Taxis are a such an interesting case study when it comes to exploring the future of mass-market retail payments that I can’t help but be fascinated by them and their use of new technology.

Well, as I’ve mentioned once or twice before, I see taxi drivers as being the vanguard for proletarian payment tastes and a prosaic benchmark for new transaction technology. That’s why I so enjoyed making a podcast with David Nagy from DDS Wireless International, North America’s biggest supplier of taxi dispatch systems and that’s why there is nothing at all odd about me photographing the insides of cabs from around the world. Here, for example, is what a taxi looked like during a recent visit to Singapore.

As you can see, the guy has two phones hanging from his windshield, one from Uber and one from another local service. He has both to maximise his chance of spotting a decent fare. In fact, he has three, because he also has a screen from the taxi company that he was actually working for when he picked me up.

Heather Schlegel’s podcast series about the Future of Money is excellent — she covers a different kind of ground from me and gives me very useful perspectives on the evolution of the technology — and she covered some taxi-related antics in a recent (brilliant) episode that I urge you to listen to.

Ruth was an early Los Angeles Lyft driver, and we’re talking about her experience with Lyft and her active participation in the Resource Sharing Economy.

[From Future of Money Podcast : Ruth Grayson on Lyft and the Sharing Economy]

Heather and Ruth have an interesting exchange about taking the payment away from the point of service and touch on the way in which services such as Lyft, Uber, AirBnB and others have made exchange more civilised by removing money from the point of service (a point reinforced in the “From Check-out to Check-in” talk that Douwe Lycklama of Innopay gave to kick off the Barclays/Consult Hyperion Tomorrow’s Transactions Digital Identity Unconference yesterday). This is an important factor in thinking about the future of payments since, as Heather and Ruth observe in their conversation, there are social implications to the vanishing payment experience, a topic I intend to return to.

In case you think I am obsessed, by the way, I should say that taxis are not the only proxy for the mass market that I pay careful attention to. There’s another that I particularly like. I came across this snippet about Softcard in Mobile Commerce Daily.

Payment solutions provider USA Technologies’ collaboration with mobile wallet solution Softcard recasts the mundane task of doing the laundry while driving momentum for NFC adoption.

It’s nearly two decades since I did some work for Mondex, as was, studying the one merchant category in the Visa/MC Manhattan trial that had seen traction with the general public. For our younger readers, I should point out that Mondex was an early attempt at cash replacement using a pre-paid card, one that had very clever card-to-card (i.e., cash-like) capabilities. So what did people use it for? Yep, doing laundry.

Back in 1999, I wrote up a case study on laundromats for the sadly long-gone Financial Times Virtual Finance Report

[From Throwing good zinc after bad – Tomorrow’s Transactions]

My investigation into the relationship between digital money and laundry machines turned out, as it happened, to be a lot more interesting that I had expected. As a junior deputy under assistant payments guru at the time, the reason for the investment by laundry chains came as something of a surprise to me.

I can remember calling up some of the people involved in these chains and being really surprised to learn that the main element of the business case was not (as I had imagined) the cost of machines getting jammed or the cost of coin collection but the increased sales through the differential pricing.

[From Throwing good zinc after bad – Tomorrow’s Transactions]

It seems somehow exciting to me that two decades on, the next generation of cash replacement technology is starting in the same place.

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

A big story to finish the week. You can now travel around London on the buses, tubes, trams and docklands light railway without having to queue for tickets or reload your Oyster. You can now use your contactless payment cards, stickers, wristbands and goodness knows what else instead.

For the last few years, colleagues at Consult Hyperion have been working for Transport for London (TfL) on a really big, fun, interesting and challenging project to allow customers to use mass transit in London without having to have a transit card, using instead the contactless payment cards issued by banks. You might remember that back in 2011 we recorded a podcast with Shashi Verma and Will Judge at TfL when they talked about the ambition to move to “open loop” on one of the world’s biggest transit networks. Well, open loop ticketing went live on the buses a couple of years ago and I wrote at the time that:

To make the simple tap-and-go work for millions of consumers taking millions of bus rides, reliably and securely, is very complicated. To hide all of the complexity from consumers and make the tap work in a few hundred milliseconds was a tall order. But they’ve done it, so well done TfL.

From You wait ages for a contactless terminal then 8,500 turn up at once – Tomorrow’s Transactions.

This week, this tap-and-go convenience was extended across the whole TfL network. Wow. And I genuinely mean it. Wow.

Passengers on the tube and most of London transport can now travel using a contactless card… Passengers will not need tickets or Oyster smartcards on the tube, tram, DLR, London Overground and rail services that currently accept Oyster cards.

From London tube introduces contactless payments | Money | theguardian.com.

