Business

Unified ticketing: creating frictionless transport ticketing for passengers

Published

3 weeks ago

November 11, 2023

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Arnaud Depaigne, Product Manager – Smart Mobility, and Taoufik Sakhi, VP Deputy – Technical Advisory at Fime

Around the world, numerous cities have implemented complex digital ticketing systems to facilitate automated fare collection to increase the efficiency of growing transportation networks. Often, these ticketing systems have been implemented against the backdrop of misaligned urbanization and transport policies.

Furthermore, each transit system serves a varied group of passengers, and the diversity of urban organization between cities implies there has been no universal ticketing approach that has met the needs of all networks. However, there are consistent concerns that must be evaluated to make sure that a ticketing system continually meets evolving operational needs.

In the first of our five-part blog series on unified and interoperable ticketing, we will focus on the key passenger considerations that Public Transport Authorities (PTAs) and Public Transport Operators (PTOs) must keep in mind.

Simple, convenient and flexible ticketing

Charging the right price for a passenger’s journey based on their network usage and any applicable concessions, is a complex task for a PTA. Arguably the foremost point of friction for public transport usage is difficulty understanding the fare that is required for a journey. If passengers are unsure about the best fare choice, or do not know if the ticket they have selected meets their needs, this can undermine the trust between operator and user. This is especially true if a user is fined for accidentally purchasing the wrong ticket.

Passengers expect tariff structures that provide them with both flexibility and value for money. Amongst other factors, crucial to creating a loyal ridership for any public transport network is to make it a more affordable and practical alternative than using a private vehicle. And in an increasingly digitized world, many passengers expect a digital or contactless payment experience that eliminates the need to queue at ticket offices and machines.

An additional challenge is providing a seamless travel experience across all modes of transportation. Despite the recognized advantages of using contactless cards, such as saving time and increasing passenger convenience, purchasing different tickets for each individual operator or mode of transport is still a reality. In some areas, groups of cities or regions, several contactless cards are even required. The reason for this is commonly the different implementation phases each provider within a network has gone through and the constraints of maintaining legacy solutions, often done to accommodate the existing habits of certain passenger groups. Be they a regular commuter, an occasional user, or a tourist visiting the city for the day, unified ticketing provides travelers with a smooth and continuous journey, with a single transit pass throughout the transportation network.

Integrated and inclusive payment options

Between different groups of passengers, the preferred payment method can vary a great deal. The available payment options may depend on when legacy systems were implemented or existing contracts with solution providers and operators. Even within the same city, different operators may require different methods of payment, introducing unnecessary friction for passengers. Users may be required to switch from payment cards to cash, from contactless to contact card payments, or they may not be able to use new payment technologies such as digital wallets. Furthermore, each transaction may not be easily identifiable on their bank statement.

Whatever the fare collection system, be it smartcards, mobile ticketing or contactless open payments, unified ticketing offers a way to mitigate this diversity by ensuring that payment methods are consistent throughout the entire network. It enables more integrated payments between operators, strengthening the operational model of the transport network as a whole and optimizing payment acquisition contracts.

Unified ticketing also allows travelers to purchase their ticket more efficiently from any place and in any situation. However, it is important to ensure that those who may be less technologically savvy, are unbanked, or simply prefer cash, can still access the full transportation grid without exclusion.

Data sharing, security and privacy

Historically, ticketing systems were designed with little consideration for data sharing. Siloed businesses and systems could have been integrated, but this would have been an inefficient process and come at a high cost. In addition to this, separate systems offer nearly no means for passengers to understand the impact of data processing, nor do they benefit from a single mobility account to manage all their fares, payment methods and rights.

Transit fare collection systems handle a huge volume of transactions per day. The current architectural shift from card-based ticketing (CBT) to account-based ticketing (ABT) will increase service quality and help unlock better fare options for customers. Real-time transaction collection and account balance processing will allow users to reduce friction by monitoring their travel habits and payments live, meaning they can make sure they never try to travel without the necessary funds in their account. However, this enhancement in connectivity could lead to an increased risk of user data being exposed outside the boundaries of PTOs’ systems.

Individuals have the freedom to travel anonymously, and so even in a system that relies on sharing data between operators, data must be stored and managed securely. When properly managed, a unified ticketing solution facilitates a comprehensive data-led approach to travel for users. Operators working cooperatively can align their ticketing data processing to enhance security and anonymization. This helps the network to evolve according to regulations and in line with how passengers are using the service, creating a more efficient and dependable public transport offering.

