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back to Services & Technology list  Fare Payment Technologies > Fare Payment Systems Printer-friendly version
Electronic and automated fare payment systems integrate electronic communication, data processing, data storage, and microcomputer technologies in the process of fare collection in subsequent record keeping and funds transfer. The technologies developed intend to reduce the travelers' inconvenience, vehicle delays, and revenue leakage associated with paying cash fares on transit vehicles. In the past decade, transit operators across the nation and worldwide have adopted many of these advanced technologies into their fare payment system to increase convenience and efficiency. Electronic Fare Payment Systems include two main components: the first component is called Advanced Fare Payment Systems and deals with specific fare media and new hardware devices. This includes a variety of fare card types such as stored value fare payment cards and hardware such as Ticket Reading and Imprinting Machines (TRIM) for handling transfers. The second component is called Fare Integration Systems and deals with the creation of multi-modal and multi-provider transportation networks that link together the fare collection of different operators and modes of transit. Such advances, made possible by the development of new media and hardware devices, allow fare media to be used for more than one transit mode, such as magnetic strip cards usable for subways, buses, and passenger ferries. Another type of Fare Integration System is one that links fare collection to consumer financial systems. This allows the use of credit, debit and ATM cards for transit fare payment. The two components, Fare Payment Technologies and Fare Integration Systems, provide travel that is seamless for the rider but operationally and financially sound for the multiple operators. Traditionally, fare collection involved placing money or tokens into the farebox upon boarding the transit vehicle. While simple in nature, this method was time consuming, inconvenient to the user and required labor-intensive, theft-prone money handling activities. The advent of electronic and automated fare payment systems has reduced these high cost transactions by utilizing electronic communication, data processing and data storage techniques in fare collection. These fare payment technologies are rapidly replacing the manual methods. An advanced fare payment system involves an electronic fare media capable of storing fare information in a variety of forms from read-only to read-write forms. These electronic fare media include everything from magnetic strip cards to smart cards that contain microprocessors, each with their own respective advantages. Contact-Type Integrated Circuit Smart Cards In 1983, cards containing an Integrated Circuit (IC) first appeared in France for use on pay phones. These cards, sold at fixed denominations, contain read-write memory that is hard-wired so the value can be decreased but not increased to prevent the risk of counterfeit. The stored value decreases with use until the card is exhausted and then discarded. These cards also contain Read Only Memory (ROM) that allows for non-alterable bits of information that can be used for identification purpose such as ID cards. IC cards are used only for simple applications because they can run on hardwired logic routines and do not require a microcomputer chip. Contact-type Integrated Circuit (IC) smart cards are more sophisticated than the original French IC cards and carry a microcomputer and two types of memory: electronically erasable programmable memory (EEPROM) and ROM. This innovation allows for more storage of information and some simple processing. The EEPROM, a read-write memory, can be used for information that changes with use such as monetary value and use history. The ROM in the contact-type IC smart card can be used for identification purposes as in the regular IC cards, but is also used to store the microcomputer's operating program. The augmentation of the microcomputer gives the contact-type IC card more sophisticated capabilities such as the ability to process computational routines. Such advances enable greater security and privacy for stored information by creating methods of positive user identification to secure transactions and encryption to protect data. This innovation is particularly important for the use of contact-type IC smart cards as a transit fare card because of its ability to carry cash content securely. The contact-type IC smart cards, used for transit fare payment have many of the advantages of an electronic and automated fare payment system. These include the ability to accommodate more sophisticated fare pricing systems, elimination of cash and coin handling, and automation of accounting processes. The advantage that sets this new technology apart from the rest is the microcomputer that allows for greater security and privacy. Contact-type IC smart cards are considered "contact-type" because they require contact between the array of metal contacts on one side of the card and the read-write head. Electrical signals between the card and the read-write unit communicates and transfers the appropriate information. Like the magnetic strip card, the contact-type IC smart card requires the insertion into a read-write unit and is limited by processing time when rapid, instantaneous processing is desired. Generally, contact-type IC smart cards contain no battery and can only use nonvolatile memory such as EEPROM, which has drawbacks in speed and cost. A recent development of a type of EEPROM called flash memory has greatly increased performance and lowered price