Looking on the horizon of fare collection in mass transit, 2010 will be interesting. Now that contactless smart card-based systems have expanded their footprint across the U.S., transit agencies want to take the spirit of “one card fits all” to the next level.
Instead of restricting themselves to being agents of “ticketing,” operators want to more closely emulate the payment practices of the big retailers and talk about “acceptance,” primarily of the “big four” payment brands (VISA, MasterCard, American Express, Discover) directly at the patron point of sale (turnstile or farebox).
This new model of open payments has been deployed on the Salt Lake City bus system, and is now at the heart of several active procurements across the country. We think this momentum will lead to a number of agencies eventually moving to customer loyalty products that not only will provide added convenience for the end user, but will also have the potential to provide transit agencies with significantly enhanced revenue.
As this new business model is being fine tuned, Cubic is building relationships with banking partners with whom we can leverage a combination of proven expertise in the transit industry with specific focus on open payment, contactless payment technologies and customer service. For transit agencies, this approach will meet their desire to “get out of the fare collection business” so they can focus their resources on the service demands of their ridership, which makes economic sense. Modern fare collection systems are delivering transit agencies better accountability and frequently have resulted in lowered operating costs, as well as providing the riding public with fare products that are convenient.
Turnkey infrastructure projects and outsourcing services, including overall transit operations, is a trend that we have seen in several areas of the public transit market in the U.S. and to a much greater degree in Europe. Cubic recognizes this trend and we see the potential to add greater value to this approach through our unique position as a highly experienced technology and systems integrator that has taken on the biggest technical challenges in our niche market and succeeded.
We also are experiencing a shift in funding mechanisms for fare collection modernization and upgrade. While private public partnerships are not new to the industry, fare collection has typically been paid for through capex funding. However, by using lease options and private financing strategies, operators can be freed to deploy capital for funding more urgent programs that will enhance service and improve the safety of their systems. To date the federal stimulus dollars have not had a significant immediate impact on our part of the industry, but we believe there will be some further direct benefit in the next year as well as some indirect benefit from reallocation of funds and longer term growth.
Cubic continues to play a leadership role in helping its customers through our ongoing technical development and our expanding role in providing a range of services to our customers. With technology, solutions and business planning services, Cubic looks forward to working with industry in turning their fare collection systems into strategic assets that cut costs without sacrificing service, create new revenue sources and reinforce a positive experience for their patrons.
Biography
Steve Shewmaker is president of Cubic Transportation Systems worldwide. A Cubic executive for more than 20 years, Shewmaker has most recently served as a corporate vice president for Cubic Corporation, the parent company, and as managing director for the corporation’s UK operations since early 2006. He is a three-term member of the Board of Directors for the American Public Transportation Association and a member of APTA’s Legislative, Fare Collection and International committees.