So, in honour of this fantastic achievement, and to stand in testament to my colleagues’ efforts going back to the days when it was just scribble on a whiteboard, I thought I would take you on a little video diary tour of the new Jerusalem and provide a step-by-step guide.

OK. First and most basic lesson. Use a contactless card.

Second lesson. Don’t use a card that has just been used to go through a gate because the system won’t let it through again right away.

Remember, there are computers involved. So sometimes a card that we thought should work, doesn’t because of complex issues relating to cryptography and personalisation that should not affect the general public. Also remember that some things won’t work because they are not supposed to. My splendid contactless watch, sadly, is (correctly) not accepted.

Our dream, of course, is to sail on and off public transit with no more than a flick of the wrist and a super-dooper Apple-style iPhone thingamajig…

Ta Da! On and off the Tube with an iPhone. Sadly though, this is a piece of David Blaine-style trickery designed only to fool credulous observers and not eagle-eyed blog readers. Since I don’t have an iPhone 6, and even if I did I don’t have a US credit card from one of the launch issuers, I couldn’t possibly have used an iPhone. It’s a trick! In fact I made my own people’s NFC device by glueing a plastic pocket to the back of my phone and then putting a contactless credit card inside it!

By now you are probably wondering what cards do work! Well, actually pretty much all contactless credit and debit cards will work. Here’s one you might like: my BA Amex card is contactless and I can now collect BA Avios by travelling in London.

And so to the prosaic. The mass market use of open loop on London’s various modes of transport will be contactless debit cards. So here, rather boringly, since it all worked perfectly, is the mainstream money shot. Getting on the Tube without a ticket or an Oyster card, just using my regular, run-of-the-mill Barclays Visa debit card…

Don’t forget to tap out, by the way, or you’ll be charged the full fare. So long as you tap in and tap out, daily and weekly fare capping applies just as it does with Oyster so you have no need to worry about the cost of travelling across, around, over or under our fair capital.

And finally, as they say, it means a symbolic goodbye to my beloved Barclaycard Visa OnePulse, the best credit card the chaps in Northampton ever issued, and it’s triple-interface goodness. So long old friend.

It’s taken a lot of hard work to make something work this simply, this well and at this scale. A hearty well done to all.

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

For example. I checked in for my last United flight using the app on my smartphone. Cool. It worked quite well once I’d found the confirmation code (or whatever they call it) in an old e-mail from our travel agent. The mobile check-in gives you a QR code that you can use to check in at the airport. But the machines at the United counters at JFK don’t read these codes, so you have to type in your confirmation again at the counter. Then the machine asks you if you want to check a bag. I did, and the machine then wanted $25 (*). You would think that, this being nearly 2014, and since the machine and my app both know which booking this is and since they are both connected via the interweb tubes, that my app would then pop up and ask me to confirm the $25 charge and then charge it against a card on file or take it from the company account that was used to book the ticket or whatever. But no. So I had to get out my wallet and swipe a card. Swipe! Not even chip and PIN! I could, of course, have used anyone’s card since there is no CVM at all, PIN or otherwise.

On the plane, the United purser announced the meal service. You have to pay for the meals in economy class so I just got a snack box. Anyway, admirably, they won’t take cash and you have to use a card. But my card was in my wallet, which was in my laptop back, which was in the overhead bin. Total hassle. Once again, I note that you can use anyone’s card since there is, again, no CVM.

Apparently, using anyone’s card must have been happening a lot on British Airways, because if you use your card in-flight on BA, even if it’s a BA Amex chip and PIN card and you have status on BA and you must have had a boarding card to be in the seat in the first place, they swipe the card rather than do a chip transaction and they make you get your passport out and they record the details. When, on a recent BA flight, I asked why they had adopted such a time-consuming and irritating payment process, the flight attendant told me that they had very high card fraud on certain routes. In a spirit of international harmony I will not repeat the specific routes that she mentioned, and the geography is not relevant to my point here, but again I wonder why I can’t buy stuff in-flight using my BA app. My app could record the purchases in-flight and then charge against a card on file or an account when I get off the plane. How much fraud could there be? It’s my phone and my app (you have to enter a password to run the BA app) and they can see which seat I’m in. Maybe BA could try another kind of innovation, though, and follow the example of the Indian airline that sends people round to your house to collect the cash…

The airline is still happy since the cost of the cash collection service is actually lower than the average Merchant Discount Fee currently incurred by the airline for accepting card payments

[From The Less-Cash Society | Snarketing 2.0]

I don’t feel that I’m asking for the moon to ask for a little integration between Amex and an airline. Why can’t my Amex app grant my BA app permission to charge in certain circumstance? Why can’t my BA app link to the BA in-flight system? Why doesn’t my BA app have a prepaid account connected to it (hello Serve) for offline in-flight payments? Why can’t everyone play together nicely in the payments and travel world! I can assure you it’s not a new idea! There was a time when new technology brought Amex payments and an airline together…

In January 1970, American Express issued 250 000 mag-stripe cards to its Chicago-area customers and installed self-service ticketing kiosks at the American Airlines counter at Chicago O’Hare International Airport. Cardholders could opt to get their tickets and boarding passes from the kiosk or from a human agent. They flocked to the kiosks. In fact, United Airlines customers walked to American Airlines—at the other end of the terminal a quarter mile away—to use the kiosks.