for IC smart cards. Despite the growing interest in other types of IC cards, IC cards with microcomputers and metal contacts still represent the largest portion of the market. The magnetic strip card first appeared in the banking industry in the late 1970's and is widely used in banking, retail, telephone systems, access control, airline ticketing and transit fare collection. Magnetic strips can be printed on cards ranging from heavy paper to a variety of plastics and they can be coated with a plastic layer for extended life. These cards have been particularly successful in rapid transit systems in the form of readable and writeable cards that require read-write units. These read-write units are installed in computerized ticket vending machines and turnstiles at each rapid transit station. The ticket vending machines accept coins and bills in exchange for magnetic strip tickets reflecting the appropriate value. Inserting the ticket into turnstiles at the beginning and end of a trip allows the read-write unit to deduct the fare according to the length of the trip. The San Francisco Bay Area Rapid Transit (BART) is an example of a successful implementation of this technology. BART first adopted the magnetic strip card some twenty years ago in the form of an inexpensive paper magnetic strip ticket. Although the magnetic strip card technology has long been in use by rapid transit systems, it has not been as readily adopted in the bus transit system and is only now beginning to replace the conventional paper transfers used by buses. One of the benefits of using the magnetic strip card is increased convenience due to its capability to store value for more than one trip. Generally, the card allows the rider to retain the equivalent of a week's worth of fares on the card, decreasing the number of separate cash transactions or tokens the rider must carry. The reduction of cash and coin handling can improve security and lower costs as well as save the passengers time. Another benefit of the magnetic strip card stems from its ability to store information about the origin and destination of a trip. This allows flexibility in creating a fare pricing system that is more precise by determining the fare based on distance or time of day. Magnetic strip cards are also advantageous because the automation of accounting processes increases efficiency and accuracy to lower operations costs. Despite the many advantages of the magnetic strip card, there are also drawbacks to consider. While the storage capability of the magnetic strip card decreases the passenger's time spent in cash transactions, the rate at which passengers pass through the turnstiles is marginally slower than with traditional token methods. The magnetic strip card requires specific placement of the card for proper contact with the reader head so that insertion of the card into a read-write unit is a requirement. Thus, the aggregate time required inserting and retrieving the care results in a slower process through the turnstile. Other drawbacks include the risk of counterfeit that can be countered by using read-only cards or by increasing the coercivity. Finally, like the traditional fare boxes, the read-write units are also subject to their share of failure and require a fair amount of maintenance. Proximity Cards (RF Proximity Cards) Unlike magnetic cards and IC smart cards, proximity cards do not require direct physical contact between the card and a read-write unit. The most common proximity card today is the radio frequency (RF) proximity card. This type of card contains an induction coil that is coupled with the RF magnetic field generated by another induction coil, located in the read-write unit. The RF magnetic field of the unit serves as the power source for the circuits in the card and when modulated, carries signals to the card. The card must also contain some small power conditioning circuitry in order to attain power from the RF magnetic filed and to regulate it into a useable form. Another option is to include a battery in place of a power conditioning system. The card itself also has the capability of sending signals back to the read-write unit using the same coil or a separate coil or antenna. Proximity cards only require that the card and the read-write unit be in close proximity thereby eliminating the need for insertion into a unit for precise positioning of the card. This significantly reduces the time consuming processes of the contact-type method. The functional distance between the card and the read-write unit is dictated by the strength of the RF induction field generated by the read-write unit, but in practice is often held from an inch to one foot from the unit. The elimination of insertion into a read-write unit greatly increases the speed at which passengers can go through turnstiles or board buses and can potentially be an effective method of a transit fare payment system. The lack of physical contact between the card and the reader also serves to lengthen the life of the card by reducing wear and tare. Proximity smart cards, those that integrate the RF proximity card with the operational capabilities of contact-type IC smart cards are currently being tested for practical use in the U.S. Again, proximity smart cards, like other automated and electronic fare payment systems, would accommodate more sophisticated fare pricing systems, eliminate cash and coin handling and automate accounting processes. Other benefits of proximity smart cards include potential inter-modal and inter-operator transfers with advanced security features. RF Proximity cards are currently being used for other ends, and in particular, for identification purposes. This is a relatively simple form of the RF