A unified network

In the transit ecosystem there will never be a homogenous user journey. Urban commuters will always have different requirements to those of occasional users in rural locations. Furthermore, urban commuter habits have changed in the last few years due to the rise of working from home following the COVID pandemic. But while personal payment preferences can never be unified, the fundamental desires for seamless experience already are.

Unified ticketing can be a big step towards making public transport a more attractive option. By implementing this model around other modernized transit solutions, such as integrated travel information that gives real-time data on arrival and departure times, vehicle occupancy or even alternative routes, networks can create a simple transit offer that helps to foster increased ridership.

Unified ticketing is a strategic investment for transport networks and can help reduce costs and accelerate long-term objectives. However, the challenge of integrating multiple operators is significant and requires open, transparent communication between all parties.

Fime helps design and implement successful, interoperable ticketing projects. Its team of experts help guide multiple groups of stakeholders through the complexity of modern transportation networks, addressing the diverse range of passenger needs.

Business

Revolutionizing Risk: Innovative Derivatives to Support the Evolution of Commercial Space

Published

1 day ago

December 2, 2023

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By Grant Gryska, Co-Founder and Director of Markets at Allocation.Space

The space economy continues to expand rapidly, crossing $500bn in revenue in 2022, 78% of which came from the commercial sector[1]. Major developments like the successful test launch of SpaceX’s massive Starship are set to radically change the cost of getting mass to orbit, unlocking new possibilities for business in space.

This growing market presents outsized opportunities for investors, insurers, and businesses. But, as enterprises extend their reach beyond Earth’s atmosphere, risk management tools must evolve to meet the new and unique challenges they face. A new generation of derivative instruments is emerging to support the commercial space sector while complementing traditional insurance models.

A Paradigm Shift in Risk Management

Traditionally, space ventures were funded by governments and international space agencies — institutions that were able to absorb risk and ignore bottom-line concerns. The arrival of private space companies such as SpaceX, Vast, and Blue Origin represents a material shift in the trajectory of commercial space. National interest is no longer enough; space ventures must also turn a profit, which means managing risk. These enterprises are pushing the boundaries of what is possible, requiring a comparable evolution in financial tools to support their endeavors.

Grant Gryska

We’re now seeing a new generation of companies building platforms to host derivatives that enable enhanced risk management for the space industry. By hosting these products on a Swap Execution Facility (SEF), the aim is to bring pricing transparency and efficiency to the sector via a centralized venue. Unlike traditional insurance, which often relies on predefined policies and premiums designed to mitigate specific critical loss, swap contracts do not require proof of any actual loss or attribution, broadening the universe of potential participants in this growing market.

Derivative Instruments for Commercial Space

Derivative instruments tailored for the commercial space sector will help mitigate risks and enhance financial flexibility as the barriers to entry come down and competition increases.

Space Weather Derivatives (SWDs): With satellite anomalies demonstrating a 74% correlation[2] with geomagnetic disturbances caused by the solar wind, these products will become invaluable in managing revenue loss due to these disruptions. SWDs will ensure a smoother execution of space missions and terrestrial applications such as power grid management.
Space Derivative Contracts (SDCs): SDCs allow investors and companies to hedge against price fluctuations in space-related assets. Whether it’s fuel, space-based resources, or payload rate indexes across launch platforms and locations, these products provide a means to lock in prices, offering stability in an otherwise volatile market.
Space Options (SOs): Like traditional financial options, SOs provide the right, but not the obligation, to buy or sell a space asset at a predetermined price and time. This allows investors to capitalize on favorable market conditions while limiting downside risk.
Space Risk Swaps (SRS): SRSs enable entities to exchange or transfer specific risks associated with space activities. For instance, a satellite operator concerned about launch delay or orbital debris may enter an SRS with a risk-taking party, effectively transferring the risk to them. These products diversify risk and encourage collaboration among industry players providing complementary services like debris mitigation.

Complementing Traditional Insurance: Bridging the Coverage Gap

While traditional insurance remains a fundamental component of risk management, derivative instruments offer a more nuanced approach targeting the risks to revenue. These products provide a level of risk granularity that traditional insurance may lack or be unable to cover economically, which has left 99% of LEO (Low Earth Orbit), and 73% of MEO (Medium Earth Orbit) and GEO (Geostationary Orbit) satellites uninsured on orbit as of 2022[3]. This is crucial in an industry where risks to launch platforms, satellite technologies, and commercial objectives can be highly specific and variable.

The Future of Space and Derivative Instruments

There’s a growing cluster of companies looking to transform the financial products and venues supporting the commercialization of space. The derivative instruments being developed with the help of space industry players will provide a forward-looking and adaptive approach to risk management for space, complementing traditional insurance models.

