Interview TLS: A fair distribution key for public transport revenues

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In addition to making traveling easier for passengers, the introduction of the ‘OV-chipkaart’ (public transport chip card) has brought a number of added advantages for public transport companies. They amount that is reimbursed to them can now be calculated precisely on the basis of journeys made. This means it is no longer necessary to rely on samples and percentages, but that actually traveled kilometers can be calculated. The next step involves basing the distribution keys for season tickets on actually made journeys. Add to this the development of contactless payment and it is abundantly clear that Trans Link Systems is facing an important technological development.  

Article from Objective 21, 2014

Unique in the world

Our current OV-chipkaart is based on a model that has been in use as a standard across the globe for more than a decade. “Our system originated in Hong Kong, where they use the Octopus card. Exactly the same thing. Just as the Oyster card in London”, Hugo Laarakkers explains. He is Development Manager at Trans Link Systems (TLS) and innovation is one of his responsibilities. “What makes the situation in the Netherlands unique is that our country is the only one to have a card that can be used for all forms of public transport. Few people in the Netherlands are aware of this, but it is really something to be proud of that we managed to do this.”

Offline intelligence

The current system works with a pre-paid card bearing the balance and any products purchased. You can use this ‘e-wallet’ to check in at so-called level one equipment, or gates. Gates were equipped with the intelligence that calculated the fare and – having subtracted any discount – debited the balance on the card. The gates functioned completely offline. That was necessary because the networks were still slow and unreliable at the time that this system was developed. The gates collected all data and transmitted it to TLS at a favorable moment when there was a good connection. For instance at night when the bus had returned to the garage. In doing so, TLS was doing what it had been set up to do: “We collect the money from the passenger who has charged this money to his card, and we keep it in a so-called float. Then we transfer it to the transport companies that carried the passenger. With the old ‘strippenkaart’ or paper public transport ticket, reimbursement was based on manual samples and was paid out after a long delay. The current system is therefore already a huge improvement, because the public transport companies receive their money almost immediately.”

Towards a smart back office

Even so it seems like the current system is coming to the end of its life. The transport companies are trying to replace the fixed ‘old’ distribution keys that are still used for season tickets and want to be fully paid for actually traveled journeys for this type of ticket too. “The solution lies in a smart back office system that can process a lot of data into journeys and fares within a very short period of time. In addition, the increasing demand for contactless payment through bank cards and smartphones also means we want to innovate in this respect. A contactless bank card can’t do anything other than identify. This is why we need an intelligent back office to perform the calculations,” Hugo explains. This calculation system, the Fare Calculation Engine (FCE) is able to quickly calculate the right price for journeys made with every transport company. “The basic principle is actually very simple, but the complexity of our Dutch system of transport companies and fares makes it very difficult to calculate the price of a journey”, says Hugo. “Take for instance the new idea of traveling on credit: this allows you to travel by public transport without any product or balance on your card, but instead you are invoiced on a monthly basis. But the FCE will first have to construct the journey to make this possible and then calculate the fare. On the platform, your train journey is registered immediately, but the leg of the journey that you traveled by bus will only be transmitted to the back office a day later. But if you changed from train to bus within 30 minutes, we have to make sure you’re not charged the starting fee twice.”

Intensive cooperation

“The development of the FCE is a great co-creation together with Techolution”, says Hugo. “In early 2013 we were looking at who we might be able to partner up with. This is tailor-made work and we’re talking about millions of transactions per day. We were therefore looking for a partner who is close to us, knows our sector well and speaks our language. But also a partner who has a similar mentality, who can think along with us and is proactively solution-oriented.” The two partners know each other well, because Technolution has been carrying out the certification of complex logic for TLS for ten years now. That was a strong advantage for this project. “TLS has knowledge of the complexity of the fare system. This means we have deep knowledge of all the rules, but not on how you implement that. And that is what Technolution has been doing for years: obtaining knowledge on how to implement it and to turn it into a working system. There is intensive cooperation between the people who really know what they’re talking about. In this work process that is leading towards the end solution we’re all proactively thinking along with each other. This works really well.”

Reusing knowledge

The two partners examined together whether the system was viable. Given that the end product has a precision requirement of 99.8 %, the bar was set pretty high. An internal pilot with monthly travel data from the Rotterdam region was conducted to provide a definite answer. “Having had a building period of six months, a first test in a limited geographical area made it clear to us that we were able to meet the high reliability requirements. ‘This means we can do it’, we said to each other in summer last year. So let’s implement it.” By closely analyzing what went well and what went wrong in a number of other countries that have the same system, and by reusing knowledge, the partners succeeded in turning the reference implementation into the FCE. “The efficiency that this generated made it possible for us to go live last January for phase 1; calculating the distribution keys for season tickets. That was a small, relatively safe step. Just to make the comparison: London has been working on this for seven years, but after one year we were already quite far advanced with this new way of paying and distributing,” Hugo says with modest pride.

Exciting first step

In April, a practical trial was begun together with the Rotterdam public transport company RET. Since then, passengers have been traveling with their OV-chipkaart according to the new system. “This is the really exciting phase, because we are currently using the FCE to draw up invoices. Clients could easily start doubting the reliability of the system if certain things aren’t right, for instance if the outbound journey doesn’t have the same price as the inbound journey. If the trial goes well, the FCE will be further enriched and expanded. That will possibly be followed by the technological realization of contactless payments through bank cards and telephones”, Hugo explains.

Ready for the future

The FCE will provide better insight into traveling, and this leads to new propositions for our clients and passengers. “By adding logic we can expand the system, for instance by adding a maximum day fare. Passengers would then be able to travel anywhere, while never being charged more than they would with a season ticket. It will also be worthwhile to see if the system can be deployed generically. Maybe it could be made suitable for other countries? That would be interesting as a way of recovering the costs. It might also make the system cheaper. But not in the short term. The FCE is primarily intended to keep up with developments. The expensive gates will therefore continue to be part of stations for the foreseeable future. But the FCE means that the Netherlands is leading the way in this development and is showing the world that it is a country of innovation.”

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