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`Near Field Communication (NFC) and Transit:
`Applications, Technology and Implementation
`Considerations
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` Smart Card Alliance Transportation Council White Paper
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`Publication Date: February 2012
`Publication Number: TC-12001
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`Smart Card Alliance
`191 Clarksville Rd.
`Princeton Junction, NJ 08550
`www.smartcardalliance.org
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`About the Smart Card Alliance
`
`The Smart Card Alliance is a not-for-profit, multi-industry association working to stimulate the
`understanding, adoption, use and widespread application of smart card technology. Through specific
`projects such as education programs, market research, advocacy, industry relations and open forums, the
`Alliance keeps its members connected to industry leaders and innovative thought. The Alliance is the
`single industry voice for smart cards, leading industry discussion on the impact and value of smart cards
`in the U.S. and Latin America. For more information please visit http://www.smartcardalliance.org.
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`Copyright © 2012 Smart Card Alliance, Inc. All rights reserved. Reproduction or distribution of this publication in any
`form is forbidden without prior permission from the Smart Card Alliance. The Smart Card Alliance has used best
`efforts to ensure, but cannot guarantee, that the information described in this report is accurate as of the publication
`date. The Smart Card Alliance disclaims all warranties as to the accuracy, completeness or adequacy of information
`in this report.
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`TABLE OF CONTENTS
`1  
`INTRODUCTION .................................................................................................................................. 5  
`2   OVERVIEW OF TRANSIT MOBILE APPLICATIONS .................................................................. 6  
`2.1  
`PROVISION OF REAL-TIME INFORMATION .......................................................................................... 6  
`2.2   ADDITIONAL OPPORTUNITIES ............................................................................................................. 7  
`2.3  
`PILOT PROJECTS ................................................................................................................................. 7  
`2.3.1  
`NJ TRANSIT, 2011 .............................................................................................................. 7  
`2.3.2  
`London, 2007 ....................................................................................................................... 8  
`2.3.3  
`San Francisco, January-May 2008 ..................................................................................... 8  
`2.3.4  
`Germany, 2008 .................................................................................................................... 9  
`2.3.5  
`Summary .............................................................................................................................. 9  
`3   NFC APPLICATIONS THAT BENEFIT TRANSIT ....................................................................... 10  
`3.1  
`STANDARDS AND SPECIFICATIONS ................................................................................................... 10  
`3.2   NFC-ENABLED OPEN BANK CARD PAYMENT .................................................................................. 11  
`3.2.1  
`Fare Product Acquisition .................................................................................................. 11  
`3.2.2  
`System Entry and Exit, and Transaction Processing ........................................................ 11  
`3.2.3  
`Post-Purchase Inspection and Processing ........................................................................ 12  
`3.3   NFC-ENABLED CLOSED SYSTEM TRANSIT TICKETING AND PAYMENT ............................................ 12  
`3.3.1  
`Fare Media Acquisition and Top Up ................................................................................. 12  
`3.3.2  
`System Entry/Exit .............................................................................................................. 13  
`3.3.3  
`Payment Validation ........................................................................................................... 13  
`3.4   NFC-ENABLED TRANSIT INFORMATION APPLICATIONS .................................................................. 13  
`4   THE NFC ECOSYSTEM AND IMPLEMENTATION OF NFC-ENABLED TRANSIT
`APPLICATIONS .................................................................................................................................. 14  
`4.1   ECOSYSTEM PARTICIPANTS .............................................................................................................. 14  
`4.1.1  
`Secure Element Providers and Issuers .............................................................................. 14  
`4.1.2  
`Mobile Network Operator ................................................................................................. 15  
`4.1.3  
`Handset Manufacturer ...................................................................................................... 15  
`4.1.4  
`Operating System Provider ............................................................................................... 16  
`4.1.5  
`Mobile Wallet Developer .................................................................................................. 16  
`4.1.6  
`Trusted Service Manager .................................................................................................. 17  
`4.1.7  
`Application Service Providers ........................................................................................... 17  
`4.1.8  
