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Transports for London cancels Oyster contract

Thursday 18 September 2008

The contract signed in 1998, was scheduled to run until 2015, with a stipulated ten year “break option”. Both TFL and TranSys have also been keen to stress that negotiations for the contract's cancellation have been ongoing for at least a year. The contract termination will be effective in 2010, TranSys will keep on operating for the next two years.

Stakeholders did not expose in details the reasons for contract termination. Analysts agree on a combination of factors:

  • Oyster is, in a way victim of its success: it was originally designed as a payment system for London Tube, and it has since been expanded to support all types of public transport, with the associated complexity.
  • Oyster is based on Mifare, recently the object of several attacks, and not considered any longer as a safe, reliable and flexible solution.
  • Mayor Boris Johnson and TfL are convinced any future contracts will deliver enhanced services for less money. A statement from TfL says that it is “convinced that any new contract will deliver enhanced services for less money, driving significant savings.
  • Some system failures happened this summer, that led TfL to open the tube gates totally. The failures are estimated to have cost hundreds of thousands of pounds - monies that TfL said would be recouped from the TranSys consortium: TfL has demanded a GBP 1 million (EUR 1.26 million) compensation for the two Oyster card outages that happened last month.
  • Local authorities see a need for a systems evolution, especially considering Oyster's integration with the planned "paperless ticketing" for the 2012 Olympics has also yet to be defined.
  • Negotiating now the end  of the contract in 2010 allows TFL and TranSys time to manage any kind of handover, as well as ensuring that there is a decent bedding in period for the new solution before the Olympics in 2012.
  • TfL could consider developing an open loop payment system in which commuters would tap their Visa payWave, MasterCard PayPass or other contactless banking cards to pay. "The thing we want to do is link our ticketing system as closely as we can to the financial-payment industry," said Shashi Verma, TfL’s Director of Fares and Ticketing. "The ultimate vision should be (that in) the same way you pay for everything in your life with credit and debit cards, you should be able to buy transports" she added.

TfL could lose the right to use the Oyster brand as it is owned by TranSys. TfL has acknowledged that but insisted "TfL will ensure the continuity of the brand in future arrangements".

It is now understood that TfL was planning to give the contract to Cubic Corporation, one of the partners in Transys Consortium. But EDS has managed to stop the move with a court order. After two rounds of negotiations, TfL decided to side with Cubic for three years starting from 2010

Six million Oyster cards are now in use across London's transport network.