PLAYING THE SMART CARD

Smart or memory?
Chip-based cards are currently all the rage in the transport industry. They are not,
however, a new idea. Such cards, which are known in some countries as Integrated
Circuit (IC) cards, were first patented in France by Roland Moreno in 1974. They are, in
effect, micro-computers. The processing and memory capacity varies according to the
software specification. Many chip cards are basically disposable memory cards –
technically speaking a ‘smart card’ should have its own micro-processor and built-in
logic.

Pre-paid telephone cards were their first major application. Now, such cards are widely
used for banking, access control, health and social services, loyalty schemes, passports
and many other single or mixed applications. Cornwall County Council, for example,
operates a ‘citizens’ card’ called the Cornish Key. This identifies holders as residents of
Cornwall and replaces the individual cards for fare-concessions, library-membership,
council employees, school meals and car parking. Further services are planned, including
a loyalty scheme for bus users.

The main force behind the development of card-based systems in the transport sector, has
been either a need for integrated, seamless travel within an area (as with the London
Travelcard or Scotland’s One-Ticket) or for the possibility, as with the Cornish Key, of
having a multi-function card that can be used for a variety of applications, of which travel
is one.
There are two main types of smart card. The original version has contacts on the surface
and must be inserted into a reader. Now contactless cards (which may be of either long-
range or proximity types), are becoming popular. They need only be worn near the reader
or passed over it and have the advantage that, in principle, they can be kept in the
holder’s wallet and, therefore, do not wear out easily.

An intermediate type of card, called MOSAIC (Module On Surface And In Chip), was
developed as a means of cutting costs. Combination cards, which have the features of
both the contact and the contactless varieties are used for some applications, especially
where ‘electronic purses’ are involved. Such cards may use two separate chips (as is the
case with French bank cards) or else a single chip which allows loading and use through
either interface. Smart cards may also carry magnetic stripes, as do many credit and debit
cards (a further development is being tried in Orlando, Florida where users can tap or
wave their contactless cards at a reader and the system automatically transmits the
magnetic stripe information when this is needed for a transaction).

Just the ticket?

The advantages of using electronic ticketing systems, such as smart cards, are that they
are easy to use, secure (in terms of transaction and payment safety), reduce fraud, are
fast, reliable (few card or terminal errors and failures) and have low maintenance costs.
There are several moves towards standardisation and harmonisation of both software and
hardware, involving the ISO (International Organisation for Standardisation), CEN
(European Committee for Standardisation) and Calypso, as well as nationally (BSI –
British Standards Institution or ITSO – Integrated Transport Smart Card Organisation).
Within the industry there are hopes for a single standard, in much the same way as that
developed for digital mobile phones: GSM – developed by Groupe Systeme Mobile.

A disadvantage of using smart cards for simple applications is their cost. Over-capacity
and competition in the industry have brought down prices considerably (a few years ago
they could still cost as much as £5 each), but it may still be difficult to justify the
expenditure. The high initial cost also means that it is important to keep ‘wastage’ low, as
every lost card adds to the scheme’s expense. The collectability of chip cards is a
contributor to the problem: when the transport authority of Seoul, the South Korean
capital, first introduced chip cards the entire issue was taken up by collectors and dealers.
Similar problems have occurred in some British cities, such as Bradford and Nottingham.
While enthusiasm amongst transport operators for the introduction of smart-cards is
great, it can take far longer than expected for a such a scheme to come to fruition – or it
may not be realised at all. Germany’s national association of transport undertakings
(VDV) began testing a rechargeable multifunctional chip card combined with an
electronic purse (which stores credit transferred from a bank account to pay for small
purchases, such as fares, newspapers, hamburgers or phone calls) back in April 1996.
Five cities (Dresden, Frankfurt, Hamburg, Munich and Stuttgart) were involved and it
was intended that a common standard would be developed in time for a national roll-out
no later than November 1997. However, it is only now that using the system is becoming
popular. For example, ASK SA, a major supplier, has recently delivered nearly two
million contactless cards to the 54 operators in North-Rhine-Westphalia for, what is
claimed to be, Europe’s largest smart-card transport project.

Another major launch, in a blaze of publicity, was Australia’s first contactless transport
scheme which was born after three years’ gestation. In March 1995 Transcard began a
three-month trial on Sydney’s buses, trains and taxis prior to its national launch that July -
in good time for the Sydney Olympics. The scheme was promoted as going “one step
further” than other smart cards as all the cards were anonymous (thereby protecting the
users’ privacy) and combined both ticketing and payment systems. “The benefits will be
enormous and a boon for transport operators”, announced a spokesman for the New
South Wales Bus and Coach Association, while the chairman of Cabcharge Australia
enthused about its security and simplified payment benefits for taxis. And where is it
now? Dead. Australia’s Federal Court found that the software had infringed another
company’s patent!

More successful, one hopes, will be the major British scheme: London’s Oyster card,
developed as a key element of the £1100m. Prestige project to develop a new integrated
revenue collection service for London’s buses and Underground.

London, the world’s Oyster

London trials for a contactless smart card began in the early 1990’s, first with some
small-scale experiments (for example, on bus route 212 using bus pass-holding
volunteers) and, in 1994, in Harrow where a trial covered the whole town and all local
operators. Buscom (Finland) supplied off-the-shelf technology coupled with a proximity
card. Initially the Harrow cards were issued as smart photo-cards to be checked against a
reader each time a passenger boarded a bus. The cards came with magnetic passes for
visual checking throughout the rest of the London Transport bus and underground
system, although the mechanics of this were not made clear to all staff and passengers.
The plan was to extend the trial with a transferable stored-value Farecard sold for an
initial value of £10, rechargeable either at newsagents or on buses in Harrow.
Oyster, itself, opened at the end of 2002, initially for London Underground’s 80,000 staff
and their families. The scheme is the product of a 17-year Private Finance Initiative (PFI)
for Transys, a consortium of EDS (for management/operations), Cubic Transportation
Systems (AFC Infrastructure), Fujitsu Services (retailing and IT development) and W.S.
Atkins (transport consultants). The major partners are EDS and Cubic (the Cubic
Corporation has for long had contracts to supply ticket-vending machines and gates to
London Underground and to run much of the AFC system). It is hoped that eventually
Oyster will become a multi-function card with a wide range of applications added.