[From The Long Life and Imminent Death of the Mag-Stripe Card – IEEE Spectrum]

Wow. That was a couple of generations ago. As I said, we’re only just beginning. This was at the dawn of the magnetic stripe era and I hope for some similar innovation at the dawn of the mobile era. To me it seems a rather appealing vision to potter along to the airport with my phone and use it to check in, get on the plane and interact in-flight. Maybe contactless technology could help here.

The airline has 3 million EuroBonus members, and among these it issued the sticker to many of its most loyal frequent flyers, EuroBonus Gold members. It issued 20,000 stickers last fall in Sweden and another 35,000 in Denmark and Norway starting in March… A follow-up survey of these users by SAS found that 87% said they had applied the stickers to the back of their mobile phones, and 68% said they had used it at least six times since October.

[From Airline to Introduce NFC App Following Successful Sticker Launch | NFC Times – Near Field Communication and all contactless technology.]

Stickers are, as I may have mentioned, the future. But in another parallel universe, where NFC has a future, there are some people who are still working on that phone-based contactless future with gusto and developing scenarios where it might be a success.

A guide setting out the potential use cases for NFC in the air travel sector has been published by the International Air Transport Association (IATA) and The NFC Forum.

[From IATA and NFC Forum publish NFC air travel reference guide • NFC World]

Could there be progress in this area? It’s difficult. We looked at this for a client a couple of years ago and found real barriers. For one thing, all of the “component experiences” in a journey belong to different people. The airline doesn’t control the immigration desk, the immigration desk doesn’t control the airport, the airport doesn’t control the handsets and so on. Yes, phones could work as tickets and boarding cards, although I have to note that this trivial and obvious use of NFC has already been patented by Apple, whose phones do not have NFC.

The USPTO has granted Apple a patent for a service that lets travellers use their mobile phone to both buy an airline ticket and pass more smoothly and speedily through an airport on their day of travel.

[From Apple awarded patent for mobile airline ticketing and travel service • NFC World]

Never mind, I expect they have some clever Bluetooth LE plus fingerprint alternative waiting in the wings. I see, by the way, that both Amex and United have been announced as partners for the Samsung Wallet. As the good people at Samsung have very kindly asked me to come along and give a talk at their forthcoming developer event for Europe, I shall pass on my suggestions (and any further that you send me) to the relevant people in person.

(*) I simply do not understand airline policy on this. United were charging people $25 to check a bag. As a consequence, people get on to the plane looking like models for Buckaroo. Naturally, this means that a) getting on the plane takes forever and b) there’s no room in the overhead lockers. As a consequence, the staff have to make people check their bags at the gate. But get this: if your bag is checked at the gate, it’s free. I took a laptop bag and checked my suitcase and paid the money. Next time, I’m taking two huge carry-ons and I’m going to call one of them a purse.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

Really Arriva? In 2013? At this point (in common with approximately two-thirds of all mobile purchasers in the UK), I gave up. The marketing people call this “cart abandonment”, I understand. I was about to drive to the station instead, intent on using my trusty RingGo app to pay for parking (after all, I’d have half-an-hour to kill standing up on the train, so I could re-enter the card details then), when I realised that there were some coins in my car’s centre console. Grabbing them, I saw I had enough for the bus. So much as my great-great-grandfather might have done, I waited for the bus and bought a paper ticket with coins. “Hhhmmmm….”, I was thinking to myself, “I’m glad payments work well, and I can see why people question the need for mobile payments”.

Soon enough I was at Woking station, where the system is not as advanced as it is on the buses. There is no mobile app, even an annoying one, so you have to stand in line for ticket machines. These have recently been upgraded, as you can see here:

I couldn’t really say how they have been upgraded, since on the odd occasions when they are working, all they seem to do is print out exactly the same tickets as before. Anyway, I got on train and set off for Canary Wharf, and soon enough found myself at the launch. Barclays were showing off their new PingIt services for corporates and they had invited along a wide range their customers to check it out: utilities, retailers, consumer goods and so on.