`Passengers/Consumers ...................................................................................................... 18  
`4.1.9  
`NFC Application Acceptors .............................................................................................. 18  
`4.1.10  
`Transaction Processors ..................................................................................................... 18  
`4.2   NFC ECOSYSTEM RELATIONSHIP EXAMPLES ................................................................................... 18  
`4.3   NFC AND THE TRUSTED SERVICE MANAGER ................................................................................... 19  
`4.3.1  
`Role of the TSM ................................................................................................................. 20  
`4.3.2  
`Requirements for Filling the TSM Role ............................................................................. 22  
`5   KEY CONSIDERATIONS FOR DEVELOPING A MOBILE STRATEGY ................................. 23  
`5.1   BUSINESS CONSIDERATIONS ............................................................................................................. 23  
`5.1.1  
`Vendor and Partner Relationships .................................................................................... 23  
`5.1.2  
`Merchant Acceptance ........................................................................................................ 23  
`5.1.3  
`New Revenue Streams ....................................................................................................... 24  
`5.2   TECHNOLOGY CONSIDERATIONS ...................................................................................................... 24  
`5.3   APPLICATION CONSIDERATIONS ....................................................................................................... 24  
`5.4  
`SUMMARY ........................................................................................................................................ 25  
`6   CONCLUSIONS ................................................................................................................................... 26  
`7   PUBLICATION ACKNOWLEDGEMENTS .................................................................................... 27  
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`8   REFERENCES ...................................................................................................................................... 29  
`9   APPENDIX A: TRANSIT NFC ACTIVITIES ................................................................................. 30  
`10   APPENDIX B: MIFARE4MOBILE .................................................................................................. 33  
`11   APPENDIX C: CIPURSE ................................................................................................................... 34  
`12   APPENDIX D: GLOSSARY ............................................................................................................... 36  
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`1 Introduction
`Mobile devices and phones have been in use since the early 1990s, and their rapid acceptance
`may lead them to eclipse the use of personal computers everywhere. Powerful new handsets are
`attracting new customers, while mobile operators are upgrading networks to accommodate
`seemingly endless mobile applications; private companies and government agencies in turn are
`developing IT strategies to adapt and thrive in the mobile environment. Added to this is an
`innovation that will significantly influence the direction and growth of mobile commerce: Near
`Field Communication, or NFC, a radio frequency (RF) communication technology that allows data
`to be exchanged between electronic devices in close proximity. NFC is expected to be used for a
`wide variety of applications, including: payments, coupons and merchant promotions, and transit
`ticketing.
`As a short range or proximity technology, NFC differs significantly from more common forms of
`mobile communication. Mobile payment implementations, in particular, typically require a back-
`end server and transmit data using mobile channels, such as short message service (SMS),
`mobile applications (apps), or a browser. Mobile payment alternatives currently include the use
`of contactless stickers, microSD cards, and 2-D bar codes.
`In contrast, mobile payment with NFC technology relies on a handset provisioned with a payment
`application, which may be provided by one of the major card brands and personalized with a
`payment account from the consumer’s financial institution. Mobile NFC payment and settlement
`processes are identical to the processes executed when a contactless or magnetic-stripe credit or
`debit card is used for payment. The difference is that NFC-enabled devices offer two-way
`functionality; that is, an NFC-enabled device may act as both a contactless card and a
`contactless reader. This supports interactive processes whereby the consumer may collect
`information on the NFC-enabled device in the form of coupons, directions, web site/app store
`links, or buyer incentives from electronic boards, posters, or maps. Based on this information, the
`consumer can then choose to make a purchase. The actual payment transaction may be the final
`step in a series of data exchanges between the NFC-enabled device and a contactless point-of-
`sale (POS) reader. In short, an NFC-enabled device offers additional options for obtaining
`information to make purchase decisions, as well as a convenient way to make contactless
`purchases.
`This white paper presents a high level perspective on different NFC applications that can be used
`in the public transit industry. The Smart Card Alliance Transportation Council has prepared this
`white paper to foster greater understanding of NFC technology, explain its role in the transit
`industry, and shed light on key issues facing the transit industry in developing a mobile strategy.