Oyster has been financed, designed, manufactured and installed by Transys. The system
is based on a contactless proximity smart card (produced by Giesecke & Devrient and
Schlumbergersema) which incorporates Philips’ Mifare software. While such cards can
be read within a range of 1.0" to 3.9" (2.5 to 10 cm), Oyster is at the lower-end of the
scale. Technology similar to RFID is used – an electro-magnetic field that modulates the
power between two antennae. Although Oyster is generally described as a ‘smart-card’ it
is technically a ‘memory card’ as it has a limited capacity to store information (1KB of
memory and no processor), has only a single application and is dependent on the card
reader for data manipulation.

It is anticipated that 2-3 million cards will be in use by the end of the first year of
operation although, initially, they were available to internet and telephone applicants
only. Since the autumn, monthly, quarterly and annual season-ticket holders have been
able to get Oyster cards from booking offices and shops. Towards the end of 2003, Oyster
will be extended to less-frequent passengers with a decrementing stored-value card for
occasional travellers (loaded with from £5 to £100 value) and in about two years it is
expected that a tourist card will also be available. According to Dick Hallé, London
Buses’ Strategy Director, the present plan is that by 2005 London’s transport will be
‘cashless’ – although, as recently as November 2002 Martin Howell, the Chief Executive
of Transys, claimed that magnetic stripe cards would be available for a ‘large proportion’
of customers for the foreseeable future.

All Oyster cards are ‘pre-paid’ (i.e. payment must be made before the card can be used).
Stored-value cards will have unlimited validity and, like weekly-seasons, will require a
£3 refundable deposit.
When the holder of a stored-value card enters the Underground, the card’s value will be
transferred to the system and re-credited on passing through an exit gate (with the
exception of the few interchanges, such as King’s Cross and Stratford, which require
passengers to pass through both ‘outward’ and ‘inward’ gates). If a passenger fails to ‘tap’
the card against the reader on leaving the system, a basic fare of £5 will be deducted (it is
easy to miss the card readers, as stations are required to have the gates open when
insufficient staff are available to man them). Unlike Hong Kong’s Octopus Card, for
example, the London ticket gates give no read-out of the remaining balance or validity of
an Oyster card. It is hard, therefore, for a user to verify that the correct fare has been
deducted: some wall-mounted add-value machines do allow balance verification.
However, the user must know how to do this. The procedure takes time and delays other
passengers; checking machines located near to platforms would help).

Holders of stored-value cards will have the option of registering their details so that, if
the card is lost, any remaining travel value can be credited to a new card and the old one
can then be blocked from further usage. If credit card or bank details are supplied, card-
holders will be able to receive automatic renewals or top-ups, either on the basis of
continuous authorisation or when the remaining value falls below £5 by tapping the card
on a reader at a nominated station. Once authorisation has been received from the
registered bank or credit card company, the card will have been re-valued in time for the
next journey.

Nicole Carroll, marketing director of Transys, claims that mobile phone payments will be
available from early 2004. She is currently testing the possibilities with her own Nokia
3310 hand-set (the most common pay-as-you-go phone) and expects Oyster payments to
be available through an integrated contactless SIM card.

Once Oyster is fully-operational, daily usage is expected to exceed five-million

transactions and all transport in London should be cashless (though how people who
travel infrequently will be catered for is not, yet, known). Transport For London hopes
the card will be such a success that it is currently in discussions with the train operating
companies about integrating Oyster within a national rail smart-card scheme.

Whether these expectations will actually be met depends on how reliable the system is.
The Mifare chips in Oyster cards are based on relatively old technology (dating from the
mid-nineties) and are, in effect, available from only a single source – Philips Electronics
(a more secure version of Mifare has been developed, but it is considered too
sophisticated and costly for transport ticketing applications).

Critics claim that it is risky for such a large project to depend on one supplier’s
proprietary software which will probably need replacement after, perhaps, five or six
years. Security may also be an issue.

One of Oyster’s key selling points is its ability to speed passage through ticket gates and
cut bus boarding times.
For Martin Howell of Transys, getting users to accept, and feel happy with, Oyster is
down to the three ‘E’s: evaluate (needs, expectations and planned deliverables), educate
(the users) and execute “get it right the first time, on time, every time”. Sounds good.
But, perhaps a lesson can be learnt from Singapore, Asia’s ‘intelligent island’, where
much effort went into explaining their smart card to the public.

Here, the difficulty of making short-term assessments was ably demonstrated.

Singapore’s contactless stored value Ez-link card was introduced in early 2002. Ez-link is
a multi-function card with separate entry and exit processing. As in London, the launch
was staggered through the different categories of user. Yet, Silvester Prakasham, General-
Manager of Ez-link, had a heart-stopping experience on the launch day: the Transport
Minister was to be the first to test the system but, faced with a software failure, the event
had to be postponed. After that, the public service developed smoothly – until the final
group of users had been issued with their cards. That was the real test of the system – and
when all the problems appeared.

London has committed £200m. to the Prestige project over 17 years and the world is
watching.

Ralph Adam
September 2003.