DfT research shows convenience is a key factor in people choosing to travel by car and the government believes that an easy, integrated and ticketless payment system will help to lure people from making the majority of their journeys in this way.
The technology is not as new as many may think. The first paperless mass transit system was launched in Seoul, South Korea, in 1996. Hong Kong followed a year later with the Octopus card, and London launched the Oyster card in 2003.
Since then, Transport for London (TfL) has issued 55m Oyster cards with 8.5m in regular use.
According to a spokeswoman, more than 85% of journeys on the TfL network are made using the Oyster card, whereas contactless payments on London buses have just passed the 1m mark. Now only 1% of bus fares are paid in cash.
A similar scheme is being rolled out across the South East commuter belt with the £45m South East Flexible Ticketing (SEFT) programme. This will introduce smartcard ticketing at an estimated 300 stations for up to 180m journeys per year, with the target of all passengers having a ticketless option in 2014.
Meanwhile in London, a £60m technology upgrade aims to allow travellers to use contactless bank cards and the ITSO system alongside the Oyster card by December. ITSO users will be able to hold data for similar schemes on a single device or smartcard thus linking smart services in different parts of the country. ITSO trials are already underway in Norfolk and Cambridgeshire.
Transport Secretary Patrick McLoughlin says: "The simple fact is that the journey from buying tickets online to taking your seat on the train is too complicated at the moment. By harnessing the latest technology to make the ticketing process easier, we can vastly improve the passenger experience."
Already 20% of UK Visa cardholders have its Europe-wide contactless payment system, paving the way for European visitors to travel from Gatwick Airport to Edinburgh via London simply by using their credit or debit cards.
In the UK, seven banks have issued 26m contactless cards while approximately one in five Visa debit and credit cards are now contactless with Mastercard and American Express also offering the facility.
The government’s next stop is to encourage train operating companies whose franchises come up for renewal over the coming years, to phase out the 700m magnetic tickets issued annually.
An Association of Train Operating Companies (ATOC) spokesman says: "By and large we are in favour of and see the benefits of ticketless travel. It will help cut fraud and make it easier to purchase tickets."
Passenger groups are also keen, providing customers have the option to keep paper tickets if they want to.
Magnadata, which holds the current five-year ATOC contract to supply all the classic magnetic strip-backed yellow tickets to train operators through the Rail Settlement Plan, has been developing smart technologies since 2001 and currently supplies printed travelcards with RFID technology worldwide.
One of these, the Z card, was a key part of the bid to host the London 2012 Olympics. It is also one of several suppliers of Oyster cards to TfL.
While this contract will be up for renewal in 2015, train operators say there are more train travellers now than at any time since the 1920s.
Steve Howes, managing director of the Rail Settlement Plan, which provides services, including ticketing, to rail franchise operators, says: "Despite the growing popularity of new forms of ticketing, there has so far been no decline in the number of traditional train tickets we require because there has been significant growth in the overall number of train journeys being taken.
"I would expect any decline in the volume of physical tickets we need to be gradual. There are several years left to run on our existing print contract and any reduction in the volume we require will be discussed when it comes up for renewal."
Magnadata is primed for that eventuality, and as paper tickets decline, new contracts for smart tickets come on board.
"The cost doesn’t come from smart ticketing, it comes from installing the equipment. We are in constant contact with all of our customers, reminding them we have the technology if they want to go down that route," says customer services director Giles Elson.
BemroseBooth Paragon also supplies train operators with tickets and is working on smartcard and contactless projects, including SEFT. A representative said opinion was divided as to how long it would take to go ticketless.
Despite government desires, convincing all transport operators in the UK to adopt new technologies will be challenging with commercial ramifications, according to Stephen Joseph, chief executive of the Campaign for Better Transport, which advised the government on the issue.
"Encouraging public transport users across the entire country to adopt smart ticketing will be a slow process with smart and conventional systems needed to exist side by side for a long period," he says.
He thinks it is especially important that no group of passengers is put at a disadvantage simply because they have not adopted smart ticketing.
So paper tickets will survive for now, but if the rate of change for the UK follows that of London, only a small proportion of travellers will be using them in a decade’s time.
OPINION
Fresh technology provides more diverse opportunities
Dale Wallis, membership director, BPIFIt will have an impact, but a big one? I don’t know. I don’t really understand why they are doing it. If they’re doing it for security or to speed things up, well if they saw the buses going through my village, they are half empty and it’s the older generation using them. And at schooltime they will have some fun with the schoolchildren passing their cards around once they are on the bus.
I’m not so sure that when we get touch cards that the older generation will want to use them. Where will people top up? The top-up stations may not be local and if you get a top-up station by a bus stop you never know if there’s a group of people lurking around the back, waiting for you to get your credit card out.
But this could be an opportunity for the Post Office or banks to boost their local services for the community, and an opportunity for printers to sell point-of-sale material and packaging for cards.
Things are just moving on and on, and technological evolution is moving faster than ever. New technology is providing more diverse opportunities than ever, moving into multi- and cross- media channels, and we have machinery that produces excellent print quality, faster than ever. All this is happening at the very time the industry is consolidating so quickly and so much.
In print, the number of companies is going down but the turnover for the industry is still around the £14bn mark. It has been steadily rising over the past five years and this can only mean that printers are identifying new opportunities and hopefully bringing with them profitability for re-investment.
You have got to be a futurologist. It is not about today or tomorrow, you have got to think far ahead about how you can add value to your customer. Other than the production of the touch cards, the opportunity to use the information through the cards is endless. You can find out where they are travelling to, the route they take, the time they go and come back, the events or places they are visiting, their age and so on. Printers will be able to use this opportunity to demonstrate the power of print and to educate their customer on how best to use the intelligence they have.
When you look at what the superstores have done collating intelligence they have, people have now got a totally different opinion on the mail they receive. It is now believed to be more targeted, relevant and useful as it is based on the customer’s buying experience over the previous months, not just a scatter gun approach selling some of the things the retailers have struggled to sell in the past.
Again the print generated information based on the intelligence from the touch cards will show the customer further behaviours and will open new doors for opportunities. On the whole, going ticketless is a great opportunity to further promote the power of print, and add real value to the customer proposition, and change the perception direct mail to the population.
We should be preparing ourselves on what we can do to support this going forward. When you look at the opportunity which will be replicated around the country, that is an opportunity that is pretty significant.
READER REACTION
Is the print sector and its market ready for digital ticket types?
Martyn Eustace, director, Two Sides"I think that this is an issue. On the one hand, if something is more effective then we will have to accept that the world is changing and that this is the way things are. With tickets you do not have the same issues as you would have with bank statements, for example. These are important documents to keep. The bigger issue is that 20% of households are currently not connected to the internet and there are sections of the population who do not find it possible to use digital systems as effectively as the rest of the population."
Roger Severn, chairman, Aquatint BSC"I think that it’s inevitable and if it makes life easier, great. However you need to keep the system simple. Ticket pricing is too complicated and without paper tickets you need to know what you are doing and monitor things. I gave up my Oyster card because I was sure I was spending more. Technology is moving so fast, even the most whizz-bang company does not know what will happen, but it’s all about being close to your customers. If you are in at the design stage, you can influence where things are going."
Tim Webb, executive director, Picon"We all need to embrace modern technology and this is not a bad thing. Paper is a wonderful medium and has a huge number of valuable uses. I do not think it’s going to be replaced by other means. Tickets will still have value. Ticket printers developing new technologies is an example of what many printers are doing. We are going through a period of massive change and successful companies can see the opportunities and embrace them. This big, diverse industry is still vibrant and strong, that sometimes gets forgotten."
