July 21, 2005

London to issue own money

Ian Brown let me know that London's Oyster program is looking to expand from a mass transit ticketing application to a fully blown small payments system. This follows in the footsteps of the Hong Kong Octopus program, and has been predicted by FCers for years.

Transport for London (TfL) announced the shortlist of potential partners for the development of e-money today:
Nucleus/Dexit/Ericsson/Hutchison 3G/Euroconex


This marks an important step forward for TfL's aspiration to extend the use of its successful ticketing and payment smart card, Oyster, to low value payments for goods and services at newsagents, parking machines, fast food restaurants, supermarkets and other locations where the importance of transaction speed and the inconvenience of cash are recognised.

Jay Walder, Managing Director of Finance and Planning at Transport for London said: "The use of contactless smart cards for low value payments is growing in popularity around the globe."

"Such schemes are now well established in Hong Kong and Japan and significant trials are taking place in the United States."

If anyone wants to predict who gets to do the job, recall the Frank Trotter observation that the prime candidates for digital money issues are telcos, couriers and mass transits. Frank now runs an Internet bank, and pointedly does not issue digital money.

Posted by iang at July 21, 2005 09:19 AM | TrackBack

From what I recall, the Octopus card works wonderfully well in Hong Kong - but I was singularly unimpressed with the TfL Oyster card when I considered using it.

The latter lacks (or lacked, in case they have woken up to themselves since I looked at it) one vital component - an incentive to use it.

In Hong Kong, New York, and most other systems I have used, prepayment got you some form of discount - usually at least 10%.

The use of the Oyster card, on the other hand, would have cost me money, because it precludes the use of off-peak tickets and single trips were a lot more expensive than with the carnet, and much worse than a season ticket.

The London Underground person I spoke to about it agreed that Octopus wasn't really very good value, and only worth considering if you were a commuter that travelled only during peak hour but not regularly enough to buy a season ticket.

I don't so much mind if there are no discounts, but to work for me it would have to at least always provide me with the lowest fare that would be available to a cash paying traveller for the same trip. And that was manifestly not the case.

So for now I am sticking with using credit card to buy ten trip carnets from the vending machine.

I wonder if there is any significance to the names. Octopus creates an image of something flexible with tentacles everywhere, whereas an Oyster tends to be rigid and rather closed.


Posted by: DigbyT at July 21, 2005 10:54 AM
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