proximity card, where the card need only contain a single identification message that it relays in response to a query given by the reading unit. Such uses of proximity cards require only a ROM memory that can be programmed during manufacturing. Other current uses for RF proximity cards include keyless entry systems, personnel identification and inventory security in offices and retail stores. Capacitively coupled cards are cards that use capacitive coupling in order to perform read-write functions. This type of card contains two or more areas of metal foil, that are covered by extremely thin layers of a plastic insulator. When the plastic coated metal foil layers are closely aligned with the plastic coated metal foils contained within the read-write unit, a capacitor is created that couples the circuits of the two components. This coupling allows the communication and transfer of information between the card and the read-write unit by supplying the required power and signals. The capacitively coupled card is similar to the RF proximity card in that it does not require direct physical contact between the circuits of the card and the circuits of the read-write unit. This card is different from the RF proximity card because it still requires insertion into a read-write unit for precise positioning and does not come along with the benefits of contactless methods. The capacitively coupled card has not yet been used for practical application in the transit systems. FARE INTEGRATION SYSTEMS Fare integration systems are fare payment systems that are intended to simplify travel and make it more efficient among different transit modes and operators. There are three types of integration that are currently emphasized in the Fare Integration System. One type involves linking the fare payment systems among different modes of transportation that are managed by a single transit operator. A second type links together different transit operators to the same system of fare payment. A third type of integration links transit fare payment systems with consumer financial systems such as banks and credit unions. The goal of these mergers is to increase convenience for the passenger and operational effectiveness for the operators. A "common currency" and standards for its use is necessary to integrate different modes, operators and systems. The ability to set key features of integration systems, such as standards can foster large-scale acceptance and future development of new related technology. Fare Integration Systems require that the participants designate a common type of fare media, such as magnetic strip cards or smart cards. The adoption standards for a common fare media and their data transmission devices will serve to simplify integration and to encourage other participants to integrate with the established system in the future. Most credit cards and ATM cards are designed to comply with the International Standards Organization (ISO) standards for plastic magnetic strip cards that have been established for many years. These magnetic strip cards, the ISO standards allow the use of credit cards and ATM cards in far to reach places. Contact-type read write memory cards like the European telephone industry for phone cards use established ISO standards. However, these standards are not as strictly adhered to as in the case of magnetic strip cards, but they are generally accepted. Standards for proximity and capacitively coupled cards are under development and deal with carrier frequencies, baud rate, data transfer protocols and encryption. An Integrated Fare Payment System following universal standards
allows efficient linking of multiple providers. There are many benefits
that make this cooperative fare payment system appealing. The most
significant benefits include the accommodation of more sophisticated
fare structures without manual computation, significant decrease
in cash transfers, automation of accounting processes, convenience
and operational effectiveness. These advances, which mostly require
electronic fare media, are realized through technological advances
in electronic data processing, communication and storage. Among
these advances are new innovations that are strictly designed to
accommodate Fare Integration Systems. Transit passes, often read-only magnetic strip cards, do not contain value that is reduced with use, but serve as a pass when inserted into a reader unit. Current uses include fare payment on subway and bus transit. Transit passes are purchased during issuing periods and are commonly valid for one month. There is some variation in the length between issuing periods. These cards are swiped through reading units at subway turnstiles or electronic fare boxes of buses. The primary benefit of using transit passes is increased convenience and accounting simplifications by minimizing the number of monetary transactions. Monetary transactions can be maximally reduced when the transit pass system is integrated with the financial systems of employers. With the implementation of this integration system, transit passes can be paid for by the employer or via the employer through deduction from wages. This would allow employers to purchase transit passes for all employees in one transaction, and the passenger would be free of all such transactions. More simple forms of transit passes in use today are simple cards with a picture identification that is shown to a bus driver or subway attendant for admittance. Stored value fare cards contain value for more than one trip and value is deducted from the card with use. Fare media that is appropriate for such use include read-write magnetic strip cards, contact type smart cards and proximity smart cards and all