Octopus card (original) (raw)

The Octopus card is a rechargeable contactless smart card used in an electronic payment system in Hong Kong. Originally launched in September 1997 as a fare collection system for the city's mass transit systems, it has grown into a widely used electronic cash system for convenience stores, supermarkets, restaurants, parking garages and other point-of-sale applications. It has become one of the world's most successful e-cash systems, with over nine million Octopus-cards circulating and over 80 service vendors (June 2003).

An Octopus card, used in Hong Kong

Introduction

Octopus card is anonymous, so users do not need to register an account or show identification to buy one. It can easily be purchased at Mass Transit Railway (MTR) station customer service counters with cash. If someone loses a standard issue Octopus card, only the cash stored in it is lost. No personal information, bank accounts or credit cards are linked to the internal memory of the card. (This is not the case with the special "personalized Octopus" card discussed below).

The card can be used on nearly all Hong Kong transportation systemss, and many stores in the city, most notably, 7-Eleven convenience stores, McDonald's restaurants and Starbucks coffee shops.

Although Octopus card is anonymous, each card has a unique identification number. Therefore Octopus cards are often used as identification cards in certain buildings - only persons with their card registered can enter.

Facts and Statistics

(Source: RFID Journal, FinanceAsia)

Operation

Because Octopus cards are contactless, a visitor to Hong Kong will find it strange to see people tapping their wallets, handbags, backpacks or jackets on the yellow and orange Octopus readers. The card can be read through common materials such as cotton or leather, for up to a few centimters away from the reader, and takes about 1/3 of a second per transaction.

An Octopus card transaction is a store and forward transaction, meaning reader units write data into the Octopus card and then store data about the transaction until it is retrieved by a clearing device (usually a Pocket PC). The data is then sent to the Octopus Central Database.

Incorporated in 1993, Creative Star Limited (CSL), is a private non-profit company that settles accounts between the Octopus system and the operators/merchants. Because of this settlement function, CSL has a deposit-taking licence by the Hong Kong Monetary Authority (HKMA).

Technology

The Octopus system was created by AES ProData (Hong Kong) Limited, a member of the ERG Group of Companies, based in Perth, Western Australia. AES Prodata is responsible for the design, build, operation, maintenance and financing of automated fare collection in the Octopus system.

The Octopus card uses radio frequency identification (RFID) technology so that users need only hold the card in close proximity of the reader. Physical contact is not required. The Sony 13.56 MHz FeliCa RFID chip is used in Octopus with over 12 million units delivered to Hong Kong. Octopus uses a nonstandard system for RFID, since there were no standards in the nascent industry during its development in 1997.

To communicate transaction information, transit stations have local area networks that connect the various components that deal with Octopus cards -- turnstiles, add-value machines, analyzers and customer service terminals. These are connected to the MTRC's Kowloon bay headquarters through a frame relay wide area network. From here, all financial transactions are managed as different service providers relay their daily transction information regarding purchases, usage statistics and added value.

Personalized Octopus Cards

A recent variant of the Octopus is the "personalized Octopus" card which can be linked to a bank account to provide auto-pay or auto-topup functions. In this case, there is no more anonymity, but the tradeoff is ease of use as the card is topped off with HK$250 after the balance goes to zero.

Special Octopus "Cards"

There is an Octopus watch which contains the "guts" of an Octopus card embedded in a plastic wristwatch. Users can simply wave their arm over the sensor. Nokia also produced an Octo-phone, which had the smartcard chip in the Xpress-on cover of a Nokia 3300 series mobile phone.

History

Two major railroad companies in Hong Kong, MTR and KCRC, wanted to upgrade their common ticket system to a modern smartcard system. To fully utilize the potential of the new system and to reduce the development cost, they decided to invite the other three major public transport operators--KMB, Citybus and the Hong Kong and Yaumati Ferry--to join their venture.

As a result, Creative Star Limited (renamed as Octopus Cards Limited in January 2002) was established in 1994 to oversee the development and implementation of the contactless smartcard.

In 1997, the Octopus system was launched. With a single card, a commuter could travel across different transport modes without the hassles of finding exact change for individual journeys. Nowaday, the role of the Octopus card extends far beyond a fare collection system, with many hoping it will eventually eliminate the use of notoriously heavy Hong Kong coins.

On June 29, 2003, Octopus-card operated parking meters went into operation to begin the effort of replacing 17,000 parking meters using the less popular e-Park smartcard. The conversion of all meters is planned to be completed by 2005.

In November 2003, Octopus Cards Ltd. secured a HK $200 million contract to help provide contactless smartcard technology in The Netherlands' system, combining the fare collection system of its vive public transport companies -- rail operator Nederlandse Spoorwegen, bus and tramway operator ConneXXion, public transport companies of Rotterdam (RET) and Amsterdam (GVB) and the light train system in The Hague (HTM).

Comparison with other smartcard systems

The 1997-vintage Octopus system may not be particularly advanced compared to today's latest technologies, but it is one of the most successful smartcard systems around the world. There are basically three reasons:

  1. It is a joint venture of the major transport operators in Hong Kong. In many countries, different transportation systems develop their own card systems, giving rise to compatibility problems and restricts their popularity.
  2. In many countries such as Singapore and Malaysia, smartcards are government projects and the cards double as identification cards. This gives rise to privacy problems. Indeed, lack of anonymity is one of the reasons for the failure of many cash cards, such as VisaCash.
  3. Visitors to Hong Kong can easily purchase and use Octopus cards, with a full refund on unused credit. Unlike other use-it-or-lose-it stored value cards, Octopus cards are fully refundable which makes the barrier to entry very low for tourists and short stay visitors.

See also: Transportation in Hong Kong, Electronic money