Article Highlights

Key Takeaway:

Officials in Italy have reportedly denied an appeal by Italy-based fare-collection technology provider Pluservice and its partner, acquirer and processor Nexi, which had challenged a planned contract award to U.S.-based Conduent in Venice.

Key Data:

The contract is unconventional for open-loop projects and is expected to present a difficult business case for Conduent, which will be required to fund all hardware costs–including at least 1,700 certified validators for Venetian buses, trams, water buses and shuttles. It must also spend €500,000 for a communications campaign.

Organizations Mentioned:

AVM
Conduent
Pluservice
Elavon
Nexi

 

Officials in Italy have denied an appeal by Italy-based fare-collection technology provider Pluservice and its partner, acquirer and processor Nexi, which had challenged a planned contract award to U.S.-based Conduent in Venice.

Assuming Pluservice and Nexi don’t further appeal the ruling, which was reportedly made by a regional administrative court yesterday in Venice, transit agency AVM will award the five-year approximately €4 million (US$3.9 million) contract to Conduent to roll out open-loop payments in Venice under a concession agreement.

As Mobility Payments first reported in June, Conduent, working with acquirer Elavon, had achieved the best score in a three-way contest that also included France-based Flowbird. Mobility Payments also reported that the contract award was under appeal early last month, after Pluservice and Nexi came very close to beating out Conduent for the contract.

According to reports today in regional Italian publication Il Gazzettino, the difference between the “scores” of Conduent/Elavon and Pluservice/Nexi was less than 1%, with Conduent/Elavon reportedly receiving a score of 83,904 points, slightly above the Pluservice/Nexi score of 83,418 points. Flowbird received a score of 68,174.

Update: AVM’s head of institutional and customer relations confirmed the denial of the appeal to Mobility Payments. He said the scores “refer to an estimation of the tender’s object economic value” of the bids, though did not elaborate. He did not release the bid documents or the commission rates the winning vendors offered on the proposed contract. End update.

The contract is unconventional for open-loop projects and is expected to present a difficult business case for Conduent, which will be required to fund all hardware costs–including at least 1,700 certified validators for Venetian buses, trams, water buses and shuttles. It must also spend €500,000 for a communications campaign.

That’s in addition to the vendor providing a fare-calculation engine; integrating the EMV payments service with the existing electronic-ticketing system; and providing a “traveler’s portal,” where customers can consult their transaction history and possibly associate their contactless payment bank card with AVM’s Calypso-based closed-loop Unica card. The card stores storing tickets and passes.

To cover these expenses and potentially turn a profit, the concessionaire, which would be Conduent, would receive a commission on all open-loop revenue of a maximum of 3.5% the first year, though the initial rate could be negotiated downward, and the fee would likely be lower in subsequent years. The acquirer, which would be Elavon, would receive a maximum fee of 1% for domestic debit cards, not more than 3% for “non-consumer” domestic cards and up to 5.5% if a customer uses an international bank card.

The commission rates that Conduent and Elavon bid, which have not yet been released, apparently went into determining the total value of the five-year contract, which was reportedly set at just under €4.2 million.

Conduent handles its substantial European fare-collection business out of its head office for the region in France. Although Conduent’s Transportation business unit recently said it has 10 projects in Northern Italy, mainly with small to mid-tier transit agencies, the vendor has had some stumbles on past contracts, including one with the large transit operator in Milan, said sources.

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