[POWER COMPANY] "War Against Fare Evasion"... K-Company Protects U.S. Subways Smartly

 

Date: December 2, 2024, 11:21 AM Reporter: An Kyung-ae

 

Annual Loss of About 1 Trillion Won($0.7Billion)  for Top 10 U.S. Transit Agencies 

Improvement of Fare Payment Gates with Smart Technology 

70% Reduction in Fare Evasion in Washington with Automatic Fare Gates 

Implementation of 'Tap to Exit' in LA Metro... Increased Convenience 

Expectations for Entry into the Largest Operator, New York Transit AuthorityPlans to Expand 

SaaS Business Areas Including Ticket Vending Machines

 

Moon Chan-jong, CEO of STtraffic(Provided by STtraffic)

 

 

STraffic, Planting Smart Transportation in Major Cities Worldwide

The New York City Transit Authority (MTA), which operates 472 stations and transports about 5 million passengers daily, suffers an annual loss of 940 billion won( $0.7 Billion, due to fare evasion. Preventing nearly 1 trillion won in annual leakage is the agency's top priority. Other U.S. cities like Los Angeles, Washington, and San Francisco face similar issues. The combined annual loss due to fare evasion for the top 10 U.S. transit agencies amounts to 1.2 trillion won( $ 0.84Billion ).

A domestic company that these cities, which have declared war on fare evasion, are sending SOS signals to is STtraffic, headquartered in Pangyo, Seongnam, Gyeonggi Province, Korea. STtraffic, a smart transportation solution company, started as a team within Samsung Electronics in 1991, transferred to Samsung SDS in 1998, and was spun off in 2013. STtraffic has entered the U.S. smart transportation market, which even large corporations couldn't penetrate, solving the problems they were struggling with.

 

Fare Evasion Losses for the Top 10 U.S. Transit Agencies Based on Daily Passenger Numbers in 2023(Source: Agency Compilation)

 

◇ Fare Evasion Not Solved Despite Various Measures

 

Major U.S. cities are suffering significant financial losses due to fare evasion in public transportation. As of 2023, the total loss due to fare evasion for the top 10 U.S. transit agencies based on daily passenger numbers amounts to 1.2 trillion won( $ 0.84Billion ). The New York City Transit Authority, the largest public transportation agency, transports about 5 million passengers daily and suffers an annual loss of about 940 billion won. This is 9400 times the fare evasion loss of the Seoul Metropolitan Subway Corporation. The Seoul Metropolitan Subway Corporation operates 275 stations, with about 7.2 million daily passengers, and the annual loss due to fare evasion is estimated at about 150 million won. The New York City Transit Authority has twice the number of stations as the Seoul Metropolitan Subway Corporation, but less than one-tenth of the daily passengers, yet the fare evasion loss is incomparable.

To solve this problem, U.S. public transportation agencies are accelerating the adoption of smart technology. Measures to prevent fare evasion include improving fare payment gates and introducing advanced technologies such as AI-based surveillance systems. The introduction of smart technology can bring effects beyond simply preventing fare evasion. AI-based surveillance systems can analyze passenger flow in real-time to alleviate congestion and prevent safety accidents. They can also provide real-time operation information, optimal route guidance, and mobile payment services to passengers through smartphone apps. They can be used to build customized guidance systems for transportation-disadvantaged individuals.

Meanwhile, the U.S. government passed the Infrastructure Investment and Jobs Act (IIJA), planning to invest about 1.2 trillion dollars (about 1,680 trillion won) in transportation infrastructure over the next five years. This investment will be used to improve various transportation infrastructures such as roads, railways, public transportation, and airports, and to introduce technology and improve systems to solve fare evasion problems.

 

Automatic Fare Gates Installed by STtraffic at West Oakland Station Operated by BART in San Francisco(Provided by STtraffic)

 

◇ Smart Transportation Technology Demonstrated in Washington... 70% Reduction in Fare Evasion

STtraffic, a company that major U.S. cities are paying attention to, is an AFC (Automatic Fare Collection) company. STtraffic installed automatic fare gates to prevent fare evasion at the Washington Metropolitan Area Transit Authority (WMATA) in Washington, DC, achieving a 70% reduction in fare evasion. The automatic fare gates installed by the company are also designed to allow safer passage for passengers with disabilities, bicycles, and strollers. Having proven its competitiveness in Washington, STtraffic has also signed contracts for automatic fare gates with BART in San Francisco and LA Metro. Washington replaced all 1400 gates at its 98 stations with STtraffic's fare evasion prevention gates, and 800 gates are being installed in San Francisco. In LA, 18 gates were delivered to the LA International Airport Transit Center by last month, and 21 additional gates are planned to be installed at three stations on the extension line scheduled to open next year.

Building a good image in the automatic fare gate business, STtraffic is also expanding its supply range to ticket vending machines (TVMs). The company is promoting the supply of TVMs to the Washington Transit Authority and is seeking business expansion to San Francisco and LA.

