EMV in Transit: the Dutch OVpay case
Frits Steenmeijer and Hans Croon
Connective Payments, December 2021
OVpay is the next major innovation in Dutch public transport
Twenty years after the foundation of Translink Systems and ten years after the national introduction of the OV-chipkaart, it is time for the next major innovation in Dutch public transport. The name of the umbrella program is OVpay. At OVpay, everything revolves around convenience. The traveller will soon be able to check in with his debit or credit card in the bus, tram and train and pay how he wants. For instance with his contactless card or mobile phone. In the long run, train passengers can even travel with GPS. For those who prefer that, the trusted OV-chipkaart will continue to exist, equipped with new technology and services. Occasional travellers can still buy a single ticket.
Traveling by public transport should work smoothly, simply and intuitively, regardless of whether you travel occasionally, with a subscription or for business. That is an extensive and complex job. For example, 60,000 contactless interfaces like gates and card readers must be equipped with the new technology, which is based on the “EMV in Transit” specifications. All national, regional and municipal transport companies have to work together to successfully implement OVpay.
We interviewed Bas van Weele, Director External Affairs at Arriva. As the Program Director of OVpay, he is responsible for this tour de force.
You have a lot of experience with large projects within Dutch public transport. For example, you were already involved in the introduction of the OV-chipkaart. You fulfill several roles, such as at Arriva and OVpay. How do you keep all those roles separated?
“Actually, I don’t have a problem with that. At Arriva I work on a number of innovations, such as Mobility as a Service, which involves planning, booking and paying for all possible transport via apps. Of course, I don’t work for Arriva at OVpay, the only way I can do this job successfully is when I’m neutral, and I do that with gusto.”
OVpay’s three migration levels
With all those transport companies, forms of travel and infrastructural challenges, OVpay is a complex change program. How do you see the rollout?
“By the end of 2023, everyone should have switched to a successor to the current OV-chipkaart. In the first step, the largest group, the travellers who now simply check in and out and pay the regular rate, will switch to the new system by mid-2022. Including people who for whatever reason do not have an OV-chipkaart. And foreign tourists who can then check in and out with their debit or credit card without any problems. With a physical card or with the wallet on their mobile, via Apple Pay or Google Pay. The urgency has only increased because of corona. This step is expected to help encourage people to use public transport again, and thus return to the level of 2019.”
What will be the next step then?
“In the next step, plateau 2, the discount products are transferred. For both the large group in plateau 1 and the travellers with discount products in plateau 2, all travel movements are collected in the back office. It contains all the business rules with which the price is determined. At the end of the day, the back office calculates the total amount that the issuer must transfer to the acquiring bank. For customers in plateau 2, that amount is therefore reduced by, for example, the off-peak discount.”
And then there are the travellers who pay a fixed amount per month, for example for their daily commute.
“Correct. These customers use account-based subscriptions such as NS flex and GVB flex, where you pay monthly instead of per ride. That will be plateau 3. We are in talks with the banks about a form in which we can only use the bank card as a means of identification, to give you access to public transport. So without a payment at the end of the day. This is a model that does not yet exist. Because we are not yet sure whether it will work, we will provide the current customers with a new OV-chipkaart, maybe with a different name. It will be a kind of EMV bank card that is not a real payment card, but only an identifier. Because it is tokenised, this card can also be used from a wallet on your mobile phone.”
Communication and lessons learned
How do you keep all stakeholders informed of the progress?
“We do our utmost to communicate about the program as openly and transparently as possible. We hold share-ins once every 2 to 3 months in which we inform large groups of stakeholders, such as suppliers, banks and credit card companies about what we are doing. So that we can also take their input into account.”
What have you learned so far?
“Of course, in the first place we learned a lot from the introduction of the OV-chipkaart ten years ago. We are incorporating those learning points into this project. Furthermore, together with the TU Delft, we have done a lot of research in recent years into how travellers use and experience the OV-chipkaart system.
In the current rollout we work in three steps. First, we do a proof of concept in a lab situation, so that we know that the technology works. This is followed by a pilot with a limited scope, usually with employees, of the carriers or the OVpay program itself. Then we will apply the technology in real life, again to a limited extent, such as in Lelystad and in Gooi en Vechtstreek. In order to manage the sky-high expectations, we call it a trial, but in fact we are live there. The number of travellers who already check in with their debit card is high. That number will increase when you can also change buses or trains. It actually works very familiar and intuitive, so we don’t have to teach our customers a lot of new things. The reactions from customers as well as carriers and their clients, usually the provinces, are very positive.
Of course no-one travels more often because paying is that easy. But the point is, the payment is not a hindrance either. All travellers should use public transport with ease and pleasure.”
Have there been any technical surprises?
“No real surprises, just planned improvements. To give an example: the OV-chipkaart is an offline system, in which the travel information is written on the chip. As you know, this is not possible on a debit or credit card. Initially, the traveller only got to see “OK”, with one beep, both at check-in and check-out. People are used to hearing two beeps when checking out. We have now ensured that the network of the bus company contains the intelligence that recognizes a check-in and a check-out with the same card. Now the traveller will see “Check out OK” when checking out, along with the familiar two beeps.”
