University of Wollongong

IACT 304 Principal of eBusiness

Autumn 2005

Business Plan
“Electronic Payment System in Action”

Nurhazman Abdul Aziz (2666182)

Chun Sing, Chan (2592472)
AHMED SHIHAM (2664872)
David (
Contents

S/NO Topics Report By Page

01 Executive Summary Nurhazman Abdul Aziz

02 Background - The Business Nurhazman Abdul Aziz

03 The Motivation Shiham

04 The Idea Nurhazman Abdul Aziz

05 Choice of Technology David

06 Investment Chun Sing, Chan

07 Hurdles David

08 Results Nurhazman Abdul Aziz

09 Future Shiham

10 Financial Summary Chun Sing, Chan

11 Conclusion Nurhazman Abdul Aziz

12 Reference Nurhazman Abdul Aziz

Executive Summary
This paper describes a consultancy business approach to consult a statutory board in the
State Ministry of Transport, New South Wales, called the Land Transport Authority. The
Land Transport Authority will act as a consultancy management in the public transport
routes, as well as to bring efficient and cost-effective land transportation to enhance our
economic competitiveness and quality of life. As the same time, this board would be
exploring and implementing new initiatives to make public transport more attractive.
Hence, one of the requirements in the tender is on the consultancy advice regarding easy
electronic payment system. The purpose of this report is also to give a short consultancy
idea for the introduction of an Electronic Payment Systems into the Land Transport
Authority’s project. Here, the report has clearly identifies the ideal Electronic Payment
Systems, as contactless smart card with the initial phase study on New South Wales’s
CityRail. Later on, expand towards the public buses and taxi.

The approach involves a study of a number of world class transportation systems and
their fair system, the technology itself and a financial effect. A similar approach too has
been conducted with the various clients which are going to be benefit from the systems,
especially CityRail. In detail, the background of the business will be introduces, with the
motivation behind play behind the idea is one of the key issues on the reasons for the
selection of the choice of technology. As a brief technical detail will be illustrated in this
report, with the potential investment that will be gains. In contrast, to the hurdles, that has
to be concern and overcome, to bring results to the idea. Furthermore, a short future will
be discuss if this Electronic Payment System would be taken place, with a concrete
financial summary to estimated the cos benefit of the systems.

Hence, this consultancy paper would give a good idea on choice of Electronic Payment
System would benefit the Land Transport Authority’s project.
Background

“Tap and Go” Pte Ltd is a private consultant company for easy electronic payment
system and is formed on April 20, 2004. The core businesses are the sales, consultancy,
distribution and management of “Tap and Go” cards. They also include the clearing and
settlement of “Tap and Go” card transactions generated in transit and non-transit
(retail/merchant) applications. This industry has been a key strength for “Tap and Go” Pte
Ltd and also a key leader in the Asia Pacific market using this electronic payment system.

Lately, we have been approached by State Ministry of

Transport, New South Wales to undertake a
consultancy tender on one of their future plans. From
the overall picture, State Ministry of Transport has
decided the plan to integrate all the public transports in NSW to be under one statutory
board, called the Land Transport Authority. This board will act as a consultancy
management in the public transport routes, as well as to bring efficient and cost-effective
land transportation to enhance our economic competitiveness and quality of life. As the
same time, this board will always be exploring and implementing new initiatives to make
public transport more attractive. Hence, one of the requirements in the tender is on the
consultancy advice regarding easy electronic payment system.

Currently, we understand that there are a number of public

transport organisations in New South Wales. They range from taxi
services, public coaches and the main commuter provider, CityRail.
Some of these providers have implemented certain payment
systems in their services, while others are still lagging behind.
Commuters take advantage of the systems, especially in the public
rail sector. Complains and losses have been reported and made
directly to the State Ministry. In addition, these have slight
negative effects on the economic earnings. Therefore, the State
Ministry has decided to make prospective plans with Land Transport Authority in the
sector of public transport, especially on their fare system.

One of the potential sectors, which will benefits from the proposed plan will be New
South Wales’ CityRail. Currently, traveling on CityRail network is easy. It is just by
determining which CityRail station you will be starting and ending your journey, the time
of day, how often you'll be traveling since there is a range of tickets designed to suit your
needs. The tickets can be purchased either at the station ticket office or the available
ticket vending machine. Its tickets can be classified into day, commuter, leisure and
tickets that will get you to where you want to go. CityRail's extensive network is ideal for
both leisure travelers and commuters. The array of tickets also offers the convenience,
flexibility and great savings in terms of commuters’ cost. Special conditions apply to
those who wish to take bicycles on CityRail services. Hence, CityRail will be our first
phase in this consultancy report to undergo our electronic payment system.