`It builds on the knowledge base developed in earlier white papers, including those from the NFC
`Forum and Smart Card Alliance Payments Council. In particular, this white paper explores the
`use of NFC for payment, transit ticketing and transit information applications. The Transportation
`Council believes NFC can help transit agencies overcome challenges faced by all transit riders,
`including selecting the correct route, obtaining real-time schedule information, acquiring fare
`media, purchasing fare product, paying the best fare, and viewing the status of fare products, all
`by way of an NFC-enabled handset.
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`2 Overview of Transit Mobile Applications
`The public transit mobile landscape includes passenger information needs, front-line employee
`communication, vehicle fleet monitoring, and facilities management. Each of these areas offers
`both challenges and opportunities for improving safety, customer satisfaction, and service
`reliability.
`Most transit agencies have deployed wireless or mobile applications by supplementing
`conventional radio systems with a range of new applications, such as automated stop
`announcements, automatic vehicle location, and automated passenger counters. NFC
`technology builds upon these capabilities to provide personalized services for mobile computing,
`geospatial information, and even social media.
`2.1 Provision of Real-Time Information
`Transit users and motorists alike increasingly want real-time travel information. Mobile
`technology, and especially the mobile phone, is changing the way transit operators provide such
`information. Device functionality such as location services, Internet browsing, in-app messaging,
`and SMS provides an opportunity to disseminate information to riders. Underlying vehicle
`tracking and arrival forecasting technologies, combined with trip planning software, create a
`seamless system for planning transit trips. Until recently, for example, the common complaint
`about transit use was that the passenger was unable to determine vehicle arrival time, due to the
`absence of real-time information about the location of the next vehicle or its arrival (or last
`departure) time. In the past, riders waiting for a bus or train had to rely on published timetables
`and hope the service was running on time.
`Today, many operators are developing the means to provide real-time vehicle location
`information and even allow vehicle tracking through innovative design solutions on Web systems,
`mobile applications, and urban information displays. Transit operators are also realizing the
`benefits of “open data,” which provides free access to schedule and real-time information that
`was previously restricted or unavailable to the public. Recently, Transport for London (TfL) began
`providing free access to internal data, New York City Transit now permits access to schedule
`data, and the Washington Metropolitan Area Transit Authority (WMATA) has made its real-time
`data available to the public.
`Mobile Internet access and smart phone applications commonly supplement traditional media to
`convey real-time information (e.g., dynamic message signs and interactive voice response).
`Trimet, the transit operator in Portland, Oregon, ranks among the industry leaders in developing
`applications to improve the passenger experience. Using open-source information technology,
`the agency shares schedule and route data with third-party developers, who create interactive
`travel planning and mapping capabilities. The increasing use of mobile devices by riders
`encouraged Trimet to create an online “app center” with links to more than two dozen transit
`applications. Some of the more popular applications include:
`• Vehicle Arrival Time. Using the GPS and schedule data, this app provides vehicle
`arrival times to iPhones and allows passengers to bookmark frequently used stops.
`• Nearest Bus Stop. Passengers can use this app to search for the nearest transit stops
`and obtain arrival information and a map.
`• Directions and Trip Planning. This app uses text messages to provide public transit
`directions and trip planning information.
`• Points of Interest. This app uses the GPS to provide points of interest around bus
`stops.
`Currently, mobile phones equipped with NFC technology are not being widely used to access
`real-time transit information, although the potential for such use remains high. An NFC-enabled
`phone provides passengers with access to the current array of information and services now
`accessible using broadband cellular and Wi-Fi. In addition, using NFC, passengers can instantly
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`download a bus timetable, check fares, or determine a vehicle location by touching a phone to a
`kiosk or “smart” poster (i.e., a poster provisioned with an NFC tag).
`Public transport occupies a unique place in the world of mobile technology. Passengers riding in
`a vehicle can access entertainment, information, and social networks. The availability of real-time
`information and related transit applications provide the foundation required for NFC to take hold,
`expand, and create further value. Buses and rail vehicles, for example, typically display posters
`and advertising to riders. If vehicle advertising or posters are smart, riders can learn about
`products and obtain coupons or directions. When a passenger taps a poster, the handset
`connects to the mobile network and to a back-end system that links the passenger to the poster.
