An Oyster Card update and a peek into the future Charles Monheim Director, Oyster Card Transport for London Smart Card Networking Forum 1 November, 2005.

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Presentation transcript:

An Oyster Card update and a peek into the future Charles Monheim Director, Oyster Card Transport for London Smart Card Networking Forum 1 November, 2005

Charles Monheim1 Presentation Outline Status of smart card ticketing in London Key developments Looking ahead Questions and answers

Charles Monheim2 Status of smart card ticketing in London Implementation phase completed successfully –No delay or disruption claims –new and innovative products introduced and marketed 50% of Tube and bus journeys now made using Oyster –all weekly and longer period Travelcards –all Freedom Pass holders –450,000 pay-as-you-go journeys on an average weekday 2006 fare proposals encourage customers to switch to Oyster –up to 50% off single journey price –daily price caps set 50p below one-day Travelcards

Charles Monheim3 New developments Daily price capping Weekly Travelcards sold only on Oyster Time of day pricing Auto-top-up Instant tickets on-line or by phone e-money

Charles Monheim4 Our initial premise – Oyster could became Londons way to make low- value payments Hypothesis: Octopus in Hong Kong is a model Oyster is attractive to merchants who need fast transactions & who dont like credit/debit cards TfL could fees if Oyster were the widely-adopted standard for low value payments W I D E R E C O N O M Y Parking Fast food Pubs & bars Groceries

Charles Monheim5 We were right but the market is getting crowded – the payments industry sees potential too and has already developed its own contactless products MasterCard PayPass AmEx Expresspay Visa Wave Dexit Planning for UK market entry This market is about to get crowded There will be competing standards over the next 2-3 years Our estimates of the £ potential for TfL may be too optimistic now This market is about to get crowded There will be competing standards over the next 2-3 years Our estimates of the £ potential for TfL may be too optimistic now Planning for UK market entry

Charles Monheim6 Potential partners are keen to work with TfL to gain a competitive advantage Industry participants in discussionsCommon themes Value Oyster as a brand Value 3m customer base highly as a means to accelerate take-up of both existing credit/debit cards & new contactless payment cards Value TfL as a high-profile potential partner with a positive image Are not prepared to risk building on proprietary Oyster technologies when industry standard products are almost available

Charles Monheim7 Conclusion – Oysters Cubic contactless technology is not easily adaptable to the security & integration needs of the payments market Key issues: Oyster smartcard security would need to be improved for payments Development & integration costs unlikely to be affordable W I D E R E C O N O M Y Parking Fast food Pubs & bars Groceries

Charles Monheim8 Applicants prefer to link Oyster to new payment industry products on the same platform to allow customers to pay in both worlds with one card Reasoning: Applicants want to exploit Oysters top-of- wallet attribute But also want to keep it in the technology mainstream and avoid delivery risks where possible All agree that carrying both forms of payment on the same card is the simplest way to achieve this W I D E R E C O N O M Y Parking Fast food Pubs & bars Groceries

Charles Monheim9 Longer-term: accepting contactless payment cards issued by banks at our readers as well as Oyster cards is appealing – may replace Oyster eventually? Reasoning: The payments industry is embracing contactless technologies that are like Oyster These technologies are very secure These cards will start to appear in 2006 We could accept them just like any other merchant An open standard is likely to dominate in the end (e.g., Visa licence MasterCard protocols) W I D E R E C O N O M Y Parking Fast food Pubs & bars Groceries

Charles Monheim10 Adopting industry-standard technologies supports our ticketing objectives and complements Oyster Ticketing objectiveBenefit of accepting contactless payment cards Simple and accessibleAllows customers to use a card they already have – no need for ticket purchase or Oyster load Efficient Reduces TfL costs easier for customers to self-serve less cash-handling less need for TfL-specific ticket machines Frees-up staff for other roles Generates licensing revenue Avoids capex by using existing infrastructure at suppliers marginal cost Sustain affordability Frequent travellers will continue to use Oyster to access discounted fares & period tickets Premium prices for the price-insensitive

Charles Monheim11 Looking ahead Infrastructure-less ticketing –contactless cards issued by others –mobile phones with contactless capability Making public transport more accessible –reduce crowding by time of day pricing –simplify fare structure and provide smarter fare media –eliminate the intermediate step of getting a ticket Driving down the cost of ticketing –encourage self service –understand the true cost of ticket sales