Meanwhile, another range of

transportation services that the Land
Transport Authority’s plan wishes to
seek is the fare systems, which include
the public coaches and taxis. One of
them is Illawarra Service, which Sdyney Bus Services
specialised in the coach services in the region of Illawara, Wollongong Taxi Service as
well as a couple of taxis and coaches services in Sydney, such as Sydney Bus, Silvercab.
(Ministry of Transport, 2005) All of them are streamed with one common goal, that is, to
make their fares and administration systems to be more efficient for the sake of
commuters and enhance our economic competitiveness and quality of life.
The Motivation

It has been few years that New South Wales’s Ministry of

Transport has been working and analyzing a way that they
can reduce the commuter’s queue to buy the ticket and
boarding to the train as well as exit. They have come to
know that “Tap and Go” Pte Ltd is leading company who has solution for such electronic
payment system. As electronic payment system has been one of the most widely used and
improved payment systems, even though it has been only few years since its birth. Its
ease of use, and high security features makes it unique and highly demanding for the
modern world.

Assume that a commuter wants to travel from Wollongong to

Lidcombe, but later he/she decided to go elsewhere, in the current
system, another ticket should be bought in order to proceed, but in the
new system, no matter where the traveler wants to go, the fare will be
deducted only on exit. There are several advantages over the current system. Even though
the new system’s initial cost is high, unlike current system it requires no further costs like
ticketing machines needing to replace ink and paper. The other benefit will be that the
new card systems are capable of topping up the money, since it uses a mechanism to store
money value inside it, so there is no need of buying a card every time that one needs to
travel. By all this, there won’t be any long queues at the ticket vending machines saving
the time of the commuters as well as the cost of running the vending machine or staffs to
sell the cards. Also this convenience will drive more people to enjoy the train service
making higher revenue for the CityRail. Since the smart card transactions are being
encrypted with high security encryption methods, it will be highly secure to use the cards.
A lost card will be blocked from the system banning the use of that card.

CityRail is celebrating its 150th years (1855 - 2005) of Rail service but still there aren’t
many changes in the way that they had been using the commuter’s entrance and exit to
the train. (CityRail, 2004) The card system that CityRail uses now is sometimes such a
disaster when there are whole lots of people to board on the train. The frustration of
people at the long queue for the entrance and exit makes us think an alternative way for
the entrance and exit to board the train. In other words the
card system that CityRail is using is not efficient and it
needs to be changed, contactless Multi-purpose Stored
Value (MPSV) card which is an ideal solution in their

Topping up will be a electronic payment system. We have named this new card
fast process. system as “Tap and Go” card system.

Due to its endless use, the smart card can be implemented in many
areas even though its first target is CityRail. So it could be divided into
many phases where it can be implemented on success of previous
phase. So let the CityRail be the first phase. The second phase which

could be targeted is bus payment system; the same concept can be A related solution used
used with minor alteration. Phase three could be taxi and it goes on. in Singapore

To aware the commuters how to use smart card would be very easy since the only thing
that changes in smart is that it don’t need to be inserted into the system on the way in or
out when they travel.
The Idea

Tremendous advancement has been demonstrated in smart card technologies for the past
few years. Chips utilized today are more economical than just a few years ago because
technological innovations have resulted in chips that possess enhanced processing power
and those which have larger memory. The resulting scenario enables cost-effective smart
card solutions for a broader array of real world challenges. Smart cards today achieve
much more than their original application of replacing cash and coins.

Hence, in this part of State’s Ministry of Transport’s consultancy plan from, we are going
to introduce an existing technology, that is, contactless Multi-purpose Stored Value
(MPSV) card as an ideal solution in their electronic payment system. Technically, the
idea is an efficient one and easy to promote as this idea has been implemented
successfully in other parts of the world. For instance, in a report article by
electricnews.net, they have noted a number of places where this technology has been
launched with great success. (Buckley, 2002) Public transport systems in Seoul, Hong
Kong, Singapore and many Asian cities have electronic payment systems based on
contactless cards. Also, both the Paris Metro and London Transport have implemented
their own contactless card payment systems. In London, they are known as “Oyster” card
(Oyster, 2003), in Singapore as “Ez-link” Card (Ez-Link, 2004), while in Hong Kong as
“Octopus” (Octopus, 2004). Amazingly, they are all introduced to improve transportation
services. Therefore, in Australia, we are going to introduce “Tap & Go” card as part of
the new solution for electronic payment system for the plan.