`The server sends information back to the passenger that can even be tailored to a specific
`location.
`The 2007 Transport for London pilot, for example, tested NFC-enabled phones and “smart”
`posters. Passengers in the trial entered a destination into their phone and, upon transferring to
`another line, touched the phone to a poster. The phone’s handset screen instantly provided
`detailed travel information, including a map of the station and surrounding area and real-time
`travel information.
`2.2 Additional Opportunities
`Several successful trials have revealed that passengers also want to be able to pay transit fares
`with a mobile device. Ticketing and payment are applications that are well suited to NFC
`technology. By touching a phone on a bus fare box or NFC turnstile, the passenger could either
`process a virtual card resident in their phone or initiate an authentication process with a back-
`office server that can be configured to charge a flat fare or a distance-based (i.e., tag in-tag out)
`fare.
`As an early adopter of contactless technology for fare payment, the transit industry is well
`positioned to take advantage of NFC technology for both payment and non-payment applications.
`Riders in several major cities are already accustomed to waving or tapping contactless cards
`against fare boxes and turnstile readers. Enabling mobile phones with NFC lets riders pay fares
`directly at the point of entry to the transit system. In a typical sequence, a transit rider could plan
`a trip and prepay the fare by connecting to a transit agency’s Web site; the electronic ticket or
`fare can be downloaded to the mobile phone and presented to a reader at a transit station or bus
`fare box. Payment for parking is another option if the parking lot entry point is equipped with an
`NFC reader. Transit customers can then touch an NFC-enabled phone to the reader to complete
`the payment transaction.
`2.3 Pilot Projects
`In 2010, Juniper Research published a study on the growth of mobile ticketing and estimated that
`some 15 billion mobile tickets will be purchased by 2014.1 The forecast volume strongly suggests
`that, over time, mobile ticketing could transition to many other industries outside of transportation.
`Several pilot projects have successfully demonstrated the potential benefits of using NFC for
`mobile ticketing and transit payment and for transit information access. A more detailed list of
`NFC pilots in transit is included in Appendix A.
`2.3.1 NJ TRANSIT, 2011
`NJ TRANSIT is New Jersey's statewide public transportation corporation. An ongoing pilot
`features the acceptance of Google Wallet, which stores a virtual version of a credit, debit, or
`prepaid card on a mobile phone. The application is currently compatible with Sprint Nexus S
`NFC mobile phones, Citi MasterCard, and Google’s prepaid card. Google is also working with
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`1 Mobile Payment Markets: Contactless NFC 2008-2013, prepared by Howard Wilcox of Juniper
`Research, February, 2010.
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`POS system companies and top retail brands to allow consumers to be able to pay for an item
`using a credit card or gift card, redeem promotions and earn loyalty points.
`NJ TRANSIT is the first transit agency in the country to partner with Google Wallet to test NFC
`mobile payments, allowing customers to pay with a simple tap of a mobile phone. NJ TRANSIT is
`testing this technology at ticket vending machines and ticket windows in New York Penn Station
`and the Port Authority Bus Terminal, on seven bus routes from the Greenville Garage, and at
`Newark AirTrain Station. This technology offers NJ TRANSIT customers the following benefits:
`Improves the customer payment and ticketing experience
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`• Decreases transaction times
`• Decreases bus boarding/dwell times
`• Broadens the customer base for contactless payments
`2.3.2 London, 2007
`An NFC pilot project in London involved the collaboration of several participants, including TfL,
`Transys/Cubic, a mobile network operator (O2), Nokia, Barclaycard, and Visa. Approximately
`500 O2 customers received a Nokia 6131 NFC-enabled mobile phone on which the Oyster card
`and credit cards were available. The phone allowed riders to load “pay as you go” value and
`calendar period passes to an Oyster card instance provisioned to the phone. Participants were
`able to tap and go on all Oyster-equipped Underground, bus, and tram fare terminals.