In truly astonishing, almost supernatural instance of money-related morphic resonance, as I started to enjoy the PingIt corporate hospitality, this arrived on my iPhone…

Yep. A bona fide PingIt funds request. Having two teenage children, I am a frequent PingIt user – this wasn’t staged for effect! So far, however, I’ve only used PingIt for inter-personal money transfer and to buy Bitcoins. Around the country, however, consumers are starting to use it to pay merchants. I saw an airport taxi ad with a PingIt logo on it and I’m going try to persuade my taxi driver to start taking it – I’ll ask him why he doesn’t take cards. I should have asked our oven repair man last week but I forgot. His GPRS card terminal wouldn’t take my card (couldn’t get a reliable connection, what with us being out in the wilds of Woking) so I should have asked about PingIt but much to my disgust I wrote out a cheque instead. People are already using PingIt to pay utility bills (Severn Trent have started sending out water bills with PingIt QR codes on them) and charities (they have integrated Gift Aid notification into the app). All in all, I can see why PingIt has become such a case study of what can be done by a retail bank when they put their minds to it.

In more advanced parts of the country, PingIt is already being integrated into the transport network. Take, for example, the case of Wessex Bus. A happy commuter in their zone of control can buy a bus ticket using the PingIt app already installed on their phone rather than having to mess about entering a 16-digit PAN and other details. Here’s how it works. You choose the ticket, then instead of opting to pay by card, you can pay by PingIt.

It works like this. When you select PingIt for payment, you get bounced to your PingIt app where you authorise the payment as normal, and from there you get bounced back to Wessex Bus. The consumer likes this, because they don’t have to mess about entering card details, and the corporate partner likes it because the payment comes in as a credit push which is both immediate and (although I am not party to commercial details) cheaper than a card payment.

In the future, you can see this being done through an API, with a token. I download my new Arriva app, the app notices that I have PingIt installed, so it asks for authorisation to use it. I get bounced to PingIt, I authenticate and I grant permission. Under the hood, PingIt generates a token of some kind that it passes back to the Arriva app. For subsequent purchases, the Arriva app can pass the token to the PingIt API and the payment can complete without me having to re-authenticate every time. Just like my iPhone settings tell me which applications I’ve authorised to post on Twitter, or access Facebook, they will tell me which applications I’ve authorised to charge to PingIt (perhaps with different limits for each one – Arriva £5 per day, Kentucky Fried Chicken £20 per week, Apple iTunes £50 per week and so forth – but you get the point). The “Triple-A Play” that we have been advising clients about is a win-win-win. It’s better for the consumers (less hassle), better for the corporates (less abandonment) and better for the payment schemes (less fraud).

(And before I get the e-mails, here’s the disclaimer: Consult Hyperion has provided paid professional services to companies mentioned in this blog post in connection with products and services described in this blog post.)

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

Traditional Woking Street Scenes, no.97

If you live in an advanced nation, you probably buy your train ticket on your mobile phone before leaving home. This is considered a normal, civilised state of affairs if you are travelling to a world city such as Mumbai or Boston. In Woking, however, you have to go to the station and stand in line to buy a paper ticket, much as you would have done when the station first opened during the reign of Her Majesty Queen Victoria. Now, when I wander toward the station and see the queue to buy tickets snaking out of the doors and down the street, I do not necessarily assume some catastrophe. This happens from time to time, and you learn to simply text your colleagues and tell them that you will be 15 minutes late for your first meeting, put on an interesting podcast (in this particular case, I was listening to This American Life) and chill. But this time, there was something different in the air. The normally placid and resigned folk were definitely agitated. I could feel it. The chap in front of me said (I paraphrase) “Goodness me, this really will not do”. When the line had reached the door, I noticed that a number of the ticket machines were out of service.

No wonder the line was so long. Most of the ticket machines were not working. But a couple of them were. How odd, I thought. What bizarre presumably IT-related cock-up would take some machines down, apparently at random, but not others? While I was mulling this over, a very upset young lady turned back from the machine that was working and, using more robust language than I feel able to trespass on reader sensitivities with, pointed out that the machines would not accept card payments. Aha! Now I understood the pattern. Some machines take cards only — these were all out of service — but some take cards and cash. The latter were in service, but not accepting cards.

Now, at this point I realised why everything was taking so long. Messing about feeding money into the machines takes ages and a lot of people didn’t have any money anyway so they had to go over the road to the NatWest cash machines and then come back. As it happened, and much against my usual policy, I had some money in my rucksack. Only enough to buy a single ticket to Waterloo, but good enough to get going. Pausing only to post some abuse about South West Trains on Twitter, I strolled on to the platform. I’d now missed all of the pre-9am trains so I was going to have to wait for the 9.13am instead, so I went to the cafe to get some breakfast. They take contactless, so I paid with my watch. Apparently, some terminals at the station could take cards, so I knew that the banking system hadn’t collapsed and that Woking had not gone off grid, perhaps as the result of aliens landing on Horsell Common.