In technical, this electronic payment system is also known as the

Enhanced Integrated Fare System. The contactless card or “Tap &
Go” will be introduced to relieve commuters of the need to
remember distance related transport fares payable, to reduce train

queues at the ticketing machine and bus boarding times at bus

Structure of
stops. “Tap & Go” card is a compact card conforming to Contactless Card
(Tap & Go)
ISO/IEC 7816 card dimensions, which is similar to a credit
card. The card surface is a tamper-proof IC chip and an antenna is built into the card. A
card reader will be also designed in order to read the data from the card. Both the card
and the reader communicate using radio wave via wireless communication. The sensing
distance between the card and the reader is up to 10cm. The card itself contains no
battery but operates from electromagnetic energy received from the reader. Encryption
techniques prevent eavesdropping and fraudulent use. Being contactless, transaction time
involving the use of the card is kept to a minimum (approximately 0.2 sec).

Commuters will able to purchase the card from the

CityRail’s station, with a certain value preloaded in the
cards. The minimum amount of value at the first point
of purchase will be $10. Commuters can later top up
their value of the card at the self-service kiosk.
Topping Up Machine in Japan
Moreover, during the topping up of the card, the
commuters could have three different choices or methods in topping their cards to their
range of desired value at $10, $20, $50, or $100. The maximum amount of the card can
hold is up to $250.The three methods of topping up can be done at the kiosk by using
cash, EFPOS or direct debit from their bank account. Next, commuters will scan their
cards before they board the trains or the public bus and later scan again, when they alight
from the bus or the train. As for the taxi services, they can just scan their cards once they
reach their destination, paying off the taxi fare.

Furthermore, the system is also environment-friendly since the card can be used over-
and-over virtually forever by rewriting the data. It also features ultimate user-ease since
there is no longer any need to retrieve and put away the card for every use. In future,
“Tap & Go” card will be a rational throughout for the daily life of the commuters, as the
system can be used in other daily applications, such as in the parking lots or gasoline
station, restaurants, schools and others.
The advantages of the using “Tap & Go” card can be classified under three sectors. These
have been studied and proven through the implementation of Octopus in Hong Kong for
their public transports. (Octopus, 2004) Below are the details of the advantages:

Enhanced Operations
• Secure, efficient, flexible and reliable means of revenue collection
• No long queues at the ticket vending machines.
• Shorter transaction time
• Reduced preventive and corrective maintenance activities
• Reduced faulty card handling
• Reduced cash handling
• Just board and scan procedure

Financial Growth
• Increased usage and revenue through enhanced user-friendliness of the system
• Improved revenue protection through greater security by minimizing fraud and
ability to block transactions after card loss
• Reduction of maintenance costs by as much as 40%
• Elimination of card recycling costs as “Tap & Go” can be recharged
• Economies of scale achieved by the sharing of a common system infrastructure by
all participating operators

Marketing Value
• Provision of a platform accommodating complex fare collection strategies such as
inter-modal discounts and different fares at different times of the day
• Provision of a platform for implementation of own or joint loyalty programmes
• Collection of data on customer profiles and behaviours for deeper market insights
and service improvements
• Enhanced corporate image and customer service
Choice of technology
The choice of the technology we will use to implement the system would be the use of
contact less smart card technology similar to Hong-Kong’s octopus system or
Singapore’s ez-link technology. This technology has proven success in the
implementation of payment systems for the mass rapid transport systems and public
transport in many countries. Furthermore, these developing countries have even extended
this form of payment system to convenient stores, supermarkets and even petrol stations.
This technology is also relatively easy to implement on existing public transport
infrastructure and the low-cost of mass production of magnetic cards for each customers.

Reason for choice

The main reason behind choosing this technology is to provide five main benefits for
transport payment systems (Octopus, 2004). Hence, these are main benefits below:

• Fast and efficient - Consumers do not need to carry cash at all; neither do they
need to give exact tender fares nor do bus drivers need to spend time in giving out
changes back to customers who does not give exact fares. Each payment
transaction only takes 0.3 seconds.

• Reliability - Since this technology is contact less, there is no need for the card to
come into contact with any device, hence resulting in less wear and tear, therefore,
last longer and able to achieve higher stability.

• Multi-Purpose – This card may not only simply be a method of payment systems
for mass rapid transports systems, but could also be implemented in buses, or
even taxi, ferry and can even be extended to convenient stores. In the future, it can
even be used as a form of authentication and access control.