`Given the lack of contactless payment awareness at the time, it is not surprising that the Oyster
`functionality created the highest customer satisfaction and interest. Contactless usage and
`terminal deployment were far more prevalent in transit than retail during this period, and twice as
`many users expressed strong interest in the transit features as compared to retail payment
`features. Overall, more than 90% of participants reported their expectations had been exceeded,
`with more than 50% stating that the presence of transit payment on the phone would influence
`their choice of handset. The firm compiling this data described these results as an incredibly high
`satisfaction rate for a new technology product.2
`Patrons repeatedly cited the benefit of “not getting caught out forgetting your Oyster Card at
`home” as a key benefit. Being able to see the Oyster balance was also highly ranked as a
`feature consumers would like to see.
`Going forward, TfL is pursuing an open payments strategy where contactless bank cards will be
`accepted at transit fare terminals. As such, it is anticipated that NFC implementation at TfL will
`see patrons using open payment cards held in the mobile wallet as the credential for mobile fare
`payment. From a user perspective, however, the key value propositions remain unchanged:
`• A convenient, always-with-you form of fare media
`• Convenient account management and top-up tools
`• Access to real-time passenger information
`• Opportunities for cross promotion between transport and retail merchant categories
`2.3.3 San Francisco, January-May 2008
`A Bay Area Rapid Transit (BART) NFC trial combined transport ticketing with mobile payment.
`BART riders used Samsung NFC-enabled handsets at all BART fare gates to access stations
`(and to pay for meals at Jack in the Box restaurants) in the San Francisco Bay Area. Project
`partners included ViVOtech, Cubic, Sprint, and First Data; the pilot also featured smart posters at
`BART stations that directed customers to retailers where they could redeem NFC-enabled
`contactless gift card credits. For transit, a BART EasyRider™ fare product was provisioned to the
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`2 Source: Cubic
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`handset and processed without the need for software modifications to the gating system. Over
`the course of the pilot, 230 participants took over 9000 trips and performed 800 mobile top-ups.
`More than 80% of users found the application easy to use. Recent focus group research
`conducted by Cubic found increasing levels of mobile engagement and awareness across the
`overall transit population.3
`2.3.4 Germany, 2008
`The German rail authority, Deutsche Bahn, and its partners, Vodafone, Deutsche Telekom, and
`O2 Germany, conducted an NFC pilot on intercity trains connecting Berlin, Cologne, Dusseldorf,
`and Frankfurt; local rail services in Berlin; and transit services in Potsdam. The project’s 3,000
`participants used phones running a ticketing application called Touch&Travel. At the departing
`station, the rider placed a phone near a reader that contained an NFC tag with station location
`information. The departure location was sent to a back-end system over the mobile network,
`recording passenger check-in on the phone. Upon arrival, the passenger tagged the phone out,
`completing the journey and fare calculation.
`2.3.5 Summary
`Through the various field trials, full system implementations in Asia, and a variety of market and
`focus group studies, it has been continually demonstrated that transit patrons warmly embrace
`mobile fare payment and associated real-time information services. User acceptance rates are
`very high with the participants citing convenience, access to information (e.g., account balance
`and status), and transit service data all offering substantial value. These user benefits can be
`offered to consumers in both closed loop transit card systems (such as BART and Oyster) or in
`open loop environments, such as those now being introduced to markets such as London,
`Chicago, Philadelphia and New Jersey.
