At its meeting of June 12, 2019, the TTC Board considered a report and presentation setting out the many shortcomings of the Presto fare card system.

Presto implementation has been underway since a 2012 master agreement between the TTC and Metrolinx, and they are now at the half-way mark in a 15-year contract. In spite of this, some functionality included in that contract has not yet been provided, and there are no service level agreements (SLAs) in place setting out basic issues for system performance and financial penalties to Metrolinx for failure. Indeed, although the TTC has claimed revenue losses thanks to problems with Presto, Metrolinx has not accepted that it owes the TTC anything.

Until quite recently, Presto, like so much that comes from Metrolinx and Queen’s Park, was a “good news story” where TTC riders switching to the fare card drove fast growth for that system. The convenience of Presto versus tokens and the disappearance of the Metropass shifted over two-thirds of TTC riding onto Presto. The chart below shows the breakdown for April 2019. The Presto share is expected to reach 95% when legacy media are withdrawn.

However, the good news hides problems with the system as it exists both for Presto users and those who might shift to that system in the future.

The heart of Toronto’s problem with Presto lies in the way the system was imposed. TTC was prepared to go with an alternative vendor for a new fare card system, but were told by Queen’s Park that failure to adopt Presto would put all of the provincial subsidy programs at risk. This was a very big, heavy stick for the government to use, and it shows just how desperate they were that Ontario’s largest transit system be a client (with associated revenue and prestige) of the Presto system.

During the ongoing discussions that began in the fall 2010, the Province and Metrolinx maintained that the common PRESTO Farecard system was their recommended approach to achieving the Plan’s inter-regional policy objective of increasing cross boundary travel. The Province and Metrolinx committed to upgrade the PRESTO system to meet the TTC’s distinct and forward-looking customer, business and financial needs, including advances in fare payment technologies using open payments. The Province and Metrolinx indicated that billions of dollars of funding for some existing TTC programs which had been promised publicly (Provincial gas tax, new streetcars, Eglinton and Scarborough transit initiatives) could be in jeopardy without PRESTO. The adoption of PRESTO was thus approved in June 2011, subject to developing acceptable operating and financial agreements and confirming the funding necessary to proceed. [p 7]

Despite a competing proposal from Xerox subsidiary ACS that would cost over $300 million less than Presto, the TTC was forced to accept the provincial system.

Presto did not perform as it needed to, and contracted functionality is still not available.

The TTC entered into the Agreement with Metrolinx on November 12, 2012. The base term is 15 years (2027), with an option to extend for one additional year at Metrolinx’s discretion and an additional four years by mutual agreement. Key elements of the Agreement include: Metrolinx to make modifications and enhancements to the PRESTO system to allow for an e-fare account based payment system with an open architecture using industry standards to accommodate open loop financial cards, mobile applications and future technological innovations (“PRESTO NG”)

Metrolinx to finance, implement and operate the PRESTO NG system and provide a wide range of “managed services” (e.g. back office operations; customer services; revenue collection and maintenance of all system field equipment)

In return, TTC to pay a fee of 5.25% of TTC fare revenues processed through the PRESTO system [pp 7-8]

The TTC contemplated a variety of payment mechanisms years ago.

The TTC’s Business Requirements specified both open payment and an account-based architecture, which was to have been built alongside the existing PRESTO card-based architecture. In such a system, customer convenience and flexibility would be maximized. A customer could choose to have a PRESTO card with all its fare policy benefits (e.g. fare concession, 2-hour transfer), or to get some of those benefits using a non-registered open-payment card (e.g. Visa, Mastercard), or to get all fare policy benefits with a registered open-payment card. These concepts were an essential component of the Agreement and were fundamental to the TTC’s agreement in 2012 to accept the PRESTO system versus a competitive market-based solution. [p 11]

Two key capabilities – fares for travel between transit agencies such as York Region Transit and TTC, and the move to “open payments” and an account based system – have yet to be implemented. Regional integration is hoped for later in 2019, but there is no firm date for a change to the payment mechanism.

What Are Account Based Fares?

Account based fares and open payments are closely related, and they are fundamentally different from how Presto works today.