• Environmental Friendly – For each company that would stand the test of time,
for the products to be environmentally friendliness is a very important aspect,
 polyethylene terephthalate (PET) is used in the fabrication of the card, this
material is environmentally friendly in the sense that it is reprogrammable and its
credit is reloadable therefore, minimizing the need of constant disposal.

• Security – For individuals who choose to top up their contactless smart card
automatically via registered bank accounts when their smart card reached zero
credit, when in the case of theft or lost of the card, they can report back via a
hotline within 6 hours and that card will be subjected to termination and a new
card will be issued to the individual and credit reloaded on the new card.

The Smart Card

The material that the cards is made up of is plastic or more
scientific, polyethylene terephthalate (PET), inside is
embedded a magnetic core where information is store, it
consist of simple digital data that represent the amount of
money in it. Below shows a picture of the actual card itself
and each card has a special ID unique to that card. (RFIDeas,
2005) The size of these cards is just about the size of a
standard credit card, it is thin and flexible enough to be carried in a wallet.
The Smart Card reader
There are many types of card readers; they are used in many applications for example, for
desktop applications where requires authentication to access resources, however, the one
which will be suitable for us will be card readers for doors and kiosks, below is a picture
of some card readers (RFIDeas, 2005):

These are some of the products offered by Proximity Company and these card readers
manipulates radio frequency (RFID) in the transmission of information. As to be more
specific on the reader that will be implemented, a picture of it shows below (RFIDeas,
2005):
These are some specification for the card reader:
• Dimensions 4.65 x 2.95 x 0.5 (11.8 x
7.5 x 1.2cm)
• Power requirements: 5 - 16 VDC
• Colors Black, *Gray, White, Beige
• Potted Reader suitable for indoor or
outdoor use.
• Pigtail (18 inches/45.7 cm)

With these specifications, since is compact and

requires only a fraction of voltage, it can be easily implemented in anywhere for example,
mass rapid transit gates, buses, or anything that requires quick payment transactions.

The Card and Reader

Contactless smart card systems are similar indeed to cards that requires contact, they both
stores information on a chip that is embedded into the smart card itself, however, unlike
contact smart cards, the power supplied to the card as well as the process of information
exchange between card and reader are achieved without the use of any contact, magnetic
and or electromagnetic fields are used to power the card to exchange data between reader
and card.

This is achieved by placing a small antenna which is altogether embedded within the
plastic body of the contactless smart card, once the card comes close enough with the
electromagnetic field generated by the reader, the chip that resides on the card would be
powered on by a small voltage and once when there is power on the card, a form of
wireless communication protocol is initiated, this wireless protocol is similar to that of
blue tooth technology or 803.11 series, however, much more simpler as it transfers a lot
more simpler type of data. After the protocol is established data will then be transferred
between card and the reader.
Here is a list of steps of events that will take place when the contactless card is brought
near a card reader:

• Energy or power, transfers to the contactless card and powers the integrated
circuit within (chip)
• Clocks the rate at which data transfers
• Data transfers to the contactless smart card
• Date transfers from the contactless smart card

The protocol that are used by these cards are described by the ISO/IEC 14443 standard
and has a frequency of 13.56 megahertz (MHz) and the reader with an electromagnetic
field of approximately 4 inches to 10 centimeters, most often depending on the voltage
given to the reader. The higher the voltage, the greater the range, the range is also
dependent on the antenna of the card.

Some questions were ask on security about the card, whether anyone with a reader can
access those cards, however, in order to access the data from the card, the application
need to know the secret keys on the card itself. If no secret key is found, the card’s
microcontroller will block any attempts to access the data on the card. (SmartCard
Alliance, 2004)

Customer’s operation
Basically, the usage of this system from the customer’s point of view is simple, at first, a
customer will need to be issued a card, the customer will not be asked to purchase the
card however, but the issuer will hold a certain amount of deposit from the customer, this
deposit can be refunded back to the customer whenever he or she is wants to give in the
card. Next, the customer will initial top up the card from either top-up machines (Add
Value Machine) or from transport operators in charge of topping up customer’s credit.

These top-up machines can be placed in noticeable areas of the train stations where there
is less people or in less congested areas, the operation of these machines will mainly be
similar to current ticket purchasing machines, basically, it will consist of a touch screen
panel that will be used to interact with the user, the user will be able to choose the
amount of money that needs to be toped up. Next the user will insert the note into a slot
similar to current machines, then when the machine verifies of the money inserted, the
user will then need to place the smartcard close to the reader in the machine, the machine
will then write the data on the card.

