MasterCard ® PayPass ™ Transit (Card Based Solution)€¦ · • PayPass specifies what is...

Wednesday, February 06, 2008

MasterCard® PayPass™ Transit (CardBased Solution) Extending Open Payments into the Transport Environment

ITSSA Workshop

Dougie Henderson MasterCard Africa

Wednesday, February 06, 2008 2

What is PayPass?

• PayPass is the basis of the global standard for contactless payments

• PayPass specifies what is required of both card and reader in order for contactless payment to take place

• Developed by MasterCard, PayPass has been licensed to both Visa & JCB and subsequently adopted by EMVCo

• The primary aim of PayPass is to offer an attractive alternative where traditionally cash has dominated

• PayPass is a key component of the MasterCard War on Cash / Low Value Payments initiatives

* EMVCo manages the EMV specifications upon which Chip & PIN is based


PayPass Global Status

• Approximately 20 million PayPass cards & devices issued to consumers (inc. fobs, watches, phones)

• Approximately 80,000 merchant locations accept PayPass (inc. McDonalds, 7Eleven and vending machines from Coca Cola and others)

• It’s a global trend! You can Tap and Go® with PayPass in 20 countries worldwide, including … – Buses & ferries in Taiwan, taxis & the subway in New York, tollways in Ohio and parking across the US

– Not a separate card application, true ‘pay as you go’

• More details at: www.mastercard.com/paypass


Why Transit?

• Smart transport card programs around the world face a number of challenges: – They are expensive to maintain as standalone programs

– They require similar skills to operate as a payment scheme

– In most markets they cannot be extended into retail payments (with its greatly increased points of service and economies of scale)

– They are not designed to withstand the regulatory scrutiny endured by open payment schemes (e.g. payment cards)


What’s the solution? • CHALLENGES faced by transport operators are:

#1 : Smart transport cards are expensive to maintain as standalone programs

– ANSWER: combine transport with an existing smart card program

#2 : Transport card schemes required the same skills to operate as a payment scheme

– ANSWER: partner with someone who already has these skills

• SOLUTION – make use of the payment scheme which is already there – MasterCard and its member banks


Who benefits from a transport / payment scheme partnership?

• By combining the infrastructure, experience and specialist skills of each of the partners …

• We have the products and tools to open up a new opportunity in transportation with advantages to all parties: – Transport operators – major operational cost savings

– Member banks – access new cardholders & locations – Cardholders/Travelers – quick, easy, convenient to use

– MasterCard – increase the reach of MasterCard brands


Proven Solutions for Transport

The TaiwanMoney card is a combination of: • OneSmart PreAuthorized

– Enables cards to be issued to traditionally nonbanked customers: children, high risk, visiting tourists, etc.

– Enables most transactions to be performed offline (e.g. readers installed on board vehicles such as buses and taxis)

– Supports business models suited to low value payments

• PayPass – Enables quick and easy contactless payments

• With some additional functionality in the payment application to handle nonpayment (transit) data

Wednesday, February 06, 2008

Case Study The Kaohsiung City Government Smart Transport Card Project (South Taiwan)


KCG – The Challenge

• The OneSmart Transit solution was first developed for the Kaohsiung City Government (KCG) Smart Transport Card Project

• KCG wanted to improve the efficiency and convenience of their transport system, without the cost of card issuance, scheme management or legislative oversight.

Kaohsiung Kaohsiung

• • 2nd largest city in 2nd largest city in Taiwan Taiwan

• • KCG manages transport KCG manages transport both for both for Kaohsiung and Kaohsiung and for 6 surrounding cities for 6 surrounding cities

• • Total population of 6.5m Total population of 6.5m (inc. 1.5m in Kaohsiung) (inc. 1.5m in Kaohsiung)

• • Modern transport, Modern transport, financial and industrial financial and industrial centre centre


KCG – The Solution

• Partner with the banks who already perform these functions in their daytoday business

– avoiding the cost of duplication these functions

• Banks gain a costeffective means of addressing a completely new set of cardholders and acceptance locations


The TaiwanMoney Card Key Partners

• MasterCard provides a combined payment solution (including PayPass and PreAuthorized) for issuers and acquirers.

• Mondex Taiwan operates the PreAuthorized host solution and clearing and settlement service

• Cathay United Bank and E.Sun Bank focus on card issuance, marketing and customer services.