By the time the train came, I had discovered that other commuters at other stations were facing similar problems. Something had gone wrong with South West Trains’ network so they couldn’t take card payments. I knew this would lead to people telling me “how’s that for your electronic money future then”, so I began composing a pre-emptive blog strike…

The chaos at Woking station wasn’t testament to the limitations of electronic money but to the limitations of South West Trains. Think about it for a moment. The network has gone down, so the machines cannot contact the acquirer. Since the country as a whole spent something in the region of a billion quid to shift to chip and PIN (ie, offline authentication with on-chip risk management) why does this matter? Well, bizarrely, despite the money spent on the technologically-advanced offline payment system, most transactions are authorised online. I’m not entirely sure why this — it may be something to do with management consultants — but it causes a real problem. Remember the embarrassment in the London Olympics when there was a similar problem at Wembley Stadium. There was the ridiculous situation where journalists armed with Samsung smartphones found themselves unable to buy drinks because the terminals couldn’t go online despite the fact that the smartphone application was specifically designed to work offline. The ticket machines at Woking station could simply be told to work offline if they can’t go online for transactions under, say, £100 but instead they have a fixed floor limit of £0 so that without online authorisation they won’t accept cards all.

I should point out to foreign financial services organisations thinking of investing in EMV that in the UK the proportion of transactions authorised online has actually gone up since we switched to the chip and PIN solution. Despite the money spent on offline PIN, the overwhelming majority of card transactions are now online. What’s more, almost all unattended points of sale have their floor limit set to £0, so South West Trains ticket machines are not alone. In the pre-EMV days, a good proportion of terminals ran APACS 30, which meant that the retailers set a reasonable, risk managed floor limit (typically £30 or so) and only went online above that floor limit. Now that communications are much cheaper and generally more reliable, the retailers and the acquirers find it easier to use a zero floor limit and APACS 70 online (so they don’t have to mess around with deny lists). This sort of makes sense, but it sidesteps the EMV risk management parameters: the cards can carry their own (bank-set) rules for whether to approve without online authorisation and these parameters can be adjusted through retail terminals (the process known as scripting).

Incidentally, since I sit five feet away from the UK’s leading expert on acquiring standards and terminals, I asked Gary Munro about this and he told me that this is all because the terminal standards date back to the dinosaur era of magnetic stripes and had chip and PIN bolted on. (In my opinion, we should have taken the SEPA Cards Framwork seriously and switched to ISO 20022 XML five years ago – just think what we could do with those data fields in our new mobile-centric world).

There are plenty of other contingency options. I bet that all of the station staff have a smartphone, so why not issue them with an m-POS solution to use if the network fails? At the ticket office, why not just take a photocopy of the card and have the customer sign it, then give them a week to come back and pay and have it torn up (if they don’t come back, then manually enter the card details for a card-not-present transaction). There are plenty of ways to deal with the problem. A natural disaster that stops card payments in Woking does not mean that commerce halts. I think customers have every right to expect South West Trains and their acquirer to work together to make more effective use of the risk management capabilities inherent in EMV.

I have to say this kind of organisation, lack of contingency planning and absence of backup solutions does not bode well for the coalition government’s vision of the future…

Norman Baker, the junior transport minister, wants people to be able to use the same smartcard to take a bus to Euston, a train to Manchester and then a bus at the other end, for example.

[From Really getting somewhere | Smarter Cities | guardian.co.uk]

How realistic is this prospect in technologically-sophisticated Britain? Perhaps more joined up thinking is required – given the Chancellor’s vision for a Britain where you can buy a ticket on the £32 billion HS2 using a cheque, I think the Birmingham Bullet Train will be able to survive if the card network goes down for an hour or two.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

John was kind enough to share the detailed transaction timing data that we (i.e., Consult Hyperion) had previously seen as part of our work on the Future Ticketing Project (FTP) but were not able to share before it was made public. I’ve included John’s slide below with the kind permission of TfL. What this data shows is that the mean transaction time for bus taps is around 530ms. Of this 550ms, around 100ms goes on the terminal “polling” to determine which Oyster, ITSO (the UK’s national standard for contactless ticketing) and open-loop (EMV) products are on the customer’s card, so when you take this into account with some other overheads, it looks at if the overwhelming majority of contactless EMV transactions are taking 400ms. This is slower than Oyster (which takes about 350ms) but not a big deal. As John mentioned in his presentation, we are working with CUBIC and TfL to find ways to reduce the transaction times further so that 100ms polling is in our sights right now. Anyway, here is the key slide:

In addition to the 545ms mode peak, John’s figures clearly showed much smaller peaks at 420ms and 490ms as well as a long tail out over 900ms! This is clear evidence that different card families and form factors (ie, dual-interface vs. tags) take different times to process the transactions and that the fastest cards (at around 420ms) are twice as fast as the slowest cards. This is an unexpectedly wide variation. John politely resisted my calls from the floor for him to name and shame (!), but it boils down to this down: the fastest EMV cards are executing the transactions faster than the new Oyster card, but the majority of EMV cards are slower.