Here is a diagram of how it works:

Choose amount Insert the cash

of money from into the slot
touch screen

Reader updates Place card near

card data reader

Here is a picture of a top up machine:

(From LUAS SMARTCARD, 2005)

There will be a minimum amount of money that is required for topping up as well as a
maximum amount of money that can be topped up. Once the smartcard is programmed
with data that contains the amount of money the customer has topped up, he or she will
then be able to use it on any card readers so as long as the reader’s key matches with the
card’s key, in other words, only with card readers of the company can read the cards
manufactured by them. Once the customer has money on the smartcard, he or she will
then be able to use the transport system, the customer will need to place his or her
contactless smart card in approximately 2 inches from the card reader, the card reader
then will power up the circuit within the card, and authenticate with the secret key, and
write data to the card, this data will consist of the source of which the customer enter the
transport system. Upon exiting the transport system, the same process is repeated and the
card reader will then be notified of where the initial source of the customer is, and check
it with current source, it will then deduct the money from the card according to
previously programmed data by the central database.

The Migration Path

Implementing this system on the current existing system will not be a task that is
achieved in a couple of months, but rather over a period of 3-4 years, firstly, contact less
smart card readers can be place in existing gates that lead to the trains, however, it can be
implemented with both systems of contactless smart card and the current paper magnetic
cards, therefore, this will give customers, technicians and personals in charge of
implementing this system, time to adapt to a new technology. Top-up machines can be
implemented in train stations however, with customers which are unsure of the operation
of the machine, can reach a teller in the station and have an operator top-up the card.
Advertisements can be made to educate customer on the usage of the system and inform
customers of the changes made.

In short, contactless smart card systems, will no doubt increase the speed in which
transactions are performed, as transactions are only at approximately 0.3s, this will
increased the efficiency, stability and speed of these transactions, moreover, it will
promote less fare evasion because this system would require gates installed at every
station and the system can be installed at every station at a reasonable price. In the future,
this system not only can be used in train stations, but it can be integrated with other
transport systems such as busses, taxis and ferries. It can further be integrated into stores
located within the train stations or even any stores that choose to implement this payment
system.
Investments
For evaluation purposes, the following scenario was developed for CityRail (CityRail,
2002):
Fare Media: -“Tap & Go” replace tickets approximately 400,000 smart cards
required for CityRail customers’ cash is accepted on recharge machines
Fare Collection: - smart card reader on all stations
- recharge machines on all stations
- station data automatically upload to server
Fare Sales: - station services center sell smart cards and can recharge the smart
card

Investment Cost Estimates

Station System Equipment
There are four things for each station need implements. First, if the station have existing
gates, it is easy for retrofit to a smart card compatible. If the
stations do not have gates, it is need to be adding some new
smart card compatible gates in the station. For instance, in
Singapore, smart cards readers are built into the gates.

Therefore, as the computer passes through the gate, they Readers are to be installed
will scan the card and proceed to train platform. (ez-link, on the gates

2004)
Second, each station needs to replace ticket vending machines to a touch
screen recharge vending machine which is a faster, easy-to-use, user-
friendly, low-failures rates machine to recharge the smart card. This will
also reduce the queue process, when purchasing a ticket from the booth,
call “Add Value Machine”. Similar to Hong Kong Public Transport
System, the Add Value Machine is a Smart Card recharging terminal,
where the principal function(s) is to reduce time taken and make day to
day processes. (Australian Design Awards, 2005) Moreover, the Smart
Card and Add Value Machine ensures more people can travel easier, and Add Value
Add Value Machine had to be simple enough to allow patrons to Machine
installed on
complete a transaction quickly and accurately due to the sheer volume of
people using the public transport system.

Third, each station will install a computer to handle the smart card transactions and
upload to the central server (Sony, 2005).

A Normal Transaction Flow

Fourth, each station will install the account balance checker
for the customer to check their smart card balances. The
last transaction details such as the date, mode of transport
and the fare deduction and remaining balance will be
displayed. (Chinetek, 2005)

Account Balance
Checker
Central Computer Facility
“Tap & Go” system will need a main-frame server to handle all the customer’s smart card
transactions on the same time and store the transaction data in the database, therefore it
need a powerful, faster, security server in a security and safety place. On the other hands,
it also needs information technology experts to design and develop the software and
implement the hardware. (Octopuscards, 2004)

Global views of Network Architecture

Facility Modifications
Screen of Station
For most of the facility, such as power, network
cabling, ducting is needed to be modified and
upgraded to make the “Tap & Go” system more
efficiently. Because of the “Tap & Go” system will
have larger number of transactions data to be
transferred.

