Wednesday, November 05, 2003

Government to finance e-purse for public transport

Karla Peijs, the Dutch Minister of Transport, has written this letter to parliament, explaining that the government will allocate 100 million euro to introduce the so-called 'OV Chipkaart'. An additional funding of € 74 million may also be expected.

A research study shows that the overall-benefits to society may be in between € 400 - € 1500 million and that without government funding the project will most likely not be realised (as some individual players are to lose money due to the migration to the new system). Other highlights:

- the new system will cost € 160-170 million compared to current cost of € 120 million,

- the largest net benefits will be € 570-710 million, due to better product conditions, shorter queues and increased social security,

- 13 million travelers will pay € 1,5 to € 2,5 for the contactless OV-chipcard.

It's interesting to note that there is a very brief reference to the need to discuss with the central bank the payment elements of the chipcard. There is also a generic reference to rules and regulations that need to be complied with, yet a reference to e-money regulation is not being made. Which, given the pre-paid nature of the product, is quite interesting an omission.

The full study about costs and benefits is not being published as there is still some discussion about who pays for placing the toll gates at the train stations. It is expected that this does not change the overall picture however.