• Acer is the systems integrator, device provider and project manager

• China Engineering Consultants, Inc. is in charge of programming the electronic transportation terminals.


Card Issuance

MasterCard Taiwan banks issue two types of cards:

• Standalone Prepay Card – For children, nonlocal and nonbanked customers

– Features a single payment product using OneSmart Pre Authorized and PayPass technology

– Distributed through retailers (just like a phone card)

• Prepay Plus Credit Card – For existing cardholders and new account customers

– Combines Prepay functionality with normal credit features on a dualbranded card

– Available by application to the bank


StandAlone TaiwanMoney Card

‘Powered by’ M/Chip 4 the industry leading EMV program from MasterCard

Personalised with OneSmart PreAuthorized profile for small payments

Equipped with the global standard for contactless payments

Linked to Payment Brand (example) associated with transport in this market

Cash Cash

Cash Cash


Cash Cash

Combined TaiwanMoney & Credit Card

‘Powered by’ M/Chip 4 the industry leading EMV program from MasterCard

Personalised with OneSmart PreAuthorized profile for small payments

Equipped with the global standard for contactless payments

‘Transport Payment’ brand (example) typically moves to back of card

Cash Cash

Chip includes a second instance of M/Chip 4

Linked to MasterCard Credit brand

enabled


TaiwanMoney Acceptance Aboard the Bus

• Bus/Ticket Validator is offline and contactless only

• Driver can choose to open only front doors (so exiting passengers must pass the reader)


Typical Retail Location – The Brunch Coffee Shop

MasterCard Cash window decal

Countertop PayPass Reader Acceptance marks: • MasterCard PayPass (credit) • MasterCard Cash (prepay) • Universal (multischeme) contactless acceptance mark


TaiwanMoney Reloading

Cash topup at bank or shop:

• Consumer hands card + cash over to cashier

• Cashier performs top up by inserting card into POS terminal

• Online EMV transaction in contact mode

Library Photo

Library Photo

Top up

= $100


KCG Bus Validator Hardware Configuration

TAIWANMONEY

Driver Console for driver interaction with BV

GPS ‘Mouse’ for bus location tracking

Bus Validator Unit with builtin wireless network module

Power Supply 12 to 24Vdc provided by bus

GPS Satellite


KCG Bus Validator Operation – Route Start & End Procedures

• The KCG Bus Validator (BV) supports two modes of operation:

Fixed Fare Variable Fare

• In both cases, the route start/end procedures are the same:

– Start Route Procedure – driver ‘logs on’ to bus validator with his/her Driver ID Number and the Route Number

– Based on the route number, the BV automatically selects either fixed fare or variable fare mode

– End Route Procedure – back at the depot, driver ‘logs off’

– BV automatically uploads transaction file (including clearing records for ‘pay as you go’ transactions) via wireless network

– BV automatically downloads any configuration updates

TAIWANMONEY


$3

KCG Bus Validator Operation – Fixed Fare Operation

• Card presented to Bus Validator once (at start of journey)

• Upon card presentation, fixed fare is deducted regardless of start point & intended end point of journey

• The BV may store an electronic receipt on the card as evidence of the cardholder’s right to travel

• An electronic ticket (eticket) may also be purchased in advance and stored on the card

• When an eticket is used for travel, the BV updates the eticket status to ‘invalidated’ (once invalidated, a ticket cannot be reused)

TAIWANMONEY

RECEIPT PAID $3.00


KCG Bus Validator Operation – Variable Fare Operation

The GPS mouse within the BV determines the journey distance. The card is presented to the BV twice:

• On boarding the bus (first presentation): – BV records on the card the start location of the journey as reported by

the GPS mouse – BV deducts the minimum journey fare from the card and sets card

status to ‘on bus’

• On disembarking the bus (second presentation): – BV reads back start location from card and compares with current

location to calculate total fare due – BV deducts additional fare to pay (over and above minimum fare

already taken) and sets card status to ‘off bus’

• To ensure that passengers present card on disembarking, cards with status ‘on bus’ are detected when next boarding a bus

$2

TAIWANMONEY

+$1

TAIWANMONEY

START=B3


KCG Bus Validator Operation – Social Card Concessions

• Certain cardholders (e.g. those over 65 years of age) are entitled to limited free travel

• Concessionary status has a start and end date (recorded on the card). Free travel can only be obtained between these dates

• Each time a concessionary passenger boards the bus, the Bus Validator (BV) checks the date to determine whether the card is currently valid for concessionary travel

• If the card is currently valid then the ‘concessionary journey counter’ is incremented

• If the counter exceeds the number of allowed free journeys (e.g. 120) with a one month period then the card reverts to normal (paid) operation


Ticketless Transport – Why are Operators Interested?

