August 2008 Issue

As an architect who lives and visits job sites in and around Santiago, Chile, Susanna Cifuentes drives some 200 miles per week.

Most of that driving is on private tollways, but at least Cifuentes does not have to stop at toll booths. She pays about 30,000 Chilean pesos (US$70) per month through automatic deductions from her checking account for tolls logged the previous month.

Cifuentes says operators of Santiago's four private tollways have worked out most of the payment-related kinks in the past few years the tollways have been in operation. Her only major complaint is that the roads have become so popular they often are as congested as public roadways.

And congestion-based pricing, which charges more for use of popular sections of tollways during rush hour, has increased costs dramatically and made it difficult to calculate how much the monthly bills will be. "It's a mystery until you receive the bill," Cifuentes says.

Though navigating can be a challenge, Cifuentes says paying her tolls is easy.

Most stakeholders, from drivers to tollway operators, agree on the benefits of electronic toll collection, commonly called open-road tolling. Such systems reduce traffic congestion and pollution.

And, of course, electronic transactions replace cash. That can be good news for payment card issuers and transaction processors, which receive incremental income each time drivers reload electronic-tolling accounts using credit or debit cards.

With electronic toll collection, readers mounted at roadway tolling points exchange payment instructions with transponders within passing vehicles. First piloted in a few countries in the early 1990s, more than 30 countries worldwide now use electronic tolling.

How drivers fund tolling accounts can vary depending on the type of system the toll authority uses. Some may fund prepaid accounts using credit cards or automatic debits from bank accounts. Some also can post-pay tolls using checks or cash after they receive bills by mail or e-mail.

Electronic tolling usually works well. Much like merchant acceptance of bankcards, more and more tolling bodies, from roadway and bridge operators to airport parking lots, are recognizing each other's transponders and are reimbursing each other.

But participants still are working out toll-collection and payment-scheme kinks, many of which stem from flawed business and government data-handling practices or from driver malfeasance or mistakes, experts say.

In the United States, for example, the Illinois Tollway Authority let violation notices for unpaid electronic tolls pile up for 13 months before sending out 500,000 old and new notices to drivers over an eight-month period, sometimes 10,000 notices per day. Many of the violators were scofflaws who did not have so-called I-Pass accounts and transponders. They doubted the cameras capturing images of their license plates would really lead to fines for repeatedly driving through electronic tolling lanes instead of nearby cash lanes, says Joelle McGinnis, the authority's spokesperson.

But a sizable portion of drivers charged with violations–McGinnis would not disclose how many–said they had transponders but had no idea the devices were malfunctioning or that their tolls were not automatically being paid from accounts funded by credit cards that had expired or been replaced. Some drivers also claimed the authority notified them of problems only a few days before violation payments were due.

Computer Glitches
The tollway authority was slow in notifying drivers of the violations because of problems, including computer glitches, that began in 2006 when it was switching companies contracted to integrate a plethora of tolling technology and services, McGinnis says. During that time, violation data collected by video cameras and computer software piled up.

A report released by the Illinois state auditor general in October criticized the tollway authority for failing to collect an estimated $10 million in toll violations in 2006. The authority ramped up efforts to catch up on old violations, and soon many drivers found out their expired or discontinued credit card accounts had stopped reloading their I-Pass accounts months earlier.

The Illinois Tollway Authority hired Electronic Transaction Consultants Corp. to replace Harrisburg, Penn.-based TransCore as its integrator of technology, software and services to move toll transactions from roadways to bank and card accounts. The Richardson, Texas-based company provides similar services to five other electronic tollways in the United States.

Electronic Transaction Consultants collects and manages drivers' electronic tolling-account information, including checking-account numbers and expiration dates, for the approximately 90% of drivers who replenish toll accounts with credit and debit cards, according to Ted Hull-Ryde, the company's director of business, development and special projects. The company passes regular Payment Card Industry Data Security Standards audits, he adds.

The consultancy also provides tollway operators the technology to send e-mail or paper alerts to drivers when the cards funding their electronic tolling accounts become invalid or are about to expire.

That does not mean tollway operators always use those services or they are able to find accountholders who have moved. "We provide the technology," Hull-Ryde says. "Our customers (tollway operators) manage and operate the systems."

Hard Lessons
Tollway operators globally have learned hard lessons similar to Illinois' about the challenges of helping drivers keep payment accounts up to date, notes Neil Gray, director of government affairs for the International Bridge, Tunnel & Turnpike Association, which is based in Washington, D.C. "Pretty much every agency has a tale of woe, of people who racked up thousands of dollars worth of fines," he says.

Besides tollway users learning to keep credit and debit cards funding tollway accounts up to date, they also are learning the importance of providing their latest mailing addresses. So even if they forget to closely monitor bankcard statements for toll-funding transactions, they can receive prompt violation notices that alert them to problems, according to Gray.

Drivers often remember to update the addresses on their drivers' licenses when they move, but they forget to inform their state's department of motor vehicles, which issues the license plates tollway cameras record to alert drivers to fines, Gray notes.

