Bus Services Bill [HL]

Written evidence submitted by the UK Cards Association (BSB 19)

House of Commons Public Bill Committee: Bus Services Bill Inquiry

 

1. The UK Cards Association is the trade body for the card payments industry in the UK, representing financial institutions which act as card issuers and acquirers.

2. The Association promotes co-operation between industry participants in order to progress non-competitive matters of mutual interest; informs and engages with stakeholders to shape legal and regulatory developments; develops industry best practice; safeguards the integrity of the card payments industry by tackling card fraud; develops industry standards; and co-ordinates other industry-wide initiatives such as those aiming to deliver innovation. As an Association we are committed to delivering a card payments industry that is constantly focused on improved outcomes for the customer. www.theukcardsassociation.org.uk

General Introduction

3. This response outlines some issues for the Committee to consider in scrutinising the Buses Bill. It does not comment specifically on the different clauses of the Bill but focuses mainly on the smart ticketing aspect.

4. Building on the success of contactless payments on the Transport for London network, UK Cards is leading a project to develop a contactless transit framework for the UK. Our aspiration is to enable customers to pay to travel on public transport outside and into London using their contactless bank card or device to move easily across different transit operators.

5. We recognise that the Buses Bill, in conjunction with the Cities and Local Government Devolution Act, offers the opportunity for a more joined-up approach to ticketing. The new arrangements for local authorities and bus operators to enter into Advanced Quality or Enhanced Partnerships could lead to more clarity for passengers on fare structures and encourage interoperability between different bus providers. This would make it easier and simpler for passengers to travel seamlessly between different cities and regions.

6. In particular, we emphasise the importance of implementing interoperable smart-ticketing systems across boundaries which will require the bus operators to take more of a collaborative approach. This would be similar to the payments industry, which is highly competitive while relying on harmonised standards and infrastructure so that customers have a consistent and frictionless experience. Bus operators will need to share ticketing information between them, as will bus and rail operators, to allow passengers to travel with different operators. This allows for local experimentation and competition, for example through fare variance or ticketing types, without introducing the fragmentation some of the ITSO implementations have brought in.

Detailed Comments

The Benefits of Contactless Ticketing

7. Since 2014, London passengers have been able to use their contactless bank cards on the Transport for London (TfL) network covering bus, underground, tram and some train lines. TfL introduced these changes for a number of reasons including to save costs on printing tickets, managing Oyster smartcards and the Oyster machines; and to save time for customers in not having to top up smartcards. The changeover to the new system has been very successful, with over 40% of all pay as you go journeys on TfL now taking place on contactless cards rather than Oyster, and 18 million unique cards used to date.

8. There is a growing consumer desire to see contactless card payments as an option for travelling on public transport outside of London. Transport Focus research from October 2016 shows 61% of people think contactless is suitable for paying for train, bus and tram fares, and 43% say they would be likely to use contactless on public transport if it was introduced tomorrow. This chimes with the steady growth in use of contactless payments in retail environments outside of London. The majority of people have at least one contactless card and contactless payments are growing in popularity – one in four card payments are now contactless.

9. The cost of paper tickets and other smart-ticketing solutions represents a large portion of the cost of sale, while the handling of cash remains expensive and problematic. By contrast, contactless transit is relatively low cost to operate after the initial infrastructure outlay. Additionally contactless transit can offer transit operators customer data by which to drive operational and route optimisation.

UK Cards’ Contactless Transit project

10. Since early 2015, UK Cards has been working with a number of transit operators, the Rail Delivery Group and the Joint Bus EMV Programme to establish a framework for transit operators to introduce contactless card acceptance on their own transport mode networks. The Joint Bus EMV Programme was established by the five largest bus companies (Arriva, First, Go Ahead, Stagecoach and National Express) to take forward the commitment to introduce contactless acceptance on all of their combined 26,000 buses outside of London by 2022.

11. The Contactless Transit project has developed three models:

12. Model 1, a Single Pay As You Go Model, where the contactless card or device is used at the start of the journey with a known fare. For example, this model will be implemented on the Translink network in Northern Ireland, which operates a linear distance-fare structure.

13. Model 2, an Aggregated Pay As You Go Model, where the contactless card or device is used multiple times, and the fare is aggregated at the end of the day or journey leg. For example, this is the model that operates on the TfL network.

14. Model 3, a Pre-Purchase Model where the passenger buys the travel allowance in advance which is then associated with the contactless card or device and used as access credentials to travel.

15. Using our contactless transit framework published in early 2016, seven individual bus operators have launched or announced plans for contactless transit schemes in Belfast, Leeds, Loughborough, Oxford, Newcastle, Bristol, Reading, Manchester and Guildford, and we are expecting more launches in other UK cities soon.

16. As the number of implementations increases, differences in customer experience are already starting to emerge. Consistency for customers and interoperability are therefore a key consideration for all parties involved in the project.

The Importance of Interoperability in Ticketing

17. A key reason for bus operators to utilise customers’ existing contactless cards is to encourage passengers from other areas to use their services, without having to buy into a proprietary card system. It is particularly important for regions accruing new powers under the City and Local Government Act, such as Transport for the North and Transport for West Midlands, to consider how passengers will travel between their bordering regions. To support this, travel information will need to be shared through a limited number of ‘back-office’ systems.

18. The UK Cards led project is investigating the mechanics of interoperability across a number of likely scenarios. In some cases, information about where the passenger has tapped in and out of the system will need to be shared between operators to allow them to calculate the correct aggregated charge, and then to apportion the revenue between the operators. In other cases, it is likely that information will need to be sent to the relevant transit operators’ systems in advance so that the passenger will be allowed to enter their systems.

19. The complexity of interoperation grows exponentially with the number of back offices, and back office development is expensive. This is why we recommend that there are as few ‘back office’ systems to manage this information as possible and suggest support for the coordination of the back office system.

20. The UK Cards Association supports the Transport Select Committee’s view that the Department for Transport should produce guidance, which supports Local Transport Authorities in developing ticketing schemes, and that they should co-ordinate the development of back office ticketing functions to limit unnecessary complexity or duplication.

March 2017