On 26 Jul, 2017 By 0 Comments

 

By Namrta Bangia, Associate Director, Global Mass Transit and NFC Forum Guest Blogger

 

Key takeaways from the VISIONFC Transport Summit

NFC Forum organised the VISIONFC Transport Summit in June, 2017 in Ho Chi Minh City, Vietnam. The half-day summit featured presentations and a moderated discussion on the use of near-field communication (NFC) technology in mobile ticketing and public transportation, with focus on Asia. The summit was well attended by public transport operators and associations, mobile network operators, systems integrators, government officials, technology providers, etc.

VISIONFC Transport Summit presenters sharing real-world examples and public transportation insights included:

  • NFC Forum (Global), Alex Rensink, Co-chair, NFC Forum
  • Global Mass Transit Report (Asia), Namrta Bangia, Associate Director, Global Mass Transit
  • Management Authority for Urban Railways of Ho Chi Minh City (Vietnam), Vu Phan Minh Tri, Head of Division of Technical – Procurement
  • Land Transport Authority (Singapore), Kelvin Lim, Fare Systems
  • Octopus Card Limited (Hong Kong), Sammy Kam, Technical Director
  • East Japan Railways (Japan), Hiroshi Iwamoto, Manager, Suica Business Development
  • CH2M (US) Trevor Findley, Senior Program Manager, CH2M
  • NFC Forum Transport Special Interest Group, Joerg Schmidt, NFC Forum Transport SIG Co-Chair

Some of the key takeaways from the summit are noted below.

Adoption of NFC

Alexander Rensink, Co-Chair, NFC Forum gave an introduction to NFC Forum activities in the transport market and major milestones. The NFC Forum stands for the open and interoperable implementation of NFC technology. It empowers organisations to deliver secure, tap-based interactions that provide an intuitive, reliable experience to users around the globe. The NFC Forum represents chip vendors, payment service providers, smart phone manufacturers, mobile operating system providers and 150 member companies.

There are approximately 2 billion smartphones in the world that read NFC Tags anytime and anywhere. In near future, consumers will see an explosion of NFC use in the Internet of Things, retail, automobiles and public transportation.

By 2020, 2.2 billion of NFC-enabled handsets are expected to be shipped. Further, the rate of NFC adoption across all handset original equipment manufacturers (OEMs) and covering all operating systems is expected to reach 72 per cent by 2020, up from 52 per cent in 2016 and 18 per cent in 2013.

Figure 1 depicts the real and expected growth in global shipments of cellular handsets and NFC attach rate over the period 2014-2020.

Figure 1: Global shipments of cellular handsets and NFC attach rate (million units)

Source: IHS, Markets and Markets, Strategy Analytics, Juniper

The mobile ticketing market is expected to grow at a compound annual growth rate (CAGR) of 16.71 per cent during 2017-2021. The growth drivers will be:

  • Rapid increase in NFC mobile ticketing applications (apps)
  • Customer demand for more convenient mobile ticketing options
  • Rise of NFC-enabled smartphones and wearables capable of handling mobile ticketing services

The NFC Forum public transport RF interoperability initiative aims to accelerate the implementation of NFC-enabled mobile ticketing. Its areas of focus include market feedback and technical specification alignment.

Ticketing trends in Asia Pacific region and opportunity for NFC

Namrta Bangia, Associate Director, Global Mass Transit spoke about transport and ticketing trends and outlook in Asia. Some of the key public transport trends include:

  • Metro rail systems: Asia’s metro rail network accounts for around 38 per cent of the total operational network.
  • Light rail network: Development of light rail systems in Asia is a relatively recent phenomenon as compared to their development in North America and Europe.
  • Ridership: An analysis of metro rail and light rail ridership in nearly 80 cities across the world reveals that some of the busiest urban rail systems in the world are in Asia.
  • Bus rapid transit (BRT) network: Asia has an extensive BRT network, accounting for nearly one-fourth of the total BRT network in the world.

Globally, there has been an increase in the uptake of electronic ticketing and the trend is similar in Asia. Cities with well-developed public transit systems are switching to advanced ticketing options for greater customer engagement and operational efficiency. Cities with new systems underway are directly adopting off-the-shelf products for the deployment of electronic ticketing.

Global Mass Transit Research analysed fare systems in 105 cities. Of these, 26 cities have deployed integrated NFC technology in mobile phones and 21 cities have deployed mobile point-of-sale solutions (mPOS). Europe leads the way, followed by North America. The market in Asia Pacific has a lot of growth potential. Of the 27 major cities analysed in Asia, 10 use mobile ticketing (NFC-based and mPOS based).

Figure 2 depicts the public transport ticketing trend in Asia for 27 cities.

Figure 2: Fare media in 27 cities in Asia (2015-16)

Source: Global Mass Transit Research

Some of the upcoming trends include the following:

  • Asia has the fastest growing urban rail network in the world. According to Global Mass Transit Research, nearly 196 projects, which will together span 3,824.8 km, are planned to be developed in Asia (including the Pacific region) by 2030.
  • Asia is the centre of activity for BRT development. About 11 projects, which will together span over 260 km, are planned to be developed in Asia (including the Pacific region) by 2020.
  • Mobile subscribers and smartphone growth is experiencing the greatest growth in Asia. By 2020, Asia Pacific is expected to account for nearly two-thirds (571 million) of the increase in total number of mobile subscribers and half of the new smartphone connections globally.