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`3 Source: Cubic
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`3 NFC Applications that Benefit Transit
`NFC technology is a standards-based wireless communication technology that allows data to be
`exchanged between devices located a few centimeters apart. The NFC based “touch paradigm”
`supports a range of new applications for mobile phones, including:
`• Making payments with a touch of a device anywhere contactless POS readers have been
`deployed
`• Reading information and picking up special offers, coupons, and discounts from posters
`or billboards on which an NFC tag has been embedded (for example, in smart posters
`and billboards)
`• Storing travel data, fare product, or tickets for transportation, parking access, or events
`securely, and enabling fast transactions at the point of entry or exit
`• Storing information that protects secure building access
`• Sharing content between two NFC phones
`This section provides an overview of the standards and specifications supporting NFC and
`describes three different NFC applications that can benefit transit:
`• NFC-enabled bank card payment for transit fares
`• NFC-enabled closed system transit ticketing and payment
`• NFC-enabled transit information applications
`3.1 Standards and Specifications
`NFC-enabled devices are governed by multiple standards (ISO/IEC standard 18092, ETSI
`standard TS 102 10 V1.1.1 [2003-03], and ECMA standard 340) and by specifications published
`by the industry association, the NFC Forum. ISO/IEC 18092 allows for backward compatibility
`with current contactless devices by supporting ISO/IEC 14443 (the standard used by payment-
`network-branded contactless payment cards and devices) and the Japanese Industrial Standard
`(JIS) X 6319-4 (also known as FeliCa) contactless interface protocols.
`An NFC-enabled device can operate in reader/writer, peer-to-peer, and card emulation mode.
`For mobile contactless payments and mobile ticketing, the NFC-enabled mobile device operates
`in card emulation mode; an external reader sees it as a traditional contactless smart card.
`Payment information is stored in the mobile phone in a secure element (SE), which is a smart
`card chip that protects stored data and enables secure transactions. For transit, card emulation
`mode can facilitate either a conventional read/write transit transaction or an account-based open
`payments transaction.
`NFC-enabled mobile phones are compatible with the contactless smart card acceptance
`infrastructure (based on ISO/IEC 14443). NFC phones can therefore be used with current
`contactless payment and ticketing services without requiring additional investment in an already
`contactless-enabled terminal infrastructure. Current contactless applications such as MasterCard
`PayPass®, Visa payWave, or a transit fare payment card can be supported on a mobile phone—a
`new form factor. Use of a mobile phone for contactless applications replaces the “passive” plastic
`card with something much more powerful—a mobile device on which applications can be
`managed online and through which the consumer experience can be greatly enhanced, thanks to
`the mobile device’s rich user interface.
`The NFC Forum4 has developed and released implementation specifications and has also
`launched a certification program that checks devices for compliance with NFC Forum
`specifications. Compliant devices behave consistently, facilitating an interoperable infrastructure.
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`4 http://www.nfc-forum.org.
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`3.2 NFC-Enabled Open Bank Card Payment
`One of the significant benefits to transit operators of supporting a fare collection system that
`accepts contactless bank cards is that other payment technologies compatible with ISO/IEC
`14443 can easily be integrated into the system. A transaction processing model that supports
`contactless bank cards will support those same applications to the same extent, using NFC-
`based card emulation.
`While basic integration for a payment transaction is relatively simple, NFC-enabled devices can
`support richer interactive user experiences than can a card, providing the consumer with both
`greater control and greater flexibility. NFC-enabled applications can deliver more robust
`capabilities in the three primary stages of the consumer fare payment life cycle:
`1. Fare product acquisition
`2. System entry and exit, and transaction processing
`3. Post-purchase inspection and processing (consumer and operator)
`For a more complete description of how contactless open bank cards are used for fare payment,
`see the Transportation Council white paper, “Transit and Contactless Open Payments: An
`Emerging Approach for Fare Collection,”5 which describes the implementation model in more
`detail.
`3.2.1 Fare Product Acquisition
`An NFC-enabled mobile device equipped with an open payment application can make fare
`product acquisition more convenient for consumers. Consumers can purchase products using
`mobile applications and mobile Web sites or tap on NFC tags available throughout the transit
`system, making fare product purchases possible literally anywhere.
`NFC capability allows agencies to explore new fare purchase use cases. For example, an
`operator can deploy a map with tags representing locations; passengers can touch their devices
`to the points on the map that represent their daily journey. The mobile app can then recommend
`the most efficient product based on the identified destination locations. The passenger can
`confirm the product selection and select a payment account using either a mobile wallet or a pre-
`registered funding account. In open payment environments, the payment product residing in the
`wallet can be used to pay for the fare product.
`Some passengers have standing orders to repurchase a