Another early learning from the TfL migration was put forward by Nick Mackie from Visa Europe in the panel (on open-loop migration in Europe) that I chaired at the event. As Nick pointed out, there’s been a problem with “collisions”. What this means is that customers who are used to waving a wallet or a purse or a pocket that has an Oyster card in it, they are now waving a wallet or a purse or a pocket that has both an Oyster and one of more contactless EMV cards in it. When the terminals see multiple cards, they (as currently configured) do nothing. There are currently far too many collisions being reported, so there’s a customer education issue here. Retailers (including transit operators) have to explain to people that if they present multiple valid cards, then nothing will happen (yet another reason for moving to mobile, where Nick pointed out that Barclaycard have “hundreds of thousands” of PayTag stickers out there and customers like them).

And here’s some more hard data from the event that might be useful: there are currently 9,000 open-loop transactions per day on the bus. This is a tiny fraction of the 6.3m transactions per day, but it is growing at 2% per annum. People seem to like it (a friend visiting from Scotland e-mailed me last weekend to say how great it was to be able just use her Barclays debit card while visiting instead of buying an Oyster card). It’s a good start.

Why does all this matter? Well, it’s because the transit experience, in many markets, is disproportionately important to the contatless trajectory. I’m might only use my contactless card twice per day on the bus, but because I use it on the bus it becomes the card in the my back pocket and I might then use it to buy coffee and lunch with contactless as well.

In any case, transit is one of the rare use cases where NFC payments add some real value to the user experience simply because it is more convenient to tap your phone as you rush through the rail gate or board the city bus rather than fumbling to find a contactless bank card or transit smart card.

[From NFC – Yes, NFC, That Speeding Train is Headed Your Way | PYMNTS.com]

Incidentally, while much of the talk yesterday was about the shift to open-loop in transit, that’s not the only model. There is indeed a completely opposite roadmap, whereby the contactless cards used for transit have such high penetration and are so well-established that it makes sense to use them instead of bank cards. Look at the Asia-Pacific region. Taiwan is following Hong Kong and Singapore in allowing the transit e-purse to be extended out into retail.

The EasyCard, a contactless smartcard system for use on the Taipei MRT system, will soon become an electronic purse that can be used to purchase small-value items… The new payment system, which will allow up to NT$10,000 (US$312.50) to be stored in the card, will be put in place a year after the Legislative Yuan passed an amendment to the Act Governing the Issuance of Electronic Stored Value Cards that paved the way for the new payment vehicle.

[From Electronic purse expected to become operational in March – Taiwan News Online]

It’s clear that, as we all know, transit is mass market, technically challenging, high profile, important and demanding. It’s at the intersection of NFC, mobile, payments and (soon) big data. I love it.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

Lanny and Howard bring more than half a century of expertise in digital money and digital identity between them and we’re delighted that they agreed to come on board.

• Lanny Byers brings over 20 years of experience in the electronic payments industry in card program management and consulting. Having held SVP and GM positions within Card Groups at Bank of America and Western Union, he has since gained 11 years’ consulting experience, first at MasterCard and more recently with his own independent consultancy delivering payment and loyalty solutions.
• Howard Hall, a veteran of the start-up and early stage technology arena, has extensive background in electronic security and identity having built and sold several companies including Vericept to Trustwave and most recently Riverglass to ASG Software.

As many of you probably know, Consult Hyperion has had customers in the USA for many, many years and these have included industry leaders in the retail electronic transaction space such the major payment schemes, innovators in the mobile payment space and key players in transit ticketing. But we’ve decided to take the extra step of creating a US presence and bring on board as US team at this time because we think there are a great many organisations in the US who will want to take advantage of our wholly independent (we are not tied to any suppliers, nor do we develop our own products) help to design, develop and deploy transactional solutions.

So why now? There are three main reasons for making the decision to create a US subsidiary now:

1. The US liability shift and EMV migration. We know how to help organisations go from stripes to chips without wasting money. In particular we already have experience as independent consultants to US banks migrating from stripe to chip in Europe as well as experience helping Canadian organisations (including Interac) do the same. And we have specific experience in helping transit operators move to chips too.
2. The explosion in mobile. We know how to help organisations go from chips to devices following flexible product and service strategies. We’ve worked on mobile payments and mobile identity for some of the world’s largest telecommunications companies, including Vodafone, Verizon and Telefonica.
3. The escape to the cloud. We know how to help organisations go from devices to clouds without opening up cracks in the systems that might be catastrophic downstream. We’ve been chosen by start-ups and legacy providers alike to help develop new online transaction systems and perform the crucial risk analysis that such systems demand.

