a-Service for Public Transit

A Guide to Fare Payments-as-a-Service for Public Transit
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Masabi

A Guide to Fare Payments-as-a-Service for Public Transit

Why Agencies and Operators are Moving to Fare Payments Platforms

Selecting the Right System for Your Agency

The Ticketing or Fare Collection industry, has not dramatically changed in decades. Of course, new ticketing channels have come onto the market and had a significant impact, one of these, mobile ticketing, Masabi pioneered. Now we are helping agencies enable Mobility as a Service (MaaS) and moving them to Account-Based Fare Payments, so passengers no longer even need a ticket or to understand fares. Instead, they just tap and ride using a contactless bank card, mobile phone or smartcard.

Around the globe the Software as a Service (SaaS) delivery model has revolutionized industries, bringing leading solutions to companies of all sizes, quickly and cost-effectively. We expect software to be available on a PAYG basis, to update and improve all the time and to have the flexibility to move provider if we are unsatisfied with the service we receive.

However, this trend has not taken hold in the Fare Collection industry (mobile ticketing aside), which is still dominated by Automated Fare Collection (AFC) providers offering bespoke and customized solutions which agencies purchase and are stuck with for years (sometimes decades) using a Design, Build, Operate, Maintain (DBOM) model.

There are now multiple ways agencies can deliver fare collection technology. These factors are rarely discussed, as until recently there was not really the option to deliver core ticketing services via a Fare Payments platform. However, today this is no longer the case, so it’s important to understand the different ways technology can be delivered to agencies, as well as the benefits and drawbacks these bring.

Design Build Operate Maintain (DBOM) Automated Fare Collection Deployments

A Design Build Operate Maintain approach to delivering a new fare collection system to an agency does exactly what it says on the tin. Each agency has to invest time and money developing what they need, and engage a supplier to build a system for them, in order to meet strict and detailed specifications set out in the agencies RFP. Then the system needs to be operated and maintained usually for a significant amount of time.

With a Design Build Operate Maintain model for system delivery, each agency purchases its own solution to fit bespoke specifications, often using bespoke software and hardware. As a result, these systems are expensive to build, maintain and update. This model comes with characteristics which we believe are no longer necessary.

  • Bespoke Technology – Agencies pay more for their own bespoke system that is required due to the way it is procured. As a result, it’s expensive to maintain and update.
  • Lock-in – With DBOM Bespoke AFC systems you have a solution which is extremely expensive to deliver forcing agencies to use it for years, effectively trapping them until the contract is over (or even longer than that).
  • Legacy Procurement – Complex, detailed and prescriptive procurements result in a bespoke and complex solution which is harder and more expensive to set up, operate and maintain.
  • High Risk – Building a new system every time is far riskier than using code that is already proven and works.

These bespoke AFC projects deliver systems that become outdated far too quickly. There are a number of problems agencies face when purchasing and procuring systems this way. These include;

  • Expense – Agencies are overpaying unnecessarily for fare collection by buying bespoke technology. They are expensive to set up, maintain and update. For agencies around the globe it is common for 10-25 pence of every pound spent on a ticket to go into paying for the ticketing system.
  • Slow to Deploy – Fare collection deployments using bespoke technology can take years (and sometimes never even go live), meaning new ticketing technology for passengers takes far too long to get into people’s hands.
  • No Updates – When you have your own bespoke system, whether that be using infrastructure which is hosted on-premise or via an AFC provider, the software stays the same and doesn’t benefit from regular updates, unless a significant amount of time and money is spent upgrading it, as each legacy deployment is its own instance.
  • Closed Solutions – Bespoke systems tend to be closed in nature and unable to link with new systems and services (without incurring expense). This locks out agencies from new innovations and services for riders.
  • Not MaaS Ready – Without serious investment, these systems are not able to enable MaaS for public transport through Practical MaaS or Account-Based MaaS.

Subscribe and Go Fare Payments-as-a-Service (FPaaS) Deployments

The ticketing industry is changing as more agencies move away from physically needing to issue tickets, to the convenience of using mobile phones and contactless bank cards, allowing riders to simply tap and ride. The future of ticketing is not about tickets anymore, it’s about fares and payments using an account-based back office and the fare payments movement is leading this change.

Fare Payments-as-a-Service (FPaaS) offers a better approach to providing fare payment services for agencies. Instead of needing to run a DBOM project, agencies and operators can sign up to a Fare Payments platform and pay for services on a pay as you go/subscription basis. This enables agencies to deliver the latest ‘tap and ride’ innovations to riders extremely quickly and grow capabilities as they get released onto the platform. There are a number of Fare Payments platform characteristics which are important to mention;

  • Subscribe, Go and Grow – Agencies can subscribe to a fare payments platform taking the complexity out of buying, managing and updating their fare collection system. Agencies can be live with a proven platform in weeks and grow capabilities as the service expands.
  • Software as a Service Platform – Each agency uses the same platform configured in different ways for different agencies needs, meaning the system is far more cost-effective, as well as being quick to deploy and constantly being updated.
  • Reduced Risk – When deploying a platform you know it will work as the code is proven and the infrastructure delivered through world class cloud-native suppliers.
  • Needs/Outcome-based Procurement – By buying technology based on the outcomes not prescribing the solution or asking transit agencies to be a system designer, you can leave this to the vendor and purchase technology that helps you achieve the results you are after, holding vendors to outcomes using KPIs.
  • Off the Shelf – By using off the shelf hardware agencies are able to operate a rip and replace maintenance model which means validation purchase and maintenance costs are reduced.

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