Notably, the transit agencies that have done business with STtraffic give good evaluations to other agencies, resulting in customers coming to them first. The news of reduced fare evasion and crime rates within stations achieved in Washington, DC, and San Francisco led to STtraffic being selected as the preferred negotiation partner for the automatic fare gate replacement project to reduce fare evasion in LA Metro in October. The U.S. AFC market includes large companies like Cubic and Conduent. STtraffic competed with these companies and won contracts. The fact that U.S. demand sources, known for their strict quality standards, chose a Korean company over domestic companies with accumulated transaction experience is due to STtraffic's strengths that U.S. companies do not have. STtraffic particularly entered the U.S. during the COVID-19 pandemic, established local manufacturing facilities, and conducted business stably, building trust with customers. This is the result of the overseas business experience and corporate systems accumulated through Samsung Electronics and Samsung SDS.

 

STtraffic Representatives Receiving Performance Verification for Subway Automatic Fare Gates from the New York City Transit Authority(Provided by STtraffic)

 

◇ Capturing LA and Heading to New York, the Largest Public Transportation City in the U.S.

LA Metro is accelerating infrastructure improvements to enhance city accessibility ahead of major international events such as the 2026 FIFA World Cup, the 2027 Super Bowl, and the 2028 Summer Olympics. STtraffic plans to confirm its strengths through the pilot project and use this as a basis to secure the entire 1200 gate replacement project.

The automatic fare gates installed in LA Metro are designed with a higher structure than before to increase the effect of reducing fare evasion. Additionally, security will be enhanced by adding wing-type doors to the gates, and the 'Tap to Exit' system will be implemented to allow passengers to pass through more conveniently.

Winning the LA Metro pilot project is also significant as it has paved the way for entry into the New York City Transit Authority, the largest public transportation operator in the U.S. The New York City Transit Authority operates 5025 automatic fare gates at 472 stations. This is twice the size of the Seoul Metropolitan Subway Corporation. New York is incomparable to other U.S. cities in terms of the number of stations, daily passengers, and revenue. Washington, DC, the second-largest city by daily passenger numbers, has 98 stations and 700,000 daily passengers, less than one-fifth of New York.

STtraffic is currently undergoing pre-qualification screening for its products with the New York City Transit Authority. After submitting proposals and undergoing screening, the agency's approval was obtained, and product functionality tests were conducted. New York City Transit Authority officials visited STtraffic America for on-site inspections. Subsequently, compatibility and performance tests with the card payment and fare collection systems installed in New York City transit facilities will be conducted, followed by several months of testing with automatic fare gates installed in actual stations.

 

Automatic Fare Gates Installed by STtraffic in LA Metro's Local Lab for Technology Verification(Provided by STtraffic)

 

An STtraffic representative stated, "New York City has 472 stations and over 5000 automatic fare gates, so it is expected that the gate replacement project will be divided among 2-3 companies," adding, "We expect good results based on our experience in Washington, San Francisco, and LA."

Supplying equipment to New York would make STtraffic a supplier to 4 out of the top 6 U.S. transit agencies by daily passenger numbers. This is an achievement that the entire domestic IT industry has not been able to achieve. Particularly, as fare evasion prevention is a major challenge for the New York City Transit Authority, STtraffic is expected to have an advantage. The plan is to supply safe and accessible automatic fare gates that meet New York's requirements and create a long-term contract structure. The company is also participating in the bid for emergency exits within the New York City subway and is awaiting the results.

Moon Chan-jong, CEO of STtraffic, stated, "The contract with the New York City Transit Authority will lay the foundation for further enhancing our recognition and credibility in the United States," adding, "To meet the requirements of the New York City Transit Authority, we need to develop innovative solutions, which will also serve as an opportunity to upgrade our technological capabilities."

 

STtraffic's swing door barrier-type automatic fare collection gates supplied to the U.S. STtraffic provided.

 

"Taking Responsibility for All Aspects of Station Automation"

STtraffic plans to expand its business beyond automatic fare collection gates and ticket vending machines, which are the core of its station equipment business, to include fare evasion prevention solutions and payment systems. The company aims to establish itself as a fare evasion stopper payment solution provider. Ultimately, STtraffic plans to become a total solution provider in the field of station automation and a service-oriented software (SaaS) company that offers various solutions as cloud services. Additionally, the company intends to strengthen its transportation solutions using artificial intelligence (AI) and cloud services, and expand into urban air mobility (UAM) and integrated mobility services (MaaS). STtraffic is particularly determined to solidify its position in the U.S. market and establish a strong presence in the global market. The company predicts that orders from the U.S. market will increase by 10-20% annually.

CEO Moon Chan-jong stated, "We aim to establish ourselves as a leading player in the global AFC market based on our achievements in the U.S.," adding, "Entering the U.S. market is a crucial turning point for the company's continuous growth and global market expansion."

 

Reporter Ahn Kyung-ae naturean@dt.co.kr