Smart ticketing - is everyone on board?

11 Oct 2017

Speaking at the Conservative party conference in Manchester last week, Transport Secretary Chris Grayling announced plans to invest £80 million into smart ticketing technology across the rail network in England and Wales.[1]

The investment is intended to ensure that every passenger in England and Wales has the choice of travelling without a paper ticket by the end of 2018, with the Government set to focus on mobile barcode ticketing and smartphone hosted travel cards as the primary means of meeting its new target. We look to explore the impact of this investment on passengers and train operating companies alike.

What is smart ticketing?

Smart ticketing means any alternative to the arrangement whereby a customer is issued a paper or cardboard ticket with which to travel on public transport. Traditionally, smart ticket travel was built around the system of storing tickets electronically on a microchip embedded in a smartcard. Today, there are numerous alternatives – the most well-known and utilised being the use of contactless debit/credit cards to access Transport for London (TfL) services.

To what extent is smart ticketing technology available today?

The North-South divide

A recent survey[2] highlighted the stark contrast between the use of smart ticketing technology in London and elsewhere in the UK, with 56% of those surveyed in London using a dedicated transport smartcard compared with 17% of those surveyed in the North of England. Critics have identified various factors contributing to the geographical divide, such as TfL’s early collaboration with Cubic Transportation Systems, an arrangement so productive that London’s contactless ticketing technology is now being exported to cities around the world.

Nevertheless, smart ticketing technology is gaining pace elsewhere in the UK, with the development of schemes such as 'Get Me There' in Manchester and smartcard programmes including 'Pop' in the North East, 'Walrus' in Liverpool, 'Robin Hood PAYG' in Nottingham and 'Swift' in the West Midlands.

Smartcards and smartphones

As payment technology has advanced, so have smart ticketing systems – as a result, purchasing a smart ticket can occur in numerous guises. As mentioned above, the classic smartcard system continues to be a popular model, with passengers often able to either buy a physical card or store a digital version of it on their smartphones. Smartphones have also enabled digital barcode technology, which is set to be a significant focus of the Government’s investment programme.

TfL, meanwhile, has taken one step further away from issuing tickets by unrolling the contactless purse payment method – this is where passengers use a contactless debit/credit card to access rail and bus services, 'tapping-out' at the end of their journey to generate payment. This is an interesting step in the development of rail travel, as it sets the future of ticketing on an entirely different trajectory; might the ultimate goal be to remove the concept of a ticket entirely?

What does smart ticketing mean for passengers?

Passenger demand for smart ticketing is the driving force behind the Government’s plans, but there is nonetheless some uncertainty over how enthusiastic rail customers are to go paperless.[3] Chiefly, the advantages to passengers of smart ticketing are:

  • Convenience: the option to purchase tickets in advance of travel and to 'tap-in' and 'tap-out' allows passengers to avoid long ticket queues and store multiple tickets on one platform, whether it be a smartphone or a smartcard, preventing them from having to manage multiple paper tickets over the course of a multi-faceted journey
  • Cost effectiveness: already in place in London and Nottingham, sophisticated smart ticketing technology can ensure that the customer pays the most competitive price for their journey by automatically selecting the cheapest rate available.

Notwithstanding the above, recent data suggests that around 40% of UK public transport users would prefer to keep using paper tickets in the future.[4] Perceived disadvantages of smart ticketing include:

  • Initial upfront costs: customers are dissuaded from investing in smart ticketing technology if there is a cost of purchasing smartcards;
  • Increased risk of data protection issues and cyber-crime: transport networks are potentially vulnerable to cyber-attacks, which could result in the loss of customer data; and
  • Usability: smart ticketing technology can sometimes be perceived as alienating to those uncomfortable with smartphone technology, potentially prompting a generational divide in attitudes toward smart ticketing generally.

How will smart ticketing affect train operating companies?

Given the emphasis placed on passenger demand for smart ticketing by the Transport Secretary, research suggests that there is a need for train operating companies to encourage a switch to smart ticketing technology.

Generally, smart ticketing has the potential to boost the profits and upgrade the operating models of train operators, with the advantages being:

  • Lower costs: smart ticketing technology eases the pressure on sales of paper tickets over the counter, thereby lowering operating costs
  • Improved customer experience and understanding: smart ticketing allows operators and/or service providers to collect more data about the ways in which passengers are using their transport services, which has the potential to help maximise ridership and improve customer satisfaction.

Details are yet to be revealed as to the distribution of the Transport Secretary's investment programme, although it was made clear that mobile barcode technology in particular is to be uniformly available on every rail franchise in Britain. Taking the lead from systems already in operation, the solution might be to couple the roll-out of smart ticketing technology with added incentives for customers, such as the ability to automatically claim delay repay. Research suggests that passengers would be receptive to schemes that allow them to save money when they switch to a smartcard,[5] for example by storing loyalty points when they make frequent journeys or via a fare cap system which sees passengers obtaining the best price possible for their journey.

Conclusion

Studies have shown that, above all else, customers choose how they travel based on cost and convenience.[6] Smart ticketing technology can give passengers greater control and flexibility over how they purchase their ticket and provide them with the most cost-effective fare for their journey. If train travel becomes more convenient and cost-effective there is every likelihood that ridership will increase, resulting in tangible benefits for all stakeholders. We wait with anticipation to see how the Government's plans for smart ticketing technology are implemented.


[1] https://www.gov.uk/government/news/government-plans-80-million-smart-ticketing-rail-revolution

[2] https://www.pwc.co.uk/industries/government-public-sector/transport/insights/smarter-travel-future-of-ticketing.html

[3] ibid

[4] ibid

[5] ibid

[6] ibid