For market research purposes, I would like to enquire about the efficiencies enabled by the implementation of your Pay As You Go system, in a quantitative context (i.e. increased revenues, reduced costs for operation, time savings, etc.) from the perspective of the TfL. This can be in comparison to other systems. Any qualitative insights, if available, are also welcome. If possible, I would also like to learn about the downsides of the Oyster Card from the perspective of the company (i.e. hardware installation costs, card creation costs etc.)

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TfL Ref: FOI-1923-1819

Thank you for your  request received by Transport for London (TfL) on 11 October 2018.

Your request has been processed in accordance with the requirements of the Freedom of Information Act and our information access policy. I can confirm we do hold the information you requested. You asked:

I would like to enquire about the efficiencies enabled by the implementation of your Pay As You Go system, in a quantitative context (i.e. increased revenues, reduced costs for operation, time savings, etc.) from the perspective of the TfL. This can be in comparison to other systems. Any qualitative insights, if available, are also welcome. If possible, I would also like to learn about the downsides of the Oyster Card from the perspective of the company (i.e. hardware installation costs, card creation costs etc.)

There are a number of factors influencing ticketing trends which mean that it is not generally possible to provide a direct correlation between cause and effect in terms of the impact of Pay As You Go on revenue, cost and time savings.  There was a one-off study undertaken by the Massachusetts Institute of Technology on the revenue impact of Pay As You Go when introduced on National Rail services in London.  This is attached.

Also attached is information to demonstrate the trends which have emerged since Pay As You Go was introduced.  We monitor the cost of revenue collection, which considers all costs associated with collecting revenue, allocating it between the different operators, revenue protection, audit and statutory controls and customer support.  The cost of revenue collection, expressed as a percentage of the revenue collected has fallen from 14.3% in financial year 2005/6 to 9.6% in 2015/16, which is the last year for which full data has been collected and analysed.  We have discussed our approach with a number of other transport authorities around the world.  To our knowledge, none of them undertake a similar exercise.

The attached graphs also demonstrate how demand for different products has changed overall demand for sales.  The decline in demand for season tickets is unlikely to be solely a consequence of the introduction of Pay As You Go, as it was fairly stable until 2013.  This change in how customers pay for travel has enabled other strategies to be delivered, including the withdrawal of cash acceptance on buses and bringing station staff out of ticket offices into the ticket halls so that they can be more accessible to customers.

The cost of supplying Oyster cards varies continually.  We have a framework contract in place where several card suppliers bid for each round of card orders, with prices changing with each order.  This is done normally 1-2 times each year.  As this is a commercially sensitive process, we are unable to provide information on card costs.

Oyster readers were all installed prior to 2010, and upgraded in 2013 to accept contactless payments.  As we have a single reader which supports Oyster, contactless payments and ITSO smart cards, it is not possible to distinguish the Oyster element of the reader.

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

Yours sincerely,

Melissa Nichols

FOI Case Officer

FOI Case Management Team

General Counsel

Transport for London

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