Transactions are hard. They have to work every time, at scale and in the face of everything that people and technology can throw at them. Making them secure means understanding the technology, the business and the social context. We have track record of doing this, stretching back to our very first assignment for the Bank of England Central Gilts Office in 1986, and are looking forward to support organisations in the US who want to do the same.

You can follow CHYP USA Inc. at @chypUSA and continue to keep up with the latest thinking at the intersection of digital identity, digital money and digital networks at Tomorrow’s Transactions, where our US team will soon be posting their perspectives on the evolution of the secure electronic transactions in the US..

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

In the back of a cab in Singapore I saw this:

Hurrah! Armed with two phones and several contactless cards I looked forward to my end of ride payment experience. When we got to the airport, the guy rang up the fare. The options on the terminal were “credit” and some others. He selected “credit”, but no contactless option was visible. So he went back and selected contactless (I can’t remember what the menu item actually was). An EZ-Link logo appeared on the screen but no Visa or MC logos. Just out of curiosity, I tapped a MasterCard NFC phone on the terminal. Oh dear.

He chose “Restart” but nothing seemed to happen. Gulp. I didn’t have any Singapore Dollars with me so I gave the poor chap a US $20 bill along with my profuse apologies. It looks like the NFC infrastructure needs a little more work in places.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

I am writing to let you know that we are introducing contactless payment tomorrow (i.e., today,Ed.); this will initially be available on any of London’s 8,500 buses.

[From TFL – Service Changes]

Hurrah! This has been long awaited by many in the contactless community, because the relationship between wallet or phone or card and mass transit is well-understood to be central to nudging consumer behaviour. There are a great many people (millions) in London who have a contactless bank card but have no idea what it is or how to use it. Hopefully, they will see other people using bank cards on yellow buttons on public transport and be encouraged to try it for themselves. (At Consult Hyperion, we use the pub for the same purpose, acting selflessly in the long-term interests of key clients.)

London commuters will be able to start paying some bus fares with the swipe of their bank cards this week when transport authorities begin rolling out one of the world’s most advanced “contactless” payment systems.

[From London buses in bank card swipe trial – FT.com]

Well, not “swipe” exactly. In fact, not “swipe” at all. But yes, the buses have been fitted with the new “open loop” payment terminals. This means that that customers will no longer have to buy an Oyster card for travel but can simply use their shiny new contactless bank cards. When I was chatting to someone about this yesterday, their first question was “why bother – Oyster works fine” and indeed it does, but…

TfL reckon that their overall ticketing system costs them about 14p per £1 collected in fares. Some of this is ripe for reinvention. Product sales alone account for almost a third of costs, and this could easily be halved: monthly and yearly season tickets won’t go away for a long time, and since they are efficient products to sell, there’s no reason to stop them, but most of the ad hoc non-commuter trips could be shifted to open products.

[From Slick transit]

It’s cost a lot of money to upgrade TfL’s infrastructure and all of the readers at something like 20,000+ gates, but it will save them money in the long term. And what’s more, foreign visitors with contactless bank cards will be able to jump straight on a bus without having to get into gigantic queues at Paddington or Victoria to buy and load Oyster cards. And never ones to take corporate PR as as substitute for reality, on your behalf we ventured into the freezing London morning to check it out.

Hurrah again! A live, working, contactless EMV bus transaction captured for posterity. The readers already work with psychic paper, of course, so contactless bank cards are old technology really (!) but we’re still very excited about this because it is a project that Consult Hyperion has been involved in from the very beginning, when we were selected by TfL as their consultants for this project. If you’re interested to learn more about the project, you can listen to two of the key guys on the project (Shashi and Will Judge, who was then head of Future Ticketing) discussing it in one of our Tomorrow’s Transactions podcasts from last year. As well as helping with the analysis and specification of the new system, Consult Hyperion also developed the prototype contactless terminal for TfL to experiment with (we’re a little different from other consultancies because we have a full-time, in-house development team that builds prototypes and proofs-of-concept for clients.

In addition to upgrading thousands of readers around the system, TfL have developed a sophisticated back-office system to manage the mixture of closed-loop and open-loop payments and are now offering that system to other transport operators in the UK. We ran a seminar on this with TfL last year, by the way. This means that in time, ticketing may earn some money for TfL as well as reducing its costs.