With Presto, fare calculations and validation occur between card readers and the cards themselves. Information about the account balance and any bulk purchase such as a pass is stored on the card. This allows a transaction to occur without any link back to a central system, an arrangement dating back to Presto’s early days when wireless links from their roving bus fleet were not reliably available. However, this forces all of the payment logic into the architecture of the readers and cards constraining the functions they can support.

This arrangement is responsible for the lag between an online account update and the appearance of new “money” on your Presto card. Until you tap onto a reader that “knows” you loaded more money online, you have money in the central system, but cannot use it because the fare machines don’t “see” it.

Imagine if software had to be loaded into every phone so that it could calculate the cost of a call and maintain your account balance. That, in effect, is the complexity Presto imposes, something that should have been designed out of the system years ago.

In the case of a credit or debit card, Presto cannot “write” information onto the card, and so distance-based functions such as GO fare calculations cannot be handled. Only a flat, standard charge is possible such as an adult TTC fare, and without a two-hour transfer privilege.

In an account based system, a rider has a transit account just as they would have one for their mobile phone or credit card, and activity (trips, transfers, border crossings) is accumulated as it occurs. At the end of a billing period, the cost of these trips is calculated with any appropriate discounts such as loyalty programs, time-of-day fares or special event promotions. A Presto card, any other smart card, or a smartphone app can be registered as the rider’s transit identification, but in all cases processing happens in the “back end” with monthly billing to a bank account or credit card. Riders who have not set up accounts simply use their credit cards for pay-as-you-go billing.

The important distinction is that the system needs only track a rider’s travel, not compute the fare in real time based on “today’s rules”. Those rules can be updated in the central billing system rather than having to be integrated in the reader software and pushed out network wide. There is no need for an electronic purse or “e-purse” on the card which must hold enough money (or some form of pass) to pay for any trip a rider might take.

Presto tickets (sometimes referred to as limited use media or “LUMs”) would still exist, but Presto readers would only have to verify when the ticket expires or how many trips are left on it.

Metrolinx plans to make account based fares available sometime in 2020 with open payments in 2021, but there are no firm dates, nor is there a specification of just what functionality Metrolinx will support.

Gaps in the Presto TTC System

Other gaps between the TTC’s Presto contract and current capabilities include:

Flexible and dynamic fare policies/products

Support for other than standard fares and environments such as

Presto tickets dispensed as receipts for cash fares on surface vehicles

Device availability/reliability

Service Level Agreements (SLAs)

Third-party sales network

Flexible Fare Products

Many fare options the TTC might consider offering are not possible with current Presto technology. These include:

Fares based on location or time-of-day. This prevents the creation of event-based fares, or fares to encourage system usage at off-peak times.

Changes within 24 hours. The TTC is unable to offer special promotions or change fares on short notice.

Multiple loyalties. Presto includes the capability of “capping” fares, but only one such loyalty mechanism can exist on a card. This affects both the co-existence of daily, weekly and monthly caps, as well as caps for multiple transit systems.

First use validation. The two hour fare now in effect counts from when a fare is paid, but there is no mechanism to activate limited-term passes (e.g. a pass for one or more days) based on the time it is first used. This means that a “day pass” whose use starts at 3 pm is only valid for half a day’s travel.

Many of these functions would be much simpler to implement in an account-based environment where fares are calculated and billed centrally and after the fact without the onerous task of updating and testing revised software for the thousands of Presto devices across the network.

One issue for future fare policy discussions is the question of capping fares charged within a period rather than requiring riders to purchase a pass up front. The report notes:

The weekly loyalty feature was delivered by PRESTO but was put on hold due to the additional financial impact to the TTC. The financial impact would result from all customers being eligible for this discount instead of those who previously had to purchase this type of pass in advance. [p 13] … A daily maximum feature was created specifically for the TTC and planned for launch in 2019. Following the introduction of the 2-hour transfer and based on further analysis, TTC staff determined that customers would have to travel beyond eight hours to realize any daily maximum benefits. Recent data showed <1% of revenue taps would qualify. As such, staff recommended this feature not be implemented at this time. [p 14]

More generally, if daily, weekly and monthly capping were in place, all riders would receive the discount they might otherwise get with a pass based on their actual usage patterns. If their trip count for a month went above the cap, they would pay nothing additional, akin to having a pass, but without the worry of paying up front for something they did not use.