Despite these opportunistic trends, firm plans for deployment of mobile ticketing are limited in scope and hence there is huge unexplored opportunity for the deployment of NFC in Asia Pacific.

Experience in Hong Kong

Sammy Kam, Technical Director, Octopus Cards Limited spoke of Octopus’ journey into the mobile world. Octopus Cards Limited processes 14 million transactions worth USD24 million daily. There are more than 76,000 Octopus terminals in Hong Kong (as compared to 17,000 contactless cards terminals). Octopus card covers 20,000 retail outlets (compared to 6,800 outlets covered by contactless credit cards). Nearly 50 per cent of the Octopus payment value is contributed by retail.

In October 2012, Octopus Mobile App was launched. Thereafter, the Octopus Mobile SIM was launched in 2013 by Octopus, Sony and Gemalto. Octopus SIM with NFC handsets works on all 76,000 Octopus readers. Further, the online payment service was launched in 2014 and O! ePay (network-based stored value account) was introduced in 2016.

There are different mobile payment options such as proximity payment, online payment and P2P payment for different customer needs. Octopus ID can be leveraged for a mobile loyalty scheme; allows remote mobile ordering with payment; and provides mobile wallet platform to manage and distribute marketing offers and mCoupons. QR Code payment for the small merchant segment is also available.

Mobile wallets are heating up due to:

  • Security concerns
  • Tipping point to change usage habit
  • Convergence of mobile payment applications
  • Market education

The key to mobile payments taking off are:

  • Customer experience
  • Value creation
  • Market confidence
  • Customer incentives

Experience in the United States

Trevor Findley, Senior Program Manager, CH2M spoke about the experience in the United States (US). In the US, there are 6,792 transit agencies, 5,231 card issuing banks (1.1 billion cards issued and 453 million active accounts), and five mobile network operators (417 million mobile subscribers). The transit agencies vary vastly in the deployment of ticketing technology.

Table 1 provides information to compare the disparity in fare system technology deployment in the US.

Source: Presentation by Trevor Findley, Senior Program Manager, CH2M at the VISIONFC Transport Summit

Most transit agencies in the US are moving towards NFC-based fare systems, but the path differs based on their current situation.

  • Legacy Systems have the most straightforward path to a Greenfield implementation
    • Open Architecture (Open APIs)
    • Account-based/ ID-based
    • Real-time (cellular) communications
    • EMV-compliant design
  • First-generation systems have to choose between upgrade or “burn and replace”
    • Proprietary systems with restrictive contracts
    • System architecture and devices incompatible with EMV acceptance
    • Customer transition is difficult under either scenario

Agencies using non-NFC mobile ticketing can use NFC to gain the following advantages:

  • Efficient deployment as stand-beside solution
    • Turnkey solutions available
    • Low or no infrastructure costs
  • Shows innovation internally and to the public
    • Strong customer demand
    • Aligns well with existing operating models
  • Strategies for acceptance and transition vary
    • Optically scanned tickets may be fully integrated into account-/ID-based systems
    • Some see mobile ticketing as only a stepping stone to closed-loop NFC payment

NFC Forum initiatives and future plans

Dr. Joerg Schmidt, First Co-Chair Transport SIG, NFC Forum spoke of the initiatives of the NFC Forum in the harmonisation of globally relevant contactless standards for NFC mobile devices. The NFC Forum Transport SIG coordinates transport industry stakeholders.

The work of NFC Forum on interoperability has allowed:

  • Harmonised specifications for NFC-interface of mobile devices and ISO-compliant public transport equipment
  • Alignment of EMVCo standards
  • Synchronised test and certification for NFC mobile devices and public transport equipment

Interoperability between the mobile and public transport sectors can be established by:

  • Synchronising RF-interface specifications for NFC mobile and public transport devices
  • Establishing synchronised test and certification processes for NFC mobile and public transport devices.

The other achievements of the NFC Forum include the following:

  • Completion of the technical work on interoperability with ISO/IEC 14443 by a joint working group of GSMA, CEN, public transport stakeholders and NFC Forum
  • Acceptance of NFC Forum’s interoperability solution.

Figure 3 depicts the future potential activities of the NFC Forum.

Figure 3: Future potential activities of the NFC Forum

Source: Presentation by Dr. Joerg Schmidt, First Co-Chair Transport SIG, NFC Forum at the VISIONFC Transport Summit

Conclusion

The summit provided a platform to discuss the current status of and future outlook for NFC-based mobile ticketing for public transport in Asia, which is one of the biggest markets for upcoming metro rail, light rail and BRT projects. Cities with new systems are directly deploying advanced fare collection technology and cities with legacy systems are moving towards advanced and integrated fare systems. These trends offer many opportunities for NFC technology providers; ticketing and validation equipment suppliers; mobile phone and chip manufacturers; consultants; etc. As the specifications are harmonised; ability to test and certify NFC systems improves; integration with financial industry standards is well established and turnkey solutions evolve, the adoption of NFC is expected to become more prevalent.

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