Others
For the efficiently and work properly, spare equipment is need to make the operating
keep continues, it is acceptable for allow 10 percent of the total equipment cost to buy the
spare equipment. On the other hand, it is recommended to allow the cost for the technical
support area such as staff training.

The following Table 6 summarise the capital investment cost estimate of installing a
“Tap & Go” system on all surface bus, and in all stations. Hardware and equipment unit
costs were based on prices provided by our system consultants, suppliers, and equipment
manufacturers.
 Table 6
Capital Investment Cost – “Tap & Go” System for CityRail
(Order-of-Magnitude estimate in Australia Dollars)
Estimated
Requirements Descriptions
Capital Cost
Equipment
Retrofit existing gates
Replace ticket vending machines
Station System Equipment $7 M Stations computers
Install new account balances
checker(Smart card readers)
Network computer hardware
Central Computer Facility $0.8 M Proprietary software ( design
and development)
Total Equipment Supply $7.8 M
Station electrical and
Facility Modifications $2.2 M communications Modifications
( power, cabling, ducting)
Equipment spares, technical
Other $1.4 M
support
Subtotal $11.4 M
Marketing, staff training,
Standard Add-ons $2.6 M
contingency
TOTAL ESTIMATED COST $14 M

For the most of the dollars invested, approximately more than half of the estimated costs
which are seven million and eighty thousand Australian dollar are required for buying
station equipments such as gates, touch screen recharge vending machines, station
computers, account balances checker, center computer, etc). Second, there is three
million and sixty thousand Australian dollar for the facility modification process. It
included modified and upgraded power, network cabling, and ducting. Third, there is two
million and sixty thousand Australian dollar for the staff training.
Hurdles
From the technology point of view, the implementation of contactless smart card system
would not be a problem, however, to actually integrate it with current system, poses a
great challenge, firstly, engineers, designers and analyst will need a certain amount of
time to actually understand the existing systems. This is because it is impossible to
actually start a system from scratch and remove the existing infrastructure. Another
challenge would be that during the course of migration, it will require a certain time
frame for adding the function of contactless smart card onto the gates, however, this is
going to heavily disrupt normal day operations, it would be a challenge to make a balance
of both. One solution is to actually, do virtual testing of the system in certain labs and
implement it in non-working hours.

Another challenge is that the writing of the software itself for the system, what
methodology to take during the course of software development and how to build the
software so as that it has new features of contactless smart card while still having the
functionality of the current existing system.

Lastly, implementing a massive system like this on a large scale will require a lot of
human power and field expertise in adopting this system, the question is, would it be
possible to find these resources locally or is it necessary to outsource it from overseas,
and if it is required, where is the best place to oursource a system like this. These are
some of the main questions needed to be addressed from the first step of migration. Once,
again, after implementation of the system, the marketing of the system implemented have
to go on a hard campaign. This is to educate the commuters on the procedure how to use
the cards. Therefore, the hurdles will not be only face by the developers and the
implementers, but also from the perspective of the commuters.
Results
Using contactless smart cards does gained acceptance for use in physical access control
systems for the three main reasons presented here. (Hidcorp, 2005)

1. A contactless presentation of the card is much more user friendly and

convenient for physical access control.

2. Contactless smart cards and readers are much more durable in harsh, dirty, or
outdoor environments such as those typically found in access control
applications.

3. Contactless card transactions are designed to be faster than contact

transactions.

With contact smart cards, users (commuters) must properly orient the card to put the
contact in the correct position, find the opening in the reader, insert the card and leave it
there until the end of the transaction before removing it. Moreover, contact smart cards
were not optimized for fast transactions, but for very high-security applications like
financial services and debit card PIN protection. Since, contactless card were targeting
high-throughput applications like transit fare collection and ticketing, fast transactions
were mandatory while still maintaining high levels of security. For that reason, as
contactless technology developed it was optimized for fast reading and authentication, an
advantage in access control systems as well. (Hidcorp, 2005) In contrast to the current
CityRail’s ticket, contactless smart card would definitely replace the system with much
benefits and improvements.

