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Presto, Change-o?

By Laurence Lui

20100728Presto.jpg
Photo by Remi Carreiro/Torontoist.


One of the biggest TTC rider gripes these days is how we pay for our transit fare. Without a doubt, the smorgasbord of fare types can be overwhelming for even the most seasoned transit rider: we have antiques known as tokens; magnetic striped Metropasses and weekly passes that can only start on the first of a month or a Monday; scratch-and-ride day passes; and of course, the all-too-confusing-on-when-and-where-you-can-actually-use-them paper transfers. Not to mention that, come September, all post-secondary students will join high schoolers in needing TTC-produced photo identification to buy and use a discounted student Metropass. Worldly travellers to locales like Hong Kong and London all return to Toronto after using Octopus and Oyster cards and cringe while reaching into possibly-bacteria-ridden token dispensers at their local subway station, all asking, “Why are we so behind?”


The TTC’s fare system has served Toronto well for the past half century, despite its perceived antiquity. Other than tokens lost through holes in our pockets and the odd bust of token and ticket counterfeiting rings, the system has yet to suffer a catastrophic failure. Ridership has grown, and continues to grow, despite the TTC’s lag in updating fare payment systems, making it hard to blame the TTC when there were more pressing needs with limited funding. Among things that have pushed a new fare payment system aside include replacing thirty-year-old buses and streetcars; repairing fifty-year-old subway tunnels; and maintaining a “state of good repair” in tracks, stations, and buildings. Besides, research shows that the best way to increase ridership is not to implement smartcards but to add service, and the TTC has adopted this approach since the introduction of 2003′s Ridership Growth Strategy [PDF], leading to a consistent increase in ridership despite the economic downturn in 2009.
So it wasn’t surprising that when the Province of Ontario announced Presto in 2007—an initiative to develop a single smartcard that can access transit systems across the Greater Toronto and Hamilton Area (GTHA)—the TTC didn’t share their enthusiasm. TTC staff estimate the cost of implementing Presto on the TTC’s 1,800 buses, 150 Wheel Trans vehicles, 250 streetcars, and 69 subway stations will be nearly $450 million. Of this cost, the Province has committed just $140 million, leaving the cash-strapped TTC to cover the balance.
Flash-forward three years and Presto has begun rolling out across GTHA transit agencies, most notably on GO Transit’s Lakeshore West line over the past several months. And as this roll-out begins, TTC Chair Adam Giambrone has initiated an exploration of another fare payment system, known as “open payment”—perceived by many as a competing, parallel system. Among those doubters are the Ministry of Transportation (which is developing and implementing Presto) and mayoral wannabe Rocco Rossi, who wants to create a “Presto Plus” card for use at libraries and recreational centres (a plan which would face a mountain of jurisdictional and logistic hurdles). So which system is best for Toronto and TTC riders?
Why not both?

What’s Open Payment?

Open payment allows customers to pay using a variety of fare media, including credit cards, debit cards, and potentially, mobile phones, using similar contactless technology. We already see open payment in everyday usage, with systems such as Mastercard’s PayPass, VISA’s payWave, and Toronto-based ZoomPass. In addition, contactless debit cards are on the way from many Canadian banks. An open payment system would require the installation of readers that accept any type of card at TTC turnstiles—much like a smartcard, you would tap, then enter.

What’s Wrong with Presto?

Really, nothing. Presto is a great initiative that will help encourage inter-regional transit use by creating a consistent fare medium. For the vast majority of Torontonians, however, a Presto card is not vital to their transit experience, as for the time being, few of us cross fare boundaries or travel between multiple transit agencies as much as transit riders outside the City. It’s hard to blame Giambrone or the TTC for finding a different solution when Presto is largely for the benefit of 905 transit commuters who do travel from local transit to GO Transit to the TTC.

So Why Are We Looking at Open Payment?

Open payment could essentially supplement the Presto system on the TTC, and fill the gap between today and when Presto is eventually rolled out years from now. Giambrone believes that implementation of open payment could occur as soon as next year, while Presto’s next major TTC roll-out is not expected until after 2014, when the Sheppard East LRT is completed. In addition, open payment has the advantage of being backed by major financial institutions, which theoretically should dramatically decrease start-up costs, as the system operator would get a cut of the revenues—no different than when you use a credit card or debit card at your corner store. Finally, open payment would instantly place a transit pass in every resident and visitor’s pocket [UPDATE, 10:48 AM: almost], removing the need to purchase and load a Presto card.