Loyalty programs should also span transit system boundaries, but that will require better transit subsidies and a recognition that cross-border “integration” is not simply a matter of using one fare card to pay on any system.

Multiple Fare Schemes and Environments

Presto is not capable of handling fares where two tariffs overlap, notably for the Premium Express bus network. This is a situation where a rider pays a standard TTC fare for their trip, but if part of this includes a ride on a premium fare route, then they must pay a supplementary fare. This is supposed to be resolved in 3Q2019.

Cross-border fares for vehicles travelling across the 905/416 border were supposed to be implemented in 2018, but this was put on hold because of reliability problems. In theory, riders would tap on and off of vehicles so that the fact they have crossed a border is recorded, but the fare structure does not actually work that way. For example, unless someone transfers to a TTC vehicle they would not pay a Toronto fare. (Buses coming to York University are a good example of this.)

An earlier solution was planned for launch in Q4 2018, but was delayed as the required fare would not be charged reliably, resulting in scenarios that over charged or under charged customers, or rejected valid fare payments (i.e. passes). A joint decision was made by the TTC, York Region Transit, MiWay and PRESTO to not accept the technical solution provided by Metrolinx, delaying our ability to discontinue the GTA Weekly Pass, which will continue to be sold until the solution is fully implemented. [p 14]

A more general policy issue is the question of making the fare boundary vanish so that, for example, a two-hour fare would be valid anywhere no matter where a trip begins. This would have implications for system-specific passes because using two-hour cross-border fares could well be cheaper than having a pass for each system.

Wheel-Trans contracted taxi services have not been able to accept Presto for fare payments, but this will be addressed in 4Q2019 with an app that will run on tablets used by the taxi operators. Presto availability in all Wheel-Trans vehicles is essential for the “Family of Services” concept where WT users make part of their journey in a dedicated vehicle and part on the regular TTC system. They must be able to transfer with no fare penalty and this means that Presto must be available throughout the trip.

Presto Fare Receipts

When a rider pays with a senior/student ticket or a cash fare, they get a fare receipt. On new Flexity streetcars, this is handled by fare vending machines (when they work). In all other cases, the rider gets a conventional TTC transfer.

However, these receipts are not machine readable, and so they cannot be used to enter a paid area through a turnstile where routes make an on-street connection with the subway. Examples of this are at Dufferin Station (29 and 929 buses) as well as the interchanges between downtown streetcar routes and the stations on Yonge Street and University Avenue. This can also be a problem when a bus or streetcar that normally offloads in a paid area is forced to do so on street because of problems in the station.

Riders who use these payment forms also do not have the benefit of two-hour transfer privileges.

As part of the TTC’s contract with Presto, the ability to issue Presto tickets (LUMs) on surface vehicles was supposed to be included, but this is not yet available.

Today, collectors visually verify paper transfers as customers pass through an open gate. However, the verification will not be possible at non-integrated stations when all fare gates close and can only be opened by using a PRESTO card or PRESTO Ticket. TTC and Metrolinx teams spent a considerable amount of time analyzing and assessing various solutions, yet no schedules have been provided to deliver this item. [p 16]

Device Availability and Reliability

It is no secret to regular users of the TTC that Presto devices can often be found that are not working. This includes both the card readers on vehicles and in stations, and the fare vending machines on the new streetcars.

The TTC’s Presto contract calls for 99.99% availability for all card readers, but actual performance lies between 94 to 98%. This may seem like a very high number, but the statistic can be misleading.

When a reader on a vehicle does not work, a rider may or may not attempt or be able to reach another device depending on both crowding and their personal motivation.

Metrolinx monitors “availability” by visibility of readers online. However, there are cases where “the lights are on but nobody’s home” with readers that simply will not respond to taps, or which are “hung” in an error status.

Front-line maintenance of these devices is supposed to be handled by TTC with backup from Metrolinx, but TTC staff report that Metrolinx do not provide timely support for repairs. From my own observations, the frequency with which I encounter non-working machines has been increasing in recent weeks to the point that I see at least one a day. That is nowhere near a 90% availability rate, let alone 99%, and represents a considerable potential for lost revenue.