As the commercial space sector continues its trajectory beyond Earth, these innovative financial tools will play a pivotal role in ensuring a robust and resilient financial ecosystem for companies participating in the space economy.

[1] https://www.spacefoundation.org/2023/07/25/the-space-report-2023-q2/

[2] Choi, H. S., J. Lee, K. S. Cho, Y. S. Kwak et al., 2011, Analysis of GEO spacecraft
anomalies: Space Weather relationships, Space Weather, 9, S06001.

[3] https://spacenews.com/connecting-the-dots-space-insurers-toast-another-profitable-year

Business

2024 Payments Predictions

Published

2 days ago

December 1, 2023

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Alan Irwin, Vice President of Product & Solutions Europe, Global Payments:

Open banking in 2024 will be all about the consumer

“2023 has been a huge year for open banking adoption, surging 68.2% from the previous year to hit 4.2 million users in the UK in July. Open banking enables consumers to provide third-party providers (TPPs) with secure access to their payments account, meaning that payments can be made through these TTPs directly from their payments account and without the need for cards.

“With more people using open banking for payments, in 2024 consumer expectations of open banking are likely to increase dramatically. Consumers will demand higher levels of speed, convenience, and security around open banking as a payment method. As a result, there will be a renewed focus on the availability and performance of APIs and user interfaces. Without improving these features, TTPs will see growth in open banking payments stagnate and even struggle to compete with digital wallets and standard cards.

“2024 will also see a stronger emphasis placed on consumer protection from fraud and scammers. With £239.2 million lost to authorised push payments (APP) fraud in the first six months of 2023, security is front of mind for businesses and their customer bases. A key differentiator for open banking and card payments is the liability protection offered by cards through the disputes and chargeback processes. Merchants and consumers alike want the power to protect themselves with tools and processes to limit financial exposure. As such, to grow in the coming year, TTPs will need to develop and implement enhanced risk and fraud prevention tools to help drive confidence in the payment channel and mitigate concerns around exposure.”

Competition between old and new banks will intensify around convenience

“Growth in consumers’ desire for a financial ‘super app’ experience will put a great deal of pressure on traditional financial institutions and increase competition between neobanks and legacy banks in 2024. A financial ‘super app’ is a single mobile application that can be used to manage all aspects of your financial life, including services that range across savings, investments, mortgages, and payments, for example.

“Neobanks, such as Revolut, are creeping into ‘super app’ territory: providing a range of services, from shopping discounts and savings pockets to instant currency conversions and stock investing, all on a single mobile application. So far, these developments are almost exclusively in the consumer banking space. However, in 2024 we will see the neobanks push their payments offerings further up the value chain into the B2B world, challenging traditional banks on another front.”

Ecommerce checkout enhancements

“In 2024, payments providers and their clients will place a fresh emphasis on customer experience, as demand for convenient and slick payment processes continues to increase. Currently, 69.57% of online shopping carts are abandoned and less than one fifth (17%) of retail, leisure and hospitality transactions are made through digital wallets, showing that much more needs to be done to offer smoother payment infrastructure online and in-store. As such, in 2024 businesses will focus on customer experience as a means of increasing customer loyalty and slashing cart abandonment rates in the process. Moving away from slow, clunky payment experiences to offer customers the ability to pay for something with a few clicks through biometrics, which allow customers to pay with a simple face or fingerprint scan, and digital wallets, which store customer payment information, is the primary method that businesses should be using as we approach the new year to tackle this issue.”

Data Storage and Keeping Customers On-Site

“Providing a top-quality payments experience will go hand-in-hand with ensuring that consumers feel safe at the checkout, especially with soaring cybercrime. In 2024 we’re likely to see more use of card data storage and tokenisation to further reduce cart abandonment rates as they allow consumers to store their card details for future use, making their next purchase at the ecommerce store much faster. Network tokens in particular, which are tokenised payment details saved for a specific card and merchant pair, drive higher approval rates for merchants and offer a more secure form of payment than raw card data entry. In addition to this, continuously updating customers’ card data further reduces friction in the checkout and drives better cart conversion.

“What’s more, customers are also put off payments when they are redirected to another (3rd party) site to complete it, as it is unfamiliar to the rest of the checkout process, often doesn’t carry the merchant brand and thus deemed insecure. Therefore, reducing site changes as much as possible and using clear branding and UX to ensure customers are aware that they’re still on this same site is key to instilling a sense of security. Similarly, real-time data validation built into the payment form can prevent bad data from being entered in the first place, such as invalid PAN, expiry date, or security code, as well as keeping out bad actors from spamming through card data en masse.”