Solution = Presto + Open Payment?

In the statement released by the Minister of Transportation, Kathleen Wynne, she states that, “best of all, the Presto system is also being developed to accept other cards—like debit or credit cards.” If Presto is developed to open payment standards, then logically a TTC open payment system can be rolled into Presto in the future. After all, that is what “open” is about—interoperability. Open payment may in fact bring the TTC closer to Presto, as the infrastructure to support Presto can be developed in tandem with open payment. Meanwhile, open payment would provide Torontonians and TTC riders greater choice on how to pay for transit.
In the end, Presto is not going to happen tomorrow in Toronto, and the TTC’s exploration of open payment ensures that all options are considered for improving its customers’ experience.

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Comments

  • http://undefined Andrew

    I have major problems with your apology for the TTC’s antiquated fare system.
    For one thing, I dispute that “the [existing] system has yet to suffer a catastrophic failure”. What would you call the TTC banning the use of tickets because of rampant fraud, and massive shortages of tokens when fares go up, because the TTC doesn’t want to lose money to hoarders?
    Also, it’s not that tokens are good enough because the TTC has only one zone; it’s that the TTC has only one zone because one zone is the only thing that tokens allow. A flexible, zoned fare system — like almost every other major city in the world — could increase revenue if not ridership by assigning prices to trips that are closer to their cost.

  • http://undefined Alison

    The difference I see between PRESTO and the open payment system is that PRESTO tracks your usage, and discounts your fare accordingly. I’m not sure if this is true of its use on TTC, but it is for GO, which is why I think it’s the better choice (especially I’m about to move to the ‘burbs and commute into TO.. gotta look out for #1, right?).
    I think that while the open payment system is probably a decent idea, and I’m not against it, they still need to have PRESTO as well.

  • http://undefined Jake Cretin

    Here’s one thing I haven’t been able to find information on yet:
    With the open payment system, I assume the tokens and tickets and metropasses would be phased out over a period of time and the open payment system would become the only payment method possible, which is fine.
    But Am I correct to assume that that means riders no longer would get discounts for bulk purchases of rides? Right now you get tokens for 2.50 if you buy a handful of them, but on the open payment system, you’d basically be paying the cash fare each time you ride and I don’t see how they could offer that same discount. That kind of sucks, doesn’t it?

  • Laurence Lui

    I think the framing of the debate right now, which seems to be for every debate, is that it has to be one way or the other. Presto will help interregional transit travel greatly, making it seamless to travel from one transit provider to another. The TTC (though mainly Giambrone, since he’s the vocal champion of it) should start framing Open Payment as a means to get Presto going sooner and in a way that is affordable to Torontonians – the City does have to find $200-million or more to get the infrastructure in place. In my mind, Open Payment is a pseudo-Private/Public partnership that gets the communications lines for both open payment and Presto in place.

  • Laurence Lui

    How much one pays would still need to be worked out, but I would hope that it is similar to Presto, where if you use it on a TTC turnstile, it deducts the price of a token, not the full cash fare. I personally can’t see open payment replacing Metropasses, etc., but that is where I see Presto coming in to supplement the open payment system.

  • http://undefined Padraic

    This is definitely an issue that Giambrone should be addressing. What if I use two different credit cards in the same month — can I still get credit for the trips from both in terms of reaching the monthly max?

  • http://undefined Vincent Clement

    I wouldn’t make the assumption that open payment means the end of the Metropass. It depends how the system is setup. I do expect tickets and tokens to completely disappear.
    Several businesses, such as Tim Hortons and Starbucks, have reloadable gift cards that are linked to a credit card. When your balance falls below a pre-determined threshold, the card is automatically topped off.
    If the open payment system will accept credit cards and debit cards, then the TTC should be able to issue it’s own reloadable card. Users of the card could be a given a discount based on much money they preload the card with and how they use the card.

