In both developed and developing countries, a growing number of cities are relying on automated systems to collect public transport fares and verify the payment. Automated Fare Collection (AFC) can bring a wide range of benefits to local governments, transport operators, and passengers.


Benefits to the stakeholders

For passengers, the development of AFC is a critical step toward making public transport more efficient, affordable, and accessible. AFC systems are now becoming compatible with an ever-increasing number of payment methods besides smart cards —near-field communication devices (including smartphones), debit and credit cards, e-commerce platforms and even printed QR codes and SMS.

Going beyond ticketing, AFC systems generate a wealth of anonymized data, fostering private-sector-led innovations looking at improving service provision, customer experience, integrating services such as retail.

The rise of AFC holds great promise for public transport passengers. Most of the time, the deployment of this technology is overly complex and expensive. To get this right, decision-makers need to come up with a clear vision, making sure their ticketing system meets a number of key criteria: the system should be interoperability, scalable, and affordable.


Technical dimensions

Getting the standard right. To develop a flexible ticketing system that can be readily expanded to all modes across the city, an industrial standard defining how transactions are processed at each of the 5 tiers of AFC (see figure below) has to be followed. This is referred to as the interoperability standard and is the key for integration between modes, operators and technology providers. A comprehensive standard should include clear provisions on:


Payment methods

The interaction between payment methods and readers at stations and on buses;
The interaction between central systems (for each transport mode) and the central clearinghouse (i.e. where all AFC transactions are settled and paid)
Data security across the entire system.


Financial and commercial dimensions.

Fare collection involves vast amounts of daily transactions in cash, and increasingly, electronic payments. For that reason, sound financial and commercial management is essential to the success of an AFC system. The clearinghouse should be run by a neutral agent who is supervised by the lead institution and, potentially, a financial regulator. Revenue distribution among operators and other public transport actors should be efficient, timely, and transparent. The fees payable to individual AFC operators should be clearly defined and such costs must be included in the main technical fare calculation of the transport system.



By allowing seamless integration between transport modes and payment mechanisms, interoperable AFC systems and potentially with the retail market are one of the main factors for the success of smart city mobility.

The writer has over 19 years of related experience. To learn more about automatic fare collection system and the investment opportunity, please visit

Post Author: Keith Lau

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