Interview: Transport for London's head of CX on leading the world in payments innovation

Derek du Preez Profile picture for user ddpreez March 18, 2015
Transport for London's Shashi Verma explains how that with over a billion annual passenger numbers, seamless payments is essential for the capital's network.


TFL Transport for London
The London Underground is the oldest metro network in the world, with the first train opening its doors to customers in 1863. The UK capital's transport system has evolved rapidly over the past 150 years and now sees over 1.2 billion passenger journeys every twelve months across a wide variety of modes of transport, including the tube, buses, boats and trams, covering over 400 kilometres of distance.

However, despite its age and scale, Transport for London (TfL), the organisation in charge of operating the network, has often led the way in global transport and technology innovation. For example, TfL is often touted as a European leader in open data, having been one of the first to provide APIs to the public, allowing companies to build useful travel applications for passengers.

But payments is one area in particular where TfL has been in the global spotlight and is seen as being particularly innovative. For example, London's transport network was the first in the world to use magnetic strips for ticketing back in the 1950s. And TfL obviously since went on to develop its internationally recognised RFID-based Oyster card, an electronic ticketing system that allows customers to 'top-up' with cash and season tickets, allowing them to travel across the entire network simply by tapping in and out.

But the innovation hasn't stopped with Oyster. TfL has allowed customers to pay for their journeys via their debit or credit, using contactless technology, for six months now, across the entire network. During this time, over 50 million journeys have been made using the new system, which runs separately from Oyster and is called Contact Assistant.

I got to speak to TfL's Director of Customer Experience, Shashi Verma, who explains that Oyster was introduced to London in an attempt to get people through the station barriers and onto their trains much more quickly – and has been a huge success for the capital city. However, even shortly after Oyster was rolled out back in 2003, TfL was already looking for the next step in payments innovation, as there were still ways to improve the customer experience, as well as drive further efficiencies. Verma says:

Even in the early days of Oyster, one of the things we realised was that despite the success of the technology, there were many things that bothered us. One of which was the cost of revenue collection. If you think about it, Oyster is like another currency and you have to change your money into Oyster money before you can travel. So embedded in that process of currency exchange is a lot of cost. We were looking for a means of reducing that cost and we were waiting to take some quite radical decisions about how the overall process of revenue collection works.

Shashi Verma TfL
TfL's director of CX, Shashi Verma

It was about that time, back in 2006, that we came across this contactless payment technology; which by the way did not really exist yet. It was in all the standards books and so on, but nobody was issuing contactless cards back then. But we thought that this is something that could transform how that collection takes place. And over this whole period we have worked with the payments industry, Visa, Mastercard, the banks, about issuing these cards.

The basic principle, to a first approximation, is that contactless cards work in a very similar to the way an Oyster card works. Once you get past the first approximation there are a number of differences in the way the two technologies works, but the basic user experience is that you put a card on the gate and you get charged a fare – but to a customer it shouldn't matter how it works, just needs to work in the background.

One of the benefits for customers, apart from not having to go through the process of topping up their Oyster cards before being able to travel, simply by being able to use their credit or debit cards, is that the idea of 'capping' is built into the system's logic. The Contract Assistant data is held centrally on a Microsoft SQL Server system and runs a new billing engine that calculates a passenger's journeys over a single day, or over a week (from Monday to Sunday), limiting the amount charged to the card once a certain number of journeys has been travelled.

Whilst Verma states that TfL will never be able to get rid of Oyster cards, given that given some passengers are children and don't have bank cards with contactless technology, the new system already accounts for 14% of all journeys and is growing every week. TfL has also been named the fastest growing contactless merchant in Europe, despite having only gone live with the system six months ago.

Whilst the Oyster system stores most of the data locally on the card or the reader, Verma also explains how having all the travel data centrally stored on the Contract Assistant SQL server has some additional benefits. He says:

It has got some quite big advantages. For example, if anything goes wrong, such as we need to give you a refund for something, we can just apply that refund to your account. Whereas with Oyster, we have to figure out where we might see your Oyster card next, to be able to send the refund to that particular reader, so that when you arrive at that reader, the reader will update your card again. There are millions of Oyster cards out there, so dealing with things in the back office is much easier.

And it's this back office, which not only simplifies the customer experience, but simplifies back-end processes for TfL, that makes the business case for contactless payments so appealing. Verma explains:

When we embarked on the contactless project, we had a capital cost of about £70 million for building the whole system. We estimated that we would have savings of about £180 million over a ten year period. And that's just the direct savings from fare collection, that's before taking into

Oyster card
account the secondary impacts of a completely changed process. We don't need as many ticket windows, we don't need to collect cash on the bus. And were you to take these into account as well, the savings are significantly higher.

For customers, the ability to not have to bother getting an Oyster card, to not having to always be topping up and so on, is a huge convenience. If you're new to London, you have to navigate how the ticketing system works in London. Whereas people are perfectly comfortable to use their contactless card to buy a coffee, so why can't the experience of accessing transport be just like buying a coffee?

The second thing, from our perspective, operationally, the fewer people that are hanging around all of our major stations, the better off we are, because we don't have space in our major stations for people to be hanging around. That's another benefit.

From our perspective, this has been a huge runaway success.

Verma also believes that TfL is at the forefront of using agile development, which was used across the development of this project. This hasn't come without its challenges, however. Verma explains that although he doesn't think it is easy to find too many flaws in TfL's approach to contactless payments, given its growing success, the benefit to customers and the tangible ROI, he does admit that getting used to agile was a steep learning curve. He says:

Could we have been a bit more efficient and so on? I think the answer to that is always yes. But hindsight is fantastic in that respect.

When we first started using agile technology methods back in 2008, agile was fairly new and not that many people had experience using it on anything substantive. We have kind of been at the forefront of the learning about how agile works.

If you've delved into agile at all, one of the things that you often see, is that it is wide open to abuse. Because if you can keep making a new requirement every month, there is no end to scope creep. We have had to learn things along the way, about how to control the process, even though you have to leave it open for flexibility and so on. But where we are now is a much higher level of maturity on how to use agile.

Had we known this five years ago, we could have probably short circuited a lot of the process and maybe taken six months out of the whole development process, but I'm not sure where we could have gone to learn that.

My take

London underground TFL tube
I love London's transport network. Whenever I visit another city in Europe or the US, I'm always reminded about how efficient and easy transport is in London (if you avoid the masses in rush hour). What I love about TfL is that it's easy. I go to a bus stop and I can look on my phone to tell me how many minutes until the next bus arrives. Planning my route, whether its by bus, tube, bike, is easily done on a very simple website. And paying has always been an incredibly simple process. From a customer experience perspective, I'm constantly impressed by TfL's use of technology to make travelling in the capital as simple and stress free as possible.

And Verma was keen to highlight to me that TfL is a good example of technology innovation outside of the Silicon Valley bubble – and I wholeheartedly agree. He finished by saying:

The one thing that I will say is that people have this view that the only innovation in the market comes from Silicon Valley. That's not the case here. This is a world leading innovation that has come from London and has actually come from a public sector organisation. And I think we need to celebrate that a little bit more and remember that anything that Silicon Valley can do, we can do too.

Hear, hear.

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