Agencies looking to implement second-generation systems will benefit from important technological and commercial developments that have been introduced into the market in recent years.
Account based ticketing (ABT) is the new back-office standard for transit AFC systems. ABT delivers even greater convenience to users than its predecessors, as it enables the use of a range of “tokens” to support a transit journey. In a more novel example of the technology, ABT systems could allow passengers to pay by staring at a camera, so long as they have their image and a valid payment method linked to their account in the background. Moreover, by keeping track of a person’s travel history, ABT enables a complex fares policy to be easily implemented and processed in the back office (e.g., daily fare caps, dynamic pricing to leverage surplus capacity or manage excess capacity).
ABT systems also potentially provide a range of direct benefits to transit agencies on a whole-of-life cost basis. The extent of these savings will clearly depend on multiple factors, including the age and functionality of the current fare collection system. Furthermore, under an account-based system, nontransit payments (e.g., parking and tolling) can be integrated and managed under the same system, further reducing revenue management cost and complexity.
Finally, ABT is seen as a critical enabler for mobility-as-a-service (MaaS). MaaS aims to curate the best mobility options for users based on their individual preferences and allow for a simplified single payment for multimodal trips and services. ABT enables both these goals by allowing user accounts to store preference data (populated by users or stemming from travel history) and a payment source.
Our business case work for clients has demonstrated that the transition from first-generation systems to ABT can unlock significant commercial and economic benefits. Many of these benefits are straightforward, such as reduced customer channel management costs. Others are more nuanced, such as the economic value associated with the release of the “funds lock” as customers move from the need to hold funds in an electronic purse on the card to the ABT operating environment.
Multitenanted systems are an emerging option for agencies looking to implement the latest AFC technologies with significantly lower investment when compared with custom solutions. In simple terms, a multitenanted system is a single AFC system that is shared across multiple agencies to leverage scale economies in the back-end system. These systems are thought to be especially compelling for smaller jurisdictions that struggle with the inability to afford of a second-generation custom system and have a simpler transit network suitable for productized offerings (i.e., less customization).
There are two main forms of multitenanted systems. The first is where a large, custom AFC system is built for or extended to neighboring agencies. These cases are often pursued opportunistically and require a case-by-case approach to find a win-win commercial solution for all involved parties (e.g., how to allocate benefits of scale and decision rights/obligations over system requirements).
The second type of multitenanted system is created specifically as a productized off-the-shelf solution. Such systems are typically cloud-based with built-in flexibility for basic customization (e.g., look and feel of interfaces, fare tables), faster rollout and fewer upfront capex requirements than traditional systems since they dispense L3 and L4 hardware (e.g., on-premises servers).