Hence, this technology has proven the results of success in a number of national
transportation systems in the world. For instance, in Singapore, their transportation
system has integrated all their public transportation like the Mass Rapid Transit (MRT),
public buses and taxis using one common electronic payment fare system, which they call
ez-link. (ez-link, 2004) This system is being well adopted by their commuters traveling
all around the island, with worrying about the different fare, they have to pay. Moreover,
they are eligible to get discount, when they frequently travel using the public transport.
This scene does save. In Hong Kong too, the commuters there, have seen the same
benefits, just like in Singapore, when Octopus is being implemented. (Octopus, 2004)

In addition, this contactless smart card has a number of benefits, which have been
discussed in other parts of this report. This is also in terms of safety of the commuters,
and the operators of the public transports. They do not have to carry a large sum of
money when either they are traveling or on duties, as for the public transports operators.
Commuters also are able to move flexible and able to travel at a fast pace from one
transportation to another. As millions of commuters travel using the CityRail and public
buses in New South Wales, there will be an increase in the economic earnings for the
public transportation. Furthermore, contactless smart card are now extending beyond
public transport to carparks, fast food outlets, convenience stores, supermarkets, vending
machines, pay phones, leisure facilities and schools. What's more, it has been introduced
successfully in payment uses such as access control.
Future
Until mid eighties, Smart Cards were still at the research and development level due to
many factors. Since then, the industry has been growing at tremendous rate is shipping
more than one billion (1,000,000,000) cards per year (since 1998). (SmartCard, 2005)
Today, there would be a population of more than 7 billion Smart Cards around the world.

As the population of the Smart Cards indicates increasing the public acceptance of this
unique innovative technology, and if CityRail adopts the proposed contact-less smart card
system, they would have tremendous benefits on long run. As there are many areas in
which it could be integrated to, like the buses, taxis, and shops in the train stations. It
could be encouraged to use public transport system and use this card more frequently
from traveling from city to city by train or inside the city by buses and give discount as
they travel more. Or even accumulate some points if they use this card to certain extent
and they can be given a special discount from shops where this card is accepted. Another
scenario would be that the travelers simply can buy the low priced items from Contact-
less Smart Card without having to use the ATM Cash Card or Credit card.

This technology is advancing day by day; even now also there are keychain (Figure-1)
which are used as multi purpose Smart Cards. (TechTrend, 2005) It may not take time to
manufacture accessories like watches, pendants, baggage tags which have built-in RFID
inside it, which in turn may bring luxurious way of life
where customers don’t have to carry any kind of cards to
travel. In the future, one traveler may pass through the gate
of CityRail by just waving his hand over the contact-less
Smart Card reader, who may happen to have a watch or
pendants which have built-in RFID. This brings ease of use
as well as overcomes some security issues like taking the Figure-1 keychain
card from the wallet in a crowded area which may lead to
wallet theft.
Increasing the storage of the Smart Card will enhance the service as well as benefit to the
company and to the country as a whole, as it will be capable of storing data such as
biometrics information of the cards owner, personal medical history and cryptographic
keys for authentication, etc. In the event of an accident or a stroke to a person, his or her
Smart Card can be used to quickly identify what is the medical history of the particular
person.

Even the card readers are becoming more advanced, a contact-less Smart Card which is
kept inside person’s back pocket can be used to deduct his fare by just walking through
the gate without manually taking the wallet or card from it. The side-way card readers are
so sensitive it just reads even when the person does not stop for a scan. There are
contacts-less Smart Card payment systems in which they a person can linked their Bank
account to the Smart Card so that it will be topped-up when the amount of the card
becomes zero or set value or even topped up using top-up machine without having to
transferring money from his or her bank.

With all this promising advancement and innovative technologies CityRail’s future
prospects in the next three or four years look very exciting and great development. The
Integration and implementation with up-coming technologies would not be a problem
since the proposed system can easily adopt those. The company would fly to the top by
serving the public, utilizing the modern technologies available to date, boosting the
revenue of the company with satisfaction of all the customers without them being in long
queues.
Financial Summary (Over 2 Years)
Based on our experiences, the followings summarise the capital expenditure, operational
expenditure and the revenue growth for first year and the second year in CityRail.

Capital Expenditure
In the first year, it will have a large number of implementation for the “Tap & Go”
system, such as “Tap & Go” system install on all surface bus, and in all CityRail stations.
It will have a larger number of the capital expenditure for buying the hardware and
equipment which is about fourteen million Australian dollars. All hardware and
equipment are installing on all surface bus and in all CityRail stations. It included station
equipments such as gates, touch screen recharge vending machines, station computers,
account balances checker, center computer, etc. The costs were based on prices provided
by our system consultants, suppliers, and equipment manufacturers

In the second year, most of the implementation for the “Tap & Go” system should be
finished. The capital expenditure will have a sharply decrease compare with the first year
which is about sixty thousand Australian dollars. But, it still has smaller number of
buying hardware or equipment and the facility modification. Because of the hardware or
equipment may damage, lost or out-of-order, etc. So it needs to keep ten percent of total
equipment or hardware for spare use.

