Jul 27 , 2010

Ontario, Toronto fight over contactless transit cards

By Robin Arnfield, News Editor

TORONTO--The Province of Ontario and the Toronto Transit Commission (TTC) are quarrelling over which contactless fare system to adopt. At stake is hundreds of millions of dollars worth of provincial subsidies which the TTC has been promised by the Province.

Hoping to create a single contactless ticket system that would be used across the province, Ontario has been subsidizing the development and roll out of the Presto proprietary contactless fare card system. Presto has been under development for five years with advice from Accenture.

So far, Presto has been rolled out across the 905 telephone code region of the Greater Toronto Area (GTA) transit system. However, the TTC, the biggest transit operation in Ontario, has not committed to Presto, although the cards can be accepted at seven GTA subway stations.

A political furor was caused when TTC commissioner Adam Giambrone told the Toronto Star newspaper that the TTC would issue a request for proposal for an open payment system. An open system would accept MasterCard and Visa contactless cards that would be processed through regular processing channels.

In response to Girambrone’s announcement, the Ontario Transportation Minister Kathleen Wynne has warned that the TTC stood to loose Provincial subsidies if it did not back Presto.

IDC Financial Insights Senior Analyst Rob Burbach can see the logic of Wynne’s position. “The TTC has already started rolling out Presto, so it makes sense to complete the job,” he says. “If the TTC were starting afresh, there would be an argument for an open system, but it could take three years to set up such a system.”

Burbach thinks that the Province has the financial power to push through a single system across the province. “The TTC hasn’t been anxious to work with other transit agencies,” he says, but I think the Province will make it happen.”

Burbach believes the money spent on Presto is a good use of tax money. “The electronic tickets can be used to promote the use of public transport by providing special offers and incentives and the automation will also help cut costs,” he says.

The main issue for Burbach is whether the Presto system will be put together and managed well. “No one knows exactly how much has been spent so far on Presto and how much more it will cost to roll out the system,” he says.

It is also difficult to put a price on the cost of processing by banks and processors versus the cost of processing a proprietary system. “The TTC would find it difficult to partner with banks and negotiate processing fees,” Burbach says.





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