Electronic purse (ePurse)

An electronic purse is the store of value on a card, which can be used in a manner similar to cash to pay for travel or for other small-scale transactions. The electronic “purse” is secure information stored in a dedicated area or file in the smart-card.

Two different main objectives are identified for electronic purse:

Replace cash in the public transport payment system, either to move from a primarily cash-based system or as an alternative for the residual cash payments in a system that is largely pre-paid.
- Retain the single tariff as the fundamental fare product; this may be an alternative or replacement for time-based tickets.

There are different concepts for electronic purse, which centre on the nature of the value. The main types are:

Tokens. The purse consists of units that have no monetary value. The units can be equivalent to individual journeys, or to money units. When the card is presented for travel, the number of units required for the applicable fare is deducted. Eventually, when all of the units have been deducted, the card is no longer usable for travel.
Transport money. The purse consists of units equivalent to money, but it can only be used for passenger transport fares. Depending on the context, this could include multiple modes, park and ride, and car parking. Although presented to the user in terms of cash equivalent, it does not have any monetary validity outside the immediate transport environment.
Transport and micro-purchases. The purse contains units equivalent to money. The primary usage is for payment of passenger transport services. The value can also be used for small purchases at non-transport locations, e.g. kiosks and vending machines. There is likely to be a modest upper limit on the value that can be loaded to the card at any given time.
eCash. The purse contains electronic money, which has full monetary value, is usable at any outlet with an accepting device, and is at any time exchangeable for cash. Transport may be just one of a number of items where the eCash can be used, and might not even be the main usage. The eCash is subject to banking regulations, and would have to be issued and underwritten by a bank.

Depending on the configuration desired by the transit agencies, a printed ticket may be issued. The details of the most recent transaction are usually stored on the smart-card, whether or not a ticket is issued. .

The value is placed on the card in one of three ways:

Preloaded on to the card (in the same manner as telephone cards), without possibility to add further value. The intention is that the card is discarded when the value is expired.
Added to the card at the time the card is issued, or when the e-purse application is added to an existing card.
Additional value added to an existing ePurse (“top-up”).

Public transport agencies frequently offer incentives to customers to use electronic purse. The three main incentive types are:

A lower tariff is applied to tickets purchased with electronic purse compared to tickets purchased with cash (may be presented as a discount for e-purse or a surcharge for paying cash).
Free or reduced-rate transfers are available when paying with electronic purse, but cash customers are not entitled to free transfers and must pay for each boarding separately.
‘Fare capping’, where the trips are paid for individually, but subject to a maximum amount deducted during a day or week. This may be equivalent to the price of a daily or weekly pass.
Tapered fares, where discounts are given to frequent travelers. When more than a specified number of trips are made in a given period, the subsequent trips are discounted.

Benefits of electronic purse are:

The customer pays only for the travel made.
Incentives such as free transfers, discounts and fare-capping can be offered to the customer in a secure and consistent way.
Cash handling is reduced as customers migrate to prepaid tickets.
Electronic purse can be offered for infrequent customers when it is desired to eliminate all cash transactions.
Innovative means of adding/renewing value can be utilized.
High degree of security.
Third parties can become involved in issuing value.

Cautions with regard to electronic purse are:

Technical complexity, which requires a substantial level of technical competence within the organization.
Need for a high level of electronic security, and the capacity and commitment to managing this security correctly.
The higher the value of the scheme, and the more places the electronic purse can be used, the more likely the regulations applying to banks and deposit-taking institutions will become applicable to the scheme.
Loss of corporate focus can occur when the transport agencies become overly interested in the ancillary uses for the electronic purse, to the detriment of the core purpose – which is the payment of transit fares.