require respective read-write units. Stored value fare cards can serve to decrease the number of monetary transactions by allowing accumulation of value on the card. This option also avoids transaction fees associated with credit card use. These cards record the origin and destination of a trip so that fare-pricing systems can be developed according to time of day and distance traveled. Stored value fare cards can also be applied to multi-operator transit networks because of their ability to record origins and destinations, which allows revenues to be properly distributed among multiple transit operators. Fare Systems Based on Passenger Accounts One way to integrate the fare payment system with consumer financial systems is to set up passenger accounts that would be billed according to individual transit use. Identification cards would be issued and transit use would be monitored and recorded by read-only units that would recognize accounts. Appropriate fare media for this system would only require read-only capabilities and can be fulfilled by bar code cards, magnetic strip cards and RF proximity cards. If origins and destinations are recorded along with fare information, sophisticated fare pricing systems could also be utilized. Currently there are no practical applications of this system. Multi-Use Electronic Coin Purses The multi-use electronic coin purse is a system to integrate transit fare payment with local merchants. These cards, like the stored value fare card, contain value for more than one transit trip but also allow for small purchases from participating merchants. Fare media appropriate for such use requires read-write capabilities and include read-write magnetic strip card or IC smart cards. Current developments in multi-use electronic coin purses involve IC smart cards. New York City Transit (NYCT) has recently adopted this option for their stored-value MetroCard system that accommodates both bus and subway. The fare media used is a long-life thin plastic read-write card that, on buses, is used in conjunction with swipe-type read-write units. The swipe-type is faster and more durable than the ticket reading type units that require insertion. The MetroCard is sold at fixed denominations but are rechargeable. All NYCT rapid transit stations and buses are expected to accept the card in the near future. There are also plans to extend the use of the MetroCard to other transit systems, small purchases and pay phones. The Metropolitan Atlanta Rapid Transit Authority (MARTA) has also introduced two types of stored value card in the form of contact-type IC cards. One form is sold at fixed denominations where value cannot be increased, while the other has recharging capacity. The cards can also be used at local merchants and service providers that accept VISA cards. With general use, MARTA expects to reduce cash-handling costs by 80 percent. Multi-use electronic coin purses are presently being developed
by the Delaware Authority for Regional Transportation (DART) in
their DART smart card system. In this program, DART will integrate
its fare collection system with the Wilmington Trust Bank and participating
retail merchants and service providers. Passengers will be issued
ATM cards in the form of contact-type stored value smart cards which
can be used on the 135 DART buses as well as for small purchases
with participating merchants. These cards will also be available
for passengers who are not customers at the Wilmington Trust Bank.
Read-write units will be installed on the 135 DART buses and value-adding
machines will be widely available to increase value of the card
using cash. Cashless Purchase of Fare Media Integration of transit fare payment with financial systems can also introduce fare media vending machines that accept debit/credit cards for payment. This would reduce costs and losses associated with cash transactions and increase convenience. Transit operators that have already introduced or are planning to introduce cashless purchase include Chicago transit Authority, BART, Massachusetts Bay Transportation Authority, Portland's Tri-Met and the Ann Arbor Transit Authority. Some systems also accept ATM cards as well as debit/credit cards for payment. The use of ATM cards, as opposed to credit cards, is an attractive option because there is no charge to the transit operator for its use as payment. A related system is one that was adopted by Phoenix Transit buses in May of 1995. This system combined the use of credit cards and passenger accounts for bus fare payment. Bus transit fares were recorded and accumulated in accounts that are billed monthly to the credit card companies. The reason for keeping passenger accounts instead of directly billing per use was to reduce the fees owed to credit card companies. Phoenix Transit itself did not issue cards or bill passengers and instead paid fees to credit card companies, as do all merchants who accept credit cards. Passengers swiped their bank-issued cards through standard magnetic strip readers upon boarding transit buses and fare was accumulated in passenger accounts. Since credit card companies were billed monthly per passenger, which reduced fees to that of one transaction per passenger per month. As of August 1, 2002, MasterCard and VISA cards were no longer accepted for fare payment on the bus. Only cash, tokens, tickets, or passes are currenlty accepted. smartcard APPLICATIONS currently Deployed Go to the ITS Decision Report on Fare Payment Technologies smartcard applications under development Go to the ITS Decision Report on Fare Payment Technologies
Authors: Lingo Leung, Phyllis Orrick, and Lauren Smith. Last update: September 7, 2005
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