  • http://undefined Christopher

    With so many privacy concerns having arisen through stolen PIN numbers on bank cards, and credit information being stolen, I’m not too certain I would feel very comfortable with this “Open Source” payment system.
    Unless the TTC will also cover any problems or thefts that might occur under this scheme, I feel that the Presto card may be the only safe option.

  • http://undefined Chester Pape

    Of course what’s wrong with Presto and Open Payment and any other substanitally electronic system is the cost. A conservative estimate of the capital investment necessary to put a reader on every bus and streetcar and at every subway turnstile 5+ years ago was over 200 Million dollars.
    Despite it’s perceived flaws (which are mostly just “oyster card envy”) the reality is that the TTC’s cost per trip for fare collection is a small fraction of what it is on any other system. So guess what, people will winge about the supposed antiquated system and eventually we will get a more expensive, less reliable all-electronic system and guess where the money will come from? That’s right the “farebox”.
    I especially get a laugh out of the comparisons to NYC, have any of these idiots actually used a Metrocard?

  • http://undefined Laurence Lui

    Three points there:
    1) People uncomfortable with using their debit/credit cards could use pre-paid credit/debit cards, similar to a Visa gift card, to use an open payment system. That being said, based on the masses of people I see using their credit/debit cards for groceries and coffee, this would be no different, and the uptake shouldn’t be a significant issue. Also, PIN numbers are not necessary for the use of open payment – since it would use contactless technology that does not require PIN (which reflects its generally low-priced nature of the purchases)
    2) In terms of potential fraud, etc., it’d be a situation where the customer would deal with the bank for issues like this, similar to any debit/credit purchase. The framework for this is already existing and people know it. Presto, on the other hand, does not seem to have a clear procedure yet for potential fraudulent activity (at least not visible on their website).
    3) In terms of privacy, Presto actually requires you to register your card with your personal information if you want to take advantage of its security features (i.e. reporting a card stolen and to have the balance transferred to another card), get tax receipts, and use the auto-load feature.

  • http://undefined Laurence Lui

    Presto is now on GO Transit, but it actually has not replaced monthly passes. Yes, it has a loyalty fare system where the cost of a ride goes down as you use it more, but it doesn’t come with other perks of having a monthly pass, such as a free companion on weekends.

  • http://undefined Kevo

    Er, isn’t that just making it redundant if the TTC makes its own reloadable card when Presto does the exact same thing? The TTC should not issue its own reloadable card under a new technology. Presto can be reloaded in person, by credit card, or over the phone/internet via debit transaction. That seems like a pretty wide array of options to me. From the Presto FAQ, it also looks like each transit system can do whatever type of fare system it wants, using monthly passes or doing the reduce-the-more-you-use-it fare.
    The TTC can go ahead and do its open payment system if it wants, but it had better include Presto so I can easily leave/enter the city to visit people or to go places. There’s also the 150,000+ people who use the GO system to get into Toronto already, many whom I’ve seen with Presto cards because of the ease of use and less hassle associated with using them.

  • http://paul.kishimoto.name Paul Kishimoto

    This article is a bit of a whitewash.
    One, “Open payment” is a misnomer. Tim Horton’s, for example, takes Mastercard but not VISA touch-free cards. That was a major coup for Mastercard. Does anyone suppose the same payment card operators will refrain from angling for a similar single-provider advantage for TTC fares, which dwarf coffee sales?
    The same financial benefit that might lead payment card companies subsidize deployment (to some “theoretical”, “dramatic” extent) will entice them to try to secure exclusive rights. It’s delusional to think that the City or the TTC has the political will to ensure that “open payment” means “all major touch-free cards”.
    Two, it is entirely backwards to suggest that a separate TTC system could be ready before Presto. Presto hardware is already in use. The TTC has not yet issued the RFP for their own system, and prior evidence belies their claim that the development and deployment can happen within a year.
    In any case, for “open payment” to truly be a stopgap would require the TTC to aid Presto deployment with the aim of eventually closing said gap. Instead, the TTC is opposing Presto and giving no indicidation they ever hope to use it. Giambrone has been using “open payment” as an excuse for non-participation in Presto for months.
    Three, it’s naïve in the extreme that a TTC “open payment” system could be “rolled into” Presto at some point in the future. Again, business advantage will deter, not encourage, the development of compatible systems, and (again) the City has little capacity to prevent this. Even if a roll-in were possible, the sunk cost (no figure is named, but “dramatically less” than Presto’s $500m can still be hundreds of millions) of the TTC system would be clearly identifiable as money wasted by the elements within the City that sponsored it. To save their skin, such people would oppose the roll-in.
    More generally, coverage of this debate has made only passing reference to systems in other cities, without considering what those invocations actually mean. For example, ten million people use Hong Kong’s Octopus card every day, and yet there is a complete and utter absence of demand for an “open payment” system there. Surely if “open payment” had such great advantages, the HK public would clamour for it as soon as they heard of it; yet this hasn’t been in the case.
    The TTC seems determined to sabotage a system that’s repeatedly proven excellent and has a known cost, in favour of one which will may have “theoretical” advantages, but will be late and has an as-yet undetermined cost.

