Victoria selects Cubic rival for transport payments

George Lekakis

The Victorian Government has selected global transport ticketing and payments facilitator Conduent Business Services to lead an overhaul of the public fare system in Melbourne.
 
Under a deal announced on Monday, Conduent will take over management of the controversial Myki fare system under a 15- year contract starting on 1 December.
 
The announcement is potentially significant for Australia’s domestic debit scheme, Eftpos, because the Andrews Government decided not to award the contract to another American technology company Cubic, which currently holds mandates for the Sydney and Brisbane public transport systems.
 
While Cubic’s work in developing the Opal payments system has helped to simplify fare collection for many Sydney commuters, the company has been criticised for developing a platform that cannot process contactless payments from millions of Australians holding single network Eftpos debit cards.
 
The inability of the Sydney and Brisbane fare readers to process contactless transactions through the Eftpos network has raised concerns that the collection platforms might be anti-competitive.
 
Victorian transport minister Ben Carroll sent a strong message on Monday that the government was looking to implement an open loop fare collection service that allowed all transport users to access services using their preferred payment method.
 
“The new contract will make sure the myki system is more efficient and effective over the coming years – and will see the system evolve with modern improvements using proven technologies in the market so all transport users can safely and seamlessly access, use and pay for public transport,” the minister said in a statement.
 
“Following trials commencing in 2024, improvements will be progressively added to the existing payment options and will allow passengers to tap on and off with their credit or debit card and pay with a digital wallet on a smartphone or smart watch.”
A spokesperson for Eftpos’ owner – Australian Payments Plus – said last night that the domestic scheme was looking forward to working with the new fare operator in Victoria.
 
“Eftpos cannot currently be used on public transport systems, principally because the system of preauthorisation and subsequent finalisation of a transaction which is part of the current operation of these systems is not aligned with the eftpos technical approach,” the spokesperson said.
 
“However, eftpos is actively engaged in exploring alternative paths to deliver lower-cost payment services to Australian public transport operators and looks forward to working with existing ticketing operators and transport agencies and the incoming Victorian operator alike.”
 
The Victorian government’s decision to select Conduent is also noteworthy given that some uncertainty hangs over the future of the New Jersey-based company’s structure in coming years.
 
In April last year, Conduent’s chief executive Cliff Skelton announced plans to separate the transportation and ticketing division from the group.
 
Skelton said the separation would probably occur by listing the division as a separate company or through a trade sale.
 
If the business is separated via a sale, there is a possibility Cubic could become the new owner.
 
That prospect might be problematic for the Victorian government given that it is aiming to roll out an open-loop payments system for Victorian transport users.
 
Conduent operates around 400 fare collection and processing platforms across the globe, including systems in the US, the Netherlands and Sweden.
 
The company recently won contracts to manage the roll out of open-loop fare systems for networks in Italy and Mexico.
 
Conduent is listed on the Nasdaq.