EMV in Transit
London is often cited as the example of a successful large-scale roll-out of EMV in Transit. What have you learned from the London experience?
“We discussed the technical background a lot in London. For example, how to deal with the EMV in Transit model, which was developed by EMVco for public transport. The payment transactions are aggregated and subsequently authorized by the issuing bank. Because the payment takes place afterwards, new rules are needed to manage the debtor risk.
But what we learned especially in London is how to do a gradual implementation. Travellers very quickly switched from the Closed Loop Oyster card to the new EMV Open Loop system, which more or less sold itself because the customer experience was so good. The current rechargeable OV-chipkaart will also continue to work until the end of 2023, and we will continue to maintain the infrastructure required for this. But we hope that many customers have switched long before that because the new way works even better.”
How does the EMV in Transit model work?
“The back office registers a tap-in and a tap-out per trip. At night, the back office calculates the price of all those journeys, adds them together and applies any discount percentages. That price is then charged to the cardholder’s bank. The money is transferred by the issuer to the acquiring bank of Translink. If necessary, Translink splits the payment and pays out to the carriers involved. It is actually a deferred debit card payment. Compared to a regular debit card payment, the big change for cardholders is that they have to check out with the same card at the end of their journey. Of course you don’t have to do that in a store.”
Technical challenges for OVpay
Were technical adjustments necessary at the banks?
“Yes, technical adjustments were required at both the banks and Translink. For example, in cases where a traveller first checks in, then buys a cup of coffee and something else and then checks out again. Such transaction flows are not uncommon in public transport. However, the bank would consider these transactions as unusual, because the transaction number has since been increased. As a result, the bank’s exception lists would explode, which of course is not the intention.
I have to say that the number of issues has become smaller and smaller in recent years. Both at banks and at Mastercard and Visa. This is also because the EMVco scheme has gradually developed into a mature EMV in Transit model. If I started a bank today, and I embraced the current EMV scheme with a Contactless Level 3 certification, I wouldn’t have to do anything. Also think of foreign debit and credit cards, which are readily accepted.”
Do travellers find it difficult that they can only see the price of their trip the next day?
“You have a point there. The Transit model implies that the charged fare price is calculated overnight in the back-office. But an indicative price calculation can be done earlier for information purposes. We are working hard to improve this service, so that customers can quickly view the fare via an OVpay app, which can also be embedded in the carrier’s app.”
How can a conductor see whether someone has checked in?
“In the pilot in Lelystad, conductors have one device with which they can read both Myfare, the current OV-chipkaart, and the EMV chip on the bank card. In the case of debit and credit cards, the device reads the card number and checks in the back office whether it has been checked in. This is a complex solution that has been realized with CPoC (PCI Contactless Payments on COTS) technology. The great thing is that this technique works well with an app that you can simply download on a regular smartphone. So you no longer need dedicated hardware.”
Is the system future-proof?
“The OVpay system is set up in such a way that it doesn’t matter what is connected to it. Whether that is a Myfare or an EMV transaction, a QR code or a GPS signal. Translink calls it a token-agnostic landscape. Everything is aimed at processing capability in the back office. All business rules are adjustable there. So wallet transactions such as Click to Pay can also be processed without any problems.”
Among the benefits of EMV in transit are removing the transit enrollment process for the occasional and foreign traveller, lowering card issuance costs, reliance on financial-grade security, and reducing the need for a dedicated top-up infrastructure for transit stored value. Will the costs of payment services for public transport companies indeed go down in the new system?
“About 15% of the turnover generated by the OV-chipkaart system is spent on payment costs, in the broad sense of the word. The business case is aimed at reducing that component to below 10%. The idea is that public transport adds almost 2.5 billion transactions per year to the acquirer’s volume, reducing the costs per transaction. This is of course not entirely in our control, because the acquirer can increase the transaction fees. Furthermore, we save on issuing millions of physical cards, maintaining hundreds of service point machines and distributing money.
On the other hand, of course, all hardware, such as 60,000 gates and card readers must be adapted or replaced with new ones.”
Future plans refer to “train journeys with GPS”. Can you tell us more about that?
“We will soon give train passengers a new function, embedded in the train operator’s app, with which they can check in and check out. The app then keeps track of the entire train journey by means of location tracking by the smartphone. So when you change platforms or train carriers along the way, you no longer have to do anything. At the moment you have to check out and in again, and nobody likes that, it is also often forgotten. For the time being, we will not go so far as to have the app also automatically check in and out, which in itself could be technically possible. In order to avoid misunderstandings and mistakes, we want the traveller to continue to consciously check in at the start of his journey and check out when he stops. In Amersfoort, for example, you can walk through the station. Of course you do not want to pay travel costs for walking through a station.”
Will this technology also become available in buses and trams?
“It is a complex new technique that we are introducing for train travel. There are only 400 train stations in the Netherlands, which can also be clearly identified on a map. In comparison, the number of bus and tram stops is much greater. Furthermore, due to the high stop density, the accuracy of location determination must be much greater than at a train station. So for now this would be really too complex, and we have placed it outside the scope of the OVpay program.”