The problem of credit cards expiring so they cannot automatically fund tollway accounts could be solved if tollways used card account-updater services, which Visa and MasterCard have offered merchants, through their acquiring banks, since 2003. Discover began offering a similar account updater service in May.

Representatives of all three card brands declined to disclose cost ranges for their account-updater services, saying acquiring banks negotiate fees with their merchant customers. But Aite Group analyst Adil Moussa says acquirers generally have charged merchants between $100 and $250 per month plus approximately 5 cents per account update.

Many merchants have considered the costs of updater services too high, but perhaps better pricing and the spread of recurring payments will nudge greater adoption by a variety of merchants and billers, including tollway operators, Moussa says. "It's a very useful service, and if they price it right, a lot of merchants will take advantage of it."

Hull-Ryde says he knows of no tollway operators that have decided to pay extra for account-updater services. But he says more may be willing to justify the extra cost in exchange for not having to rely only on drivers to update their bankcard information.

No Cash Booths
Drivers in Chile have been getting used to their own electronic tollway network since 2004. That year, the four separate companies each opened their own private roadways in the Santiago metropolitan area. A fifth tollway is scheduled to open later this year.

Accountholders only need one transponder for all four roadways, but they receive separate bills from each tolling body. They can pay those bills online, by phone, at walk-up bill-pay locations, or with automatic debits to checking accounts or charges to bankcards.

Drivers also may purchase prepaid day passes that enable them to use one or a combination of all four highways for up to 24 hours.

"In the beginning, there were a lot of complaints," says Santiago driver Susanna Cifuentes.

Some users received bills after their due dates or were charged for trips they say they did not make, Cifuentes says. In Chile, license plates stay with each vehicle as it moves from owner to owner, so consumers who had sold their cars but forgot to notify licensing authorities and tollway operators received notices for fines racked up by the cars' new owners, she explains.

Other drivers used the tollways without any intent of paying. Cameras at tolling points captured images of license plates, and vehicle owners soon discovered they could not renew their license plates, which expire annually, until they paid the fines.

Despite those initial problems, Cifuentes says she generally finds her bills accurate and payment options convenient.

Drivers' account data are shared among the four tollways through a government-operated database, notes Salahdin Yacoubi, director of global roads at Skanska Infrastructure Development, a division of Skanska AB, the Swedish company that co-owns and operates Autopista Central. The 40-mile-long, six-lane highway accounts for nearly 50% of the total length and half the revenue collected of the four Chilean private tollways.

The shared database "converts the driver into a registered customer of all four tollways, not only the one the driver opened the account with," Yacoubi says.

Autopista Central users pay nearly 77% of their bills at its three customer-service centers or at third-party walk-up bill-payment centers. Most who pay in person use cash, but a few commercial fleet owners pay with business checks, according to Yacoubi.

Users pay 12% of bills with automatic charges to credit cards and 2% with automatic debits from their checking accounts, Yacoubi says. Drivers pay the remaining 9% of bills using a dedicated Web site or by telephone, most using credit cards but a few using electronic funds transfers, he says.

Drivers may prepay for tolls if they prefer, but most opt to post-pay, as allowed by the Tollway Concession Contract under which all four tollway owners operate, Yacoubi says.

Operators would prefer to receive funds electronically instead of by cash or check, but a large percentage of drivers do not have cards or bank accounts, he adds. And many have limited Internet access or are wary of using the Internet to set up accounts and initiate payments.

'Culture Shift'
But the number of electronic payments is increasing each year as customers realize the convenience of paying electronically, Yacoubi says. "It's a culture shift, but things are changing rapidly," he says.

Things also are changing in Singapore, where the government's Land Transport Authority operates the tollways.

For the past 10 years, drivers in Singapore have inserted multi-use NETS CashCard smart cards into dashboard transponders that record and charge electronic tolls to those cards. The transponders beep and display the value left on the cards whenever a new toll is charged. Singapore-based Network for Electronic Transfers Ptd. Ltd. issues the cards.

Local merchants also accept the 4.5 million CashCards in circulation, most of which are held by 800,000 drivers who use them for tolling and parking payments. Drivers may add value to their cards at convenience stores, fuel stations and kiosks.

Drivers on the island nation soon will have more electronic options for paying tolls. In late March, the Land Transport Master Plan published by the country's transportation ministry announced the tollway system would be "further enhanced to allow alternative payment modes, such as credit card payment," by mid-2008.

And the document also said that by the end of this year, vehicle-tolling transponders should be upgraded to accept payments from contactless smart cards, including ez-Link smart cards used for buses and trains.

The Land Transport Authority "is working on the next-generation e-payment system to give motorists more options by allowing multiple suppliers to issue contactless smart cards," writes an authority spokesperson in an e-mail message to Cards&Payments.

Tolling experts say they expect the number of electronic tollways to increase as the world and its roadways become more congested. And that shift requires customer service not just from tollway operators but also from payment-services providers.

"Electronic tollways convert anonymous users into known customers," Yacoubi says. "The interaction is not taking place during the trip, as used to occur at toll plazas, but off the tollway, and at any time."

Card issuers, acquirers and others in the electronic payments industry will play growing roles in keeping tollway traffic moving. CP

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry