Cubic Corp. is providing transit agencies with some new capabilities via its latest automated fare-collection product.

With the April 11 introduction of Nextaccount, Cubic, an integrator of intelligent transport systems and services, provides a Near Field Communication and contactless smart card interface transit fare-processing engine. These allow transit agencies to give customers the convenience of using a prepaid account to pay for travel, such as one tied to transit agency-issued smart cards, or an open payment-fare media, such as bank-issued contactless credit, debit and prepaid contactless smart cards.

Cubic is using Nextaccount in an open-payment pilot with the Port Authority Transit Corp. of Pennsylvania and New Jersey (see story).

In the first phase of the pilot, which began in September, Cubic and the port authority enabled commuters to use Visa-branded payWave prepaid contactless cards at authority gates and parking terminals. During the second phase, announced at the beginning of April, the authority’s customers also now may use contactless cards supported by MasterCard Worldwide or Discover Financial Services or virtual cards in a mobile wallets to pay.

Cubic is also providing Nextaccount in its ongoing transit-payment projects in Vancouver, British Columbia, and with the Chicago Transit Authority.

An agency is not required to be an existing Nextaccount customer to take advantage of its latest automated fare collection product, Wade Rosado, Cubic capabilities development leader, tells PaymentsSource. It instead could use Nextaccount alongside its existing infrastructure or provide it as a service through cloud-based connectivity.

“The components can be mixed and matched as necessary for a specific customer application so it’s not in any way tied to Cubic’s fare-collection devices, as would be the case with CTA, for example,” says Rosado.

A third-party equipment supplier also could use Cubic’s back-office service.

“There’s a robust application programming interface that we provide with the [service] that they could implement, or we also have components that support the whole fare-collection equipment and system that can be packaged as a complete service," Rosado says.

Cubic contends the Nextaccount technology is the next stage in the evolution of smart cards, which store the transit value in a contactless chip in the card. Transactions are managed and tracked on the cards. With account-based payments, the transit value resides in a transit account in Nextaccount, and the system access it via a digital signature read from a transit card by the fare-payment system.

Account-based systems accommodate open payments, so commuters can use the same payments cards they use to buy groceries and other retail purchases. As such, tourists don’t need anything more than their everyday payment cards to use transit systems, and resident commuters can register multiple payments cards, including prepaid cards for discounted fares, or link the account to an employer’s pretax benefit plan that provides transit value on a prepaid card, says Rosado.

Use of the benefit plan helps both the employer and employee with efficient account management and security, Dave Andrews, Cubic director of central system requirements, tells PaymentsSource.

“In the old days, transit benefits were either handed out in vouchers or a magnetic fare card,” Andrews says. “Today, it’s all electronically done. The employer tells the system what your benefit is and how you want to use it, and our system manages that account and uses those funds as necessary to pay for that particular patron’s travel.”

Also beneficial to agencies using open payments are the savings in management of payment media, reducing the need to procure, encode, distribute, and support millions of mag-stripe tickets or contactless smart cards. Cash collection and handling costs go down as well.

Indeed, the use of open payments for transit access is important for the future of contactless and mobile payments, Todd Ablowitz, president of Double Diamond Group, an electronic payment and mobile payment industry consultancy, tells PaymentsSource.

“Many people think that transit is the backbone for contactless and NFC-payment growth, that without the backbone of transit you can’t realize full opportunity,” he says. In fact, because you use it twice a day (to and from work), it touches every single corner of the population in a big city. So it is an essential hub to get consumers to adopt these technologies.”

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