  • http://undefined joelphillips

    TTC staff estimate the cost of implementing Presto on the TTC’s 1,800 buses, 150 Wheel Trans vehicles, 250 streetcars, and 69 subway stations will be nearly $450 million

    That seems awfully high. Assuming an average of 10 payment points per subway station, and 2 per streetcar, that’s 3140 payment points. Even allowing for $10000 per payment point (which seems very high – this is essentially commodity technology now), that’s only $31 million. How do they get to $450 million?

  • http://undefined Laurence Lui

    I’ll get to your other points later, Paul, but on Octopus, the key reason why it has been so successful is that it basically has been provided the license to act as a bank, and does not have the same restrictions on it as Presto, which for now, is only allowed to deal with transit-based transactions, and its mandate is solely to be a means to pay for transit. This severely limits its ability to expand beyond and have the same features as Octopus. Why HK hasn’t moved to open payment is the same reason why the TTC has lagged in moving to smart cards – the current system is working, why change it? Not to mention that the task of moving away from smart cards in HK is a much more gargantuan task, since it’s so embedded into virtually everything in the SAR.

  • http://paul.kishimoto.name Paul Kishimoto

    200 Million dollars

    See joelphillips’ estimate below. Where’s that “conservative estimate” from?
    Moreover, what is the cost per trip for fare collection on the TTC? How much are TTC riders willing to pay for the increased convenience of a fare card? How does that compare with amortized impact on fares of the card deployment and operation? If the impact is less than the willingness-to-pay, that means people are OK with the increased cost.
    Unless you’ve found some new and remarkable source for this kind of data, your assertions are hollow.

  • http://undefined Laurence Lui

    I’d be curious to see the full pricing from the TTC as well. I’ve seen various figures thrown around, from $190-million, to $325-million, to $450-million.

  • http://undefined Chester Pape

    $450 Million sounds about right, a few years ago a company put in an unsolicited bid to do a stored value smartcard based system and the capital cost then was going to be 200 or 250 Million, the TTC’s correct response at the time was “do you know how many buses we could buy for that?”

  • http://undefined Vincent Clement

    Tim Horton’s staff can swipe the Visa touch free card.

  • http://undefined Padraic

    I asked Giambrone on Twitter and got this response: http://twitter.com/Adam_Giambrone/status/19744742713

  • http://undefined Kevo

    Correct me if I’m wrong, but in the article it states that the TTC has to pick up the rest after the province pays their share, but I thought that the Feds were matching the provincial contribution?

  • http://undefined rich1299

    To me it only makes sense to have as many payment options as possible, assuming that the Presto card will work with the open payment system, sure many people won’t want to use their credit or debit cards for transit but it’d be excellent for those who just use the TTC once in a while or tourists to the city or for people who need the TTC in a hurry but don’t have any other way of paying at the time. I think they should still use tokens and cash though for those who don’t want to use any sort of card, especially since they can trace their movements on them which some who are serious about their privacy would find objectionable.

  • http://undefined Andrew

    This. And since its biggest proponent is Giambrone, who won’t be in charge of anything in a few months, it’s hard to see “open payment” as anything more than a red herring and TTC foot-dragging.