contactless banking payment pilot at mta new york city transit · 2008-05-29 · contactless...
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Contactless Banking Payment Pilot Contactless Banking Payment Pilot at MTA New York City Transitat MTA New York City Transit
Steve FrazziniSteve FrazziniProgram DirectorProgram Director
Paul KorczakPaul KorczakProject ManagerProject Manager
Card Tech Card Tech SecurTechSecurTechMay 2008May 2008
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OverviewOverview
Business Strategy and New Payment Model for Transit
Opportunities: why consider an alternative approach?
Phase I Results
Next Steps
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Potential Business Strategy: Potential Business Strategy: ““MerchantMerchant”” ApproachApproach
Participate as a “merchant” in the banking industry’s move to contactless form factors (cards, cell phones, key fobs, etc.) Layer on a contactless bank device payment “option” for customers at the point of entry (fare gates, bus fare boxes)Coordinate with regional transit partners (PA, NJT, PATH, others) to solve the regional fare payment question: - Adopt a uniform payment approach- “Speak with one voice” as a merchant category
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Business Model: Becoming a Merchant at the Point of Entry
Today’s Practice“Fare Collection”
Future“Fare Payment”
Selling tickets,Validating payment
Accepting payments
Full ownership of a custom-built ticketing system
Greater participation in the banking payments network
Defining the customer relationship from a transit perspective
Adapting transit business needs to customers’ broader “retail” payments experience
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Business Model:Business Model: Support FunctionsSupport Functions
Today’s Practice
Pilot Test
Set Fare Policy and Pricing Transit Transit
Control Data Transit Transit
Manage Device Life Cycle Transit Issuer
Service Customer Accounts Transit Issuer/Service Provider
Address Customer Claims Transit Issuer (payment, billing)
Transit or Service Provider (usage issues)
Customers (self-directed)
Process Payment and Usage Transactions Transit Transit or Service ProviderMerchant Acquirer
Risk Management/Security/ Enforcement System Upgrades/Technology Development
Transit All Business Partners
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Business Model:Business Model: Operating Framework Operating Framework -- ““SunPassSunPass for Transitfor Transit””
Customers’ experience when paying“Tap” a contactless banking device of their choice.
Simple “yes/no” acceptance message at fare gate.
No receipt issued.Back office
Supports “shopping” for fare products via website or over the phone.
Applies fare policy rules, processes credit/debit payments.
Provides account-based “usage” and payment details via web and staffed customer service center (CSC).
Automatic payment of transit account an option.
Transaction aggregation used to minimize processing costs paid by transit for “Pay-As-U-Go.”
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Business Model:Business Model: Purchase OptionsPurchase Options
Pay-As-You-Go“Tap” like paying at any merchant.
$2.00 base fare.
Register on-line to see usage/payment details.
Pre- PaidBuy fare products on-line or via CSC.
Phase II: all fare products available; use any contactless bank-issued device.
Access usage/ payment details on-line or via CSC.
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Business Model:Business Model: Back OfficeBack Office
• Data captured by NYCT when presented to payment platform.
• Checks and balances performed by NYCT.
• NYCT has final word on financial reporting and customer service issues.
• Read only.
• Real-time auth (Phase II).
• Applies fare rules/processes usage and payments.
• Supports website, CSC; monitors system performance.
• Dispatches maintenance crews.
• Processes banks payments.
• Supports customer on payment/billing issues only.
• Risk management.
Payment Device/Pilot Reader
NYCTNYCT Internal Comms and Back Office
Service Provider Standard MerchantProcessing Network
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Business Opportunities: Improved Customer Service
Elimination of steps—no stopping to buy “tickets.”
Familiar to customers--less of a learning curve, fewer trust issues— ” It’s paying with your bank card…”
More flexible--customers choose banking relationship and payment form factor (i.e., card, FOB, cell phone, etc.).
Self-directed customer support via web and staffed CSC.
Overnight problem resolution via electronic funds transfers.
Greater security: customer protected by extensive resources and zero liability policies.
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Business Opportunities : “Future Proof” the fare payment system
Reduce infrastructure investments, limiting exposure to potential issues of early obsolescence
— Fewer pieces of specialized equipment
— Simpler, decentralized infrastructure
Share cost of core technical upgrades and business process advances with broad range of stakeholders.
Tap into “open market” for equipment and services.
Concentrate functionality and major investment in a central back-office.
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Business Opportunities : Finances
Reduced operating costsFewer business functions need specialized transit handling.More support offered through banking network partnerships.Broad-based competition for equipment and services because of open standards.
Scaled-back investment in transit-owned infrastructureLess field equipment needed to support same transactions.Less “future-proofing” required.
Potential revenue increases due to convenience factor.
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Phase I Outcomes: Phase I Outcomes: Operations
Customer Claims Payment claims rate identical to merchant experience at vending machines
Indications are that fraud risk is lower
Usage (acceptance) issues at point of entry significantly lower
Sales transaction availability very high Equipment Very easy to install—”plug and play”
Verified read of <300ms; accuracy of read 100%
Highly reliable/stable—significantly less maintenance complexity and frequency
No vandalismProcessing All usage and sales transactions fully reconciled – no
accounting issues—identical to broader experience
Banking infrastructure extremely robust: fast/accurate/reliable
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Outcomes: Outcomes: Customer Support
Customer ServiceCenter/ Web Site
Users very satisfied with approach and level of service
Customers first view problem resolution as a generic “payment” issue resolved through their banking relationship
Claims profile mirrors EZPass tolling experience
- Of 3,500 inquiries, most were information requests
- Second highest category were transfers to the bank
- Fewer than 200 “claims” inquiries: all handled as part of “financial” back office
- Only one (1) call transferred to NYCT
Web site 100% available: very active, with over 238K page views and more than 50K unique visitors
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Myths Debunked
Transit fare policy is too complex to be programmed and managed by the financial services sector.
Transit agencies will lose “float” and/or expired card value.
A banking approach costs more than current systems.
Customers do not use debit/credit.
Accepting bank cards will be an added cost for transit; interchange will increase dramatically.
Transit will not have access to the same data as with a traditional AFC system.
Bank cards are less secure; privacy is a concern.
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Next Step: Phase II
Scope
Fare Options
Acceptance
Customer Support
Phase I-Subways30 Stations, 79 FCAs (mostly Lex Line)
Pay-As-You-Go ($2.00)
Prepaid: Value Based, with 20% bonus
Citi-issued MasterCard PayPass only
All form factors (card, cell phone, key fob, etc.)
Web, pilot Customer Service Center (CSC)
Phase II – Buses and SubwaysEquip up to 275 buses (recommended routes on following pages); real-time authorization (on subways, via SONET; on buses, wireless EDVO)
Pay-As-You-Go ($2.00)
Pre-Paid: all fare products – passes, transfers, reduced fares, and value-based with 15% bonus, possible pilot of transit benefits program
All issuing banks, brands, and all form factors (Amex, MC, Visa, etc.)All form factors from all issuers
Web, pilot CSC expanded for all payment brands; Link to regional pilot at PA/NJT/PATH in 2009