BIG DIVIDENDS FOR SMART CITIES
26 June 2015 | Author: Shashi Verma, Director of Customer Experience, Transport for London
Cities should urgently consider introducing smart and contactless ticketing to encourage the use of public transport and help them reach their economic potential, argues Shashi Verma
Our industry is a customer service business that provides transport. Our purpose is to keep the country working and moving, supporting the creation of jobs, housing and economic growth. Technological advance and the changing expectations of our customers are offering us even more opportunity to serve them better.
Today, we are all used to doing business with retailers and other service providers simply,
accurately and transparently with a tap on a mobile device or a card reader. This is particularly so when making payments.
However, customers regularly report transport ticketing as a painful and confusing experience. Everything about it – the need to get a ticket at all, the process of buying it, wondering whether you have got the best value for money and the fear of falling foul of arcane rules leading to a penalty fare – imposes wasted time and anxiety. For many, this is a material deterrent to using public transport.
The lack of integration of fares and the means of payment among transport providers present further barriers. And this leads to the transport industry carrying too much cost for ticket selling, money that ought to be put to more productive use.
The investment required to modernise customer service in this area is relatively modest when set against large capital projects which tend to capture more of the attention. The scale of the opportunity to improve the passenger's experience, reduce cost and make public transport more attractive is too good to miss. While big capital projects are essential to provide more capacity and reliability, we also have the capability to bring rapid benefits to customers and the industry now, by reducing the time wasted navigating the ticket system.
The experience in London is that relatively modest investment in modern ticket systems leads to simultaneous financial and customer service benefits. The Oyster system, conceived initially just to put season tickets on smart media, has been used in a variety of ways to remove the burden of ticketing: reducing the number of tickets sold; allowing more staff to be visible and available to offer customer assistance; giving confidence that the right fare will be charged every time; and allowing refunds to be given automatically when things go wrong.
This also provides a greater incentive to switch to public transport. The one-off capital investment to extend acceptance of Oyster pay as you go on the national rail network in London was £33m. The increase in fare revenue directly attributable to this change is estimated at more than £100m annually. That's a return on investment that even Silicon Valley would find startling. And by reducing the number of tickets being sold, it reduces cost as well. In the case of Transport for London, the cost of revenue collection has fallen from 15% of revenue and is on the way to around six per cent. So at the same time as customer service has been improved, costs have come down very significantly too.
The right business
The next question is why is our industry in the ticketing business at all? Most public transport and ticketing relates to either rail in an urban mass transit environment or buses, which together account for around 95% of all journeys. Fares for these journeys are relatively small and the basic need is to collect a micropayment. Returns, dailies, season tickets and so on are just various means of aggregating a single payment.
The opportunity, therefore, is to make the payment proposition even slicker. A pay as you go offer liberates customers from having to buy a ticket each time they travel. Pay as you go travel coupled with fare capping is what has made Oyster in London, and similar systems around the world, a success. It may sound like a radical change, but it is tried and tested in practice, popular with customers and achievable in a relatively short time frame.
Two other factors would make it even more appealing. First, a simplification of the rail fares structure would improve public trust by introducing some simple rules such as touching in and out to get the best value fare automatically.
Second, where pay as you go can be combined with a means of payment that funds itself, such as the contactless payment cards that are now successful and popular in London, it takes away any need for customers to convert their currency into transport currency. In other words, we can start to get out of ticket fulfilment and concentrate on directing resources into making sustained investment in transport.
By giving passengers the same experience when paying for transport as they are used to when buying everything else, we can create a truly modern and convenient system. In London, four million contactless cards have been used in the first eight months of the service, with over a million transactions every day. With cards from 61 countries used so far, we have clear evidence that interoperability is achievable both domestically and worldwide without the need for a special transport payment standard.
There is an urgent need to allow our great cities to realise their maximum economic and social potential through better transport and making life easier for passengers. The evidence suggests that taking a fresh and urgent look at how we improve our ticketing systems, and thus encourage greater use of public transport, can make a major contribution to achieving that outcome.
Reference: Transport Times, June 2015 Issue
To keep abreast of current transport issues subscribe to Transport Times now, following the link below or follow us on Twitter @TransportTimes