Costs to TFL for contactless payment card usage on buses

The request was partially successful.

Dear Transport for London,

Could you please provide the costs to TFL associated with the usage of contactless payment cards on buses. In particular, I would like to see:
- The cost levied on TFL per transaction
- Any subscription or longer term costs of the scheme
- Any costs involved in the outfitting of the bus fleet to handle contactless cards
- An amortized cost to TFL of the usage of oyster per travel (costs of managing the oyster system divided by number of oyster journeys per yer) for comparison
- The split of revenue between TFL and the bus companies on contactless payments
- The corresponding revenue split for oyster
- Expected usage figures for the first three years of the contactless payment system
- Any expected revenue boost figures from lost sales owing to people being out of oyster credit
- Any expected reductions in the usage of oyster cards with them no longer being required to use buses
- Any expected impact on income from tourists who would traditionally have bought paper bus passes.
- Any plans to extend the scheme to the tube, tramlink, overground, coaches or emirates air line and whether these are pending outcomes of this trial and over what time period.

If it is decided you cannot provide all of these, please provide what you can.

Yours faithfully,

James Laver

FOI, Transport for London

Dear Mr Laver

 

TfL Ref:          FOI-1541-1213

 

Thank you for your e-mail received by Transport for London (TfL) on 14
December 2012 asking for information about contactless payment card usage
on buses.

 

Your request will be processed in accordance with the requirements of the
Freedom of Information Act and TfL’s information access policy. 

 

A response will be provided to you by 17 January 2013.

 

In the meantime, if you would like to discuss this matter further, please
feel free to contact me.

 

Yours sincerely

 

Gemma Jacob

FOI Case Officer

FOI Case Management Team

General Counsel

Transport for London

 

[1][TfL request email]

 

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FOI, Transport for London

1 Attachment

Dear Mr Laver

 

TfL Ref:          FOI-1541-1213

 

Thank you for your e-mail received by Transport for London (TfL) on 14
December 2012 asking for information about contactless payment card usage
on buses.

 

Your request has been considered in accordance with the requirements of
the Freedom of Information Act and TfL’s information access policy. I can
confirm TfL holds some of the information you require. You asked for:

 

The costs to TfL associated with the usage  of contactless payment cards
on buses. In particular, I would like to see:

 

·         The cost levied on TfL per transaction.

 

For the bus transactions the costs levied per transaction from the payment
card industry are the standard contactless interchange fees:

 

Visa credit 0.65%, debit 1 pence.

Mastercard credit 0.80%, debit 1 pence + 0.5%.

 

This is in addition to the scheme and processing fees that TfL pays as per
TfL’s merchant acquiring contract with Barclaycard. These charges are the
same for all transactions, whether chip and pin, card not present or
contactless. American Express charges for contactless transactions are the
same as for chip and pin and card not present transactions.

 

·         Any subscription or longer term costs of the scheme.

 

There are no subscription charges. For subsequent phases of contactless
ticketing, TfL will continue to pay the standard interchange fee for
contactless transactions as published by Visa and Mastercard plus the same
scheme and processing fees per TfL’s merchant acquiring contract with
Barclaycard. For American Express transactions, TfL will pay the same
rates as for chip and pin and card not present transactions.

 

·         Any costs involved in the outfitting of the bus fleet to handle
contactless cards.

 

The capital cost of the initial bus launch was £4.4m.

 

·         Any amortised cost to TfL of the usage of oyster per travel
(costs of managing the oyster system divided by number of oyster journeys
per year) for comparison

 

We do not hold the amortised cost for the Oyster system as there have been
very many capital costs since the introduction of Oyster cards in 2003 and
they are not tracked in any one place.

 

·         The split of revenue between TfL and the bus companies on
contactless payments.

 

100% of the revenue from contactless payments goes to TfL.

 

·         The corresponding revenue split for Oyster.

 

100% of the revenue from Oyster cards goes to TfL.

 

·         Expected usage figures for the first three years of the
contactless payment system.

 

The most recent  forecasts are that contactless usage will grow to around
30% of trips made by fare paying customers.

 

·         Any expected revenue boost figures from lost sales owing to
people being out of oyster credit.

 

We expect an increase in revenue by making it even more convenient for
people to use our services, therefore increasing ridership. This is the
main reason for introducing contactless payments and our current
projections show that we expect to earn £100k-£200k in increased revenue
in the first year. Also, a small proportion of people whose Oyster cards
are out of credit who would not make the journey would be able to do so
using a bank card.

 

·         Any expected reductions in the usage of oyster cards with them
no longer being required to use buses.

 

Contactless bank cards on London’s buses are not expected to have a
negative impact on the number of Oyster cards in use. Contactless payment
provides an alternative if a passenger’s Oyster card is out of credit or
for those who had previously paid their fares by cash.

 

·         Any expected impact on income from tourists who would
traditionally have bought paper bus passes.

 

There are no specific forecasts for this.

 

·         Any plans to extend the scheme to the tube, tramlink,
overground, coaches or emirates air line and whether these are pending
outcomes of this trial and over what time period.

 

We intend to have contactless payment extended to the London Underground,
Docklands Light Railway, Trams, and London Overground by late 2013.

 

If this is not the information you are looking for please feel free to
contact me.

 

Please see the attached information sheet for details of your right to
appeal.

 

Yours sincerely

 

Gemma Jacob

FOI Case Officer

FOI Case Management Team

General Counsel

Transport for London

 

[1][TfL request email]

 

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