Metrolinx defines “available” as having at least one working reader per vehicle. TTC riders who have to locate and physically reach a working reader might differ on this point.

As for the fare vending machines, their performance was improved by 7% simply by removing the credit/debit card readers, and even with this change out of service machines are fairly common.

Metrolinx has yet to accept responsibility for any revenue loss due to unreliable equipment (see below).

Service Level Agreements

Any contract between a service provider and a client includes Service Level Agreements which specify the quantity and quality of service to be provided in return for fees charged. However, despite being halfway through the contract lifespan, the TTC still does not have SLAs in place with Metrolinx.

The Agreement sets out a framework to develop SLA’s for the PRESTO equipment and managed services delivery to TTC. The SLA’s were intended to confirm the expected behaviour and performance of PRESTO equipment and service performance provided to customers, as well as associated financial impacts to Metrolinx for degraded service if targets are not met. Despite several attempts at establishing SLA’s, at this point formal SLA’s have not been agreed to, or completed. Most importantly there is no agreed path or plan to complete the required SLA’s. In the meantime, numerous provisional performance indicators are specified in the Agreement, including the requirement for 99.99% farecard reader availability. Related to the foregoing, the Funding and Financial Report Agreement sets out an Interim Compensation for Lost Fare Revenue process. The TTC can make claims for lost fare revenue due to PRESTO performance issues if gross receipts are at least $30,000 less than they reasonably should have been during a specified month or over three consecutive months. The TTC has sent Metrolinx invoices totalling $7.5 million for lost revenue with supporting backup. Metrolinx officials recently advised that they have received legal advice that Metrolinx had no liability to the TTC for lost revenue. We have received very different legal advice. Metrolinx’s position is problematic in so far as, taken to the extreme, it would mean Metrolinx had no liability to the TTC for lost revenue regardless of PRESTO performance. Discussions on this and a range of commercial issues are continuing. [Appendix 6]

This continues the arrogant behaviour so typical of Metrolinx where failures are never their fault. Whether the contract provisions are even enforceable given recent provincial moves to insulate The Crown and its agencies from legal action is an additional problem here.

The Star’s Ben Spurr reported:

Annalise Czerny, Metrolinx vice-president for Presto, pushed back against the report, saying that in addition to meeting its contractual commitments, her agency has “delivered on a number of changes and additions to the project that weren’t part of the original contract, which has impacted the overall timing and cost of delivering Presto on the TTC.” The unforeseen changes the TTC requested included the introduction of two-hour timed transfers last year. “With high adoption and customer satisfaction rates across the (Greater Toronto and Hamilton Area), we know that Presto is working for customers,” Czerny said.

It is laughable that Metrolinx would complain about the two hour transfer project considering that this functionality was available on all other Presto client systems and, indeed, appeared to be the way that Presto was operating on the TTC until the matrix of valid transfer locations was active. Moreover, the TTC paid dearly ($5 million) for the conversion of their Presto system to handle the two-hour fare.

The Presto agreements with the TTC are very long documents, but it is not hard to find functional requirements that simply do not exist in the system as implemented in Toronto. Metrolinx owes Toronto a full explanation for how they disagree with the TTC’s report, not simply a casual dismissal without details.

Third Party Sales Network

The TTC’s contract with Presto requires that the ability to purchase/load fares be as convenient to riders as the existing fare distribution system. Today, a network of TTC fare outlets mainly in convenience stores gives riders the ability to buy fare media a short distance from home during most hours all week long. Close-by access to outlets is important so that riders do not have to go out of their way, or worse, spend transit fares just to reach a point where they can buy more.

Although Presto provides automatic top-up of accounts, this is of little use to the “unbanked” riders or those whose account might not routinely have funds available for transit fare purchase.

Some riders prefer to purchase tickets for cash on an as-needed basis.

Riders whose travel patterns do not involve regular use of a subway station do not have access to a fare vending machine, and such machines are usually remote from platforms where riders would make a bus-bus or bus-subway connection.

Riders with mobility problems cannot walk long distances to reach an outlet, especially in poor weather.