The second question I was asked, and I won’t shy away from it here, was “great, I’ll be able to use my phone to jump on the bus”. Unfortunately, for reasons that are too technical (and too boring) to go into here, the only NFC/card handset combo on sale in the UK today, the Orange Galaxy S3 QuickTap, doesn’t work with the TfL bus readers. So if you want to amaze your friends (or are too lazy to get out a wallet) and jump on a double-decker using a flick of your smartphone, your better off getting yourself a Barclaycard PayTag and sticking it on the back. Here is an exciting photograph of such an installation, taken in London this crisp winter morn.

To make the simple tap-and-go work for millions of consumers taking millions of bus rides, reliably and securely, is very complicated. To hide all of the complexity from consumers and make the tap work in a few hundred milliseconds was a tall order. But they’ve done it, so well done TfL.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.

The cabin crew came round with the on-board shop trolley-style cart-thang and I bought something from them. And then I paid for it.

So this is what happened: I gave the crew member my BA Amex card and my BA Executive club card as have I done in the same circumstances for several years.

First of all, the POS terminal refused to accept my British Airways American Express card because it expires at the end of this month. I assume that this is a software error of the type first spotted in about 1955, so I’m going to mention it my complaint to BA and I’m sure they’ll get round to fixing it sometime.

The nice lady with the terminal said something along the lines of “I don’t suppose you have another card do you?” so I open my rolling office and choose one of the other 47 cards in there. I decide to give it a go with a Barclaycard MasterCard that doesn’t expire for a couple of years. They swipe it. It’s got a chip on it, and I know the PIN, but they swipe it. I wondered for a moment if they were real cabin crew or if this is some elaborate Eastern European mafia fraud to obtain track data and PINs for use in US ATMs, so thought I’d better remember their faces for the inevitable police fotofit session.

While I making a mental note of their basic characteristics (would I say that she was “average” height?) , the “cabin crew” (if that is, indeed who they were) asked me for my Executive Club number, because they can’t read the number from the new Executive Club cards in low light. Then they asked me for my passport.

What? Why on Earth would I give my passport to mafia-style super-fraudsters!

I ask why they want my passport, mentioning in passing that British Airways already have my passport details, and the cabin crew tell me that it’s because of high levels of card fraud. They also tell me that it’s a pain in the arse, because many passengers have put their passports away in bags for the flight and have to pfaff about getting their bags from the overhead bin and rummaging around finding their passports, which means it takes way longer to do on-board shop sales. They also said that the on-board terminals have new software that doesn’t do chip and PIN any more (they didn’t say whether this is the patch for 1999 or 2019), which is why they swiped my card and had me sign it. Bizarre.

Hold on.

A transaction that should have taken in the region of 20 seconds — insert card in terminal, enter PIN, print receipt (I don’t even care about this – they could just e-mail it to me later) — took several minutes. What’s more, a transaction that should have taken in the region of 20 seconds and minimised fraud was replaced by a transaction that, if anything, will cause fraud to rise, for the obvious reason that if I am a fraudster using bent cards on plane I already don’t care that you know who I am. You have my seat number and all of my personal details already. If the guy in 28B uses a stolen card, say, and the transaction gets charged back to BA, what are they going to do any differently now? The police (in the UK, at least) are not going to send out the CSI:Heathrow team because they get an e-mail from BA saying that passport number XYZ bought a bottle of Gordon’s with a card that was subsequently declined. What a joke. I felt really sorry for the BA cabin crew and (with their permission) asked if I might record this payment omnishambles for posterity.

After the harassed cabin crew had moved on, I couldn’t help but start to think how ludicrous this incident was. What has happened? Well done, payments industry. We’re actually going backwards. If British Airways decide to get some new software written by people who know what they are doing, here is my suggested transaction marketecture (and I don’t know why I’m giving them this for free – must be something to do with the low levels of oxygen in cabin).

1. If the customer has a chip and PIN card, insert the card and have the customer enter the PIN. If the PIN is correct, that’s the end of it as far as BA are concerned.
2. If the card has a magnetic stripe or a chip that doesn’t work, then by all means swipe the card, make the passenger sign the slip, demand to see their passport and record the passport details with Soviet-era efficiency. 

The way BA handled payments on BA177 LHR-JFK (08SEP12) made no sense. To take a customer’s chip and PIN card, then ignore the PIN and swipe it, ask to see a passport (which is pointless anyway, because British Airways have my passport details on file against the booking and I had to show the passport to board, so if customers are committing fraud by using counterfeit or stolen cards this won’t make any difference whatsoever) is inconvenient, slow and silly.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

These are the personal opinions of Consult Hyperion and its guests and should not be misunderstood as representing the opinion of its clients or suppliers. To discuss how any of the technologies discussed in this post can benefit your business, please contact Consult Hyperion.