The followings figure 10.1 is showing the different between first year and the second
year of the total capital expenditure:
 Capital Expenditure Graph – Figure 10.1

15

Australian Dollar 10
( in Million)
5

0
First Year Second Year

Operational Expenditure
In the first year, the operational expenditure does not have many of changes, because of
most of the implementation have not been finished. Only administration, data
management and information technology maintenance and support will have a slight
increase. For the administration, it may need to rearrange and train the current staff or
add new staff for the smart card administration such as customer service, enquiries, lost,
damaged, stolen cards, claims, refunds, etc. Second, it should have some information
technology experts for computer back office support and database management such
security. Third, it also should have some information technology experts for maintenance
and support. The estimated cost show as the following table 10.2.:

Table 10.2
Operational Expenditure of “Tap & Go” for CityRail in the 1st Year
Potential Increase in AUD
Administration $0.4 M
Data Management $0.3 M
IT Maintenance & Support $0.3 M
Total $1 M
In the second year, most of the stations with “Tap & Go” system will become functional.
Therefore the weights of operational expenditure also have a big changed. For revenue
operations, the replacement of tickets with a smart card would have a relatively small
impact on the revenue operations work force. Cash would still be accepted, so there
would be no change in the daily process of recharge smart card. Second, the introduction
of a smart card system would result in marginal labour savings in station collectors. Third,
Material expenses for tickets would be eliminated, and this would result in an operating
cost saving of two million fifty thousand Australian dollars annually. Forth,
administration, data management and information technology maintenance and support
will increase to normal operational expenditure level. For the administration, it may need
more staff to rearrange position and keep training or add more new staff for the smart
card administration such as customer service, enquiries, lost, damaged, stolen cards,
claims, refunds, etc. Then it also need more information technology experts for computer
back office support and database management such security. Finally, it also needs more
information technology experts for maintenance and support. The following Table 10.3
summarise the potential operating cost on the CityRail.
 Table 10.3
Operational Expenditure of “Tap & Go” for CityRail in the 2nd Year
Potential Savings $ Potential Increase $
Revenue Operations ($0.2 M)
Station Collectors ($3.0 M)
Fare Media Expenses
(production costs – tickets, tokens) ($2.5 M)

Administration $0.8 M
Data Management $0.6 M
Revenue Equipment &
$0.5 M
Maintenance
IT Maintenance & Support
$0.6 M

Sub-Total ($5.7 M) $2.5 M

Net Change ($3.2 M)

Revenue Growth
As the “Tap & Go” system has been implemented successfully, it brings high-efficient,
cost and performance effective, lower operational cost to CityRail. By the user-friendly
interface of the system, it is reasonable to forecast that the increased of usage and revenue.
And the “Tap & Go” system also minimizes the fraud and ability to block transactions
after loss card to improve the revenue stability. On the other hand the reduction of
maintenance costs also is an important fact to increase the revenue such as elimination of
card recycling and use economies of scale to produce smart card and sharing of a
common system infrastructure for all same facility. As all the benefits to improve the
revenue, it is reasonable to forecast that CityRail can increase their revenue for five
percent in the second year. The followings figure 10.4 is showing the different between
first year and the second year of the total revenue growth:
 Revenue Growth Graph – Figure 10.4

10.4
10.3
Australian Dollar 10.2
(in Billions) 10.1
10
9.9
9.8
9.7
9.6
First Year Second Year

As the pervious experiences in Hong Kong, there are “8.8 million cards and 75 million
transactions a day in circulation for a population of 6.5 million”. (Card Technology, 2003)
It is a strong reason that we recommend CityRail to use “Tap and Go” system to replace
the ticket system. “Tap and Go” system can reduce the operational expenditure and
increase the revenue to make the business more profitable. For the higher rates of cost
and performance of “Tap and Go” system, fourteen million Australian dollars is worth to
invest for the business future.
Conclusion
In this paper, we have described the consultancy research in the evaluation of choice of
technology which integrates ideas and motives to consult the Land Transport Authority’s
project, regarding a suitable electronic payment system. The approach leads to rich data
that can be collected and analyzed in an efficient manner, with the technical evidence and
support from other world class transportation system with their solutions towards the
transportation fare system.

In conclusion, we have also look into the investment, hurdles, results and future in the
choice of the technology, with a concrete financial summary. These would strongly
support with confidence in the idea and motivation for such consultancy business plan in
solving the electronic payment system for Land Transport Authority’s project’s tender.
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