Metrolinx has an exclusive contract with Loblaws/Shoppers as third-party Presto providers. This substantially reduces the number of places where Presto users can buy fares compared with legacy TTC media. The TTC was not a party to this contract, and cannot even get an unredacted version of it because Metrolinx claims confidentiality on commercial arrangements. At issue is whether or how the TTC will be able to maintain good coverage for fare payments considering that they would require Metrolinx co-operation to provide and install any point-of-sale devices.

The map below shows the coverage for fare media purchase within a 1.2km radius (10 minute walk for a fit person). The city is densely covered except for areas which are mainly open space. [Appendix 5 of TTC report]

By contrast, there are many gaps in coverage due to the lower number of Shoppers locations. These gaps are more of an issue in the northwest and northeast of Toronto compared to downtown, and this probably says something about the target demographic for Shoppers outlets.

The effect on a fine-grained level was shown in a deputation at the meeting by Mike Sullivan, a former MP for York South Weston, speaking on behalf of TTC Riders. The map below is his. It shows the two Shoppers outlets in Weston and Mount Dennis (blue) and the many more numerous TTC fare media outlets (orange). Large areas of this map are beyond a ten minute walk from either of the Shoppers locations or of Weston GO Station. There are no Loblaws stores in this area.

Additional outlets might be allowed by Metrolinx in locations like community centres or libraries, but these are neither as numerous as existing TTC outlets, nor are they open at all hours.

Actions By The Board

The Board discussed this issue at length and went into far more detail than is normally seen at public TTC meetings. One might wryly suggest that this was possible because there is another agency, Metrolinx, on the hook for problems with this system. All the same, the TTC has taken a “see no evil” approach publicly to Presto for years while complaining privately of bad design and heavy-handed “partnership” by Metrolinx.

Several motions were placed and approved. Whether they will have a significant effect on Metrolinx’ behaviour is quite another matter. The TTC can huff and puff all it likes, but Metrolinx is backstopped by Queen’s Park regardless of the party in power.

Motions:

Commissioner Carroll:

That the Chair and Chief Executive Officer of the TTC write a formal letter to Metrolinx asking that they provide a written report outlining the progress to date on delivering an open payment system to all PRESTO served transit systems by the end of 2021.

Commissioner Minnan-Wong:

That staff be directed to report to the TTC Board on filing an Application with the Ontario Human Rights Tribunal should Metrolinx fail to make PRESTO cards and media widely and conveniently available to the public.

Commissioner McKelvie:

Request TTC staff to prepare a short annual brief for the TTC Board that summarizes innovative payment options being adopted by comparable cities internationally, as well as the pitfalls and lessons learned during implementation.

Vice-Chair Heisey:

TTC Chair request in writing Metrolinx to provide a detailed plan to meet contractual requirements for reliability by August 1, 2019. The plan should include a detailed work plan for each device to achieve the availability requirements. Specifically, the plan should include the most notable contractual requirement of 99.99% availability for PRESTO card readers. Staff to report results of request and resulting plan to the Board in September 2019. TTC Chair request in writing Metrolinx to meet its contractual obligations to finalize and implement contractually required service level agreements by August 1, 2019. Staff to report results of request and resulting completed service level agreements to the Board in September 2019. TTC Chair also request in writing Metrolinx to provide an alternative fare distribution network to that provided by Shopper’s Drug Mart by October 1, 2019 that will provide the same convenience and accessibility as TTC’s current network. TTC Chair request in writing Metrolinx to provide a detailed timeline by October 1, 2019 to implement PRESTO functionality which would allow for more flexible fare products as are currently available in other large public transit systems worldwide, such as time based fare products (e.g. 24 hour/day/3 day pass, 30-day pass, peak pricing, promotional fares for special events).

Commissioner Karygiannis:

Direct TTC staff to report back to the July 10, 2019 TTC Board meeting on the impacts on maintaining what exists for accessible taxi contractors until the end of the contract and until the new Wheel-Trans Accessible Taxi Service Contracts RFP is negotiated.

Chair Robinson:

TTC staff are directed to continue discussions with Metrolinx to resolve all outstanding financial and contractual performance claims. TTC Staff to report to the Board in September 2019 on the status of the resolution of the financial claims. If TTC and Metrolinx are unable to resolve the financial claims, the Board will give full consideration to initiate the dispute resolution process available to the parties under the Master Agreement.