• Interoperability remains a huge challenge – Agreeing a common standard (e.g. ITSO, Calypso) is only the first step towards achieving interoperability

• Ticketing carries cost and convenience penalties – staff & infrastructure costs and long queues, extended wait time at stops

• Inflexibility of ticketing solutions – Operators moving towards ‘best price’ whereby price paid by customer is based on all travel within a period

– Payment solutions readily support this, tickets do not


What’s in it for the Transport Operators #1

• Vastly reduced operational costs: – banks issuing general purpose cards which can be used on transport …

– rather than having Operators issue their own specific cards for transport only (and bear all the cost)

• Transport Operators can take advantage of value added services offered by banks to increase card usage and generate new revenue – e.g. ecoupon, loyalty, cobrand programs



• Flexibility to include other transport operators under same payment platform (multimodal transport system) – In an open payment scheme, another transport operator is just another merchant

• Better service availability for consumer via bank’s retail services network for: – Card top ups

– Administrative services

– Customer support (e.g. lost cards)



• Improved payment security without additional burden of acquiring ‘banklike’ payment and fraud expertise.

• Take advantage of developments in payment cards to keep up with technological advances at a lower cost.

• OneSmart card provides a platform for value added services to drive both card volume and usage, e.g. loyalty, data storage, cobranding with retailers.

• Open standards, easier/more competitive sourcing and global interoperability based on: – EMV

– ISO 14443 (Type A/B) contactless technology

– The PayPass global standard for contactless payments


What’s in it for the Banks

Maintain an open payment system, make use of economies of scale, enhance cardholder value

Leverage investment in EMV migration by: – Using existing acceptance channels (e.g. retail POS) and new EMV technologies such as PayPass (contactless) and

– reducing card and terminal costs

Maintain technology leadership and develop a globally consistent low value payments solution based on an EMV compatible program (OneSmart PreAuthorized)


What’s in it for Cardholders

• One card that can be used for all payment needs

• Ability to link the transport functions and payments to existing accounts (don’t need to manage additional accounts/balances)

• Having a single bank relationship to manage both transport and general payment functions

• The contactless convenience experienced by cardholders on transport can be extended to MasterCard PayPass at the POS


KCG Deployment Status

Pilot Phase • Launched on buses and ferries October 2005 • Launched at selected retail locations November 2005 • Over 2,500,000 transactions completed during pilot phase

Public Launch – 1 st June 2007 • Live on around 1,800 buses and several ferry terminals • Live at around 2,000 retail locations • Over 150,000 cards (dualinterface) issued to the public • Over 1,100,000 transactions between July & Sept 2007 alone


MasterCard® PayPass™ Transit SUMMARY

• The PayPass Transit solution offers benefits to all stakeholders (transport operators, banks, cardholders and MasterCard)

• Technical risk minimized by basing solution on existing OneSmart solutions (PreAuthorized and PayPass)

• Innovative approach to the requirement: – Rather than trying to expand a closed transport card scheme into retail payments …

– Extend an open retail payment scheme into transport


MasterCard® PayPass™ Transit SUMMARY

• MasterCard is in dedicated discussion with all their Local customers.

• There is a solution capable of delivering the requirements for a transit opportunity

• There are unique elements in every Transit implementation – which need to be defined and agreed by all affected parties eg: – Commuter privileges

– Electronic Ticketing req.


PayPass in Public Transport – The MasterCard Vision

• Cooperate to achieve common goals such as cash displacement:

– PayPass provides a means of AFC for hardtoserve customers such as visitors and occasional travellers

– Regular travellers can be issued with a special PayPass card which is personalised to the local transport system

• Embrace global standards offering greater economies of scale and preserving competition between suppliers

• Where appropriate, delegate card and payment operations to the banks:

– Card issuance and cardholder support; Clearing and settlement; Regulatory compliance; Value added services

Thank you.

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MasterCard ® PayPass ™ Transit (Card Based Solution)€¦ · • PayPass specifies what is...

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