Another article that almost passed me by. This was in Wednesday’s NZ Herald:
Telecom is hitching up to Auckland’s $110 million transport ticketing project by turning smartphones into wallets for use on buses, trains and ferries.
The company yesterday showed the technology in action at its testing laboratory in expectation of making it available late next year for payments to retailers as well as public transport.
Smartphones loaded with an electronic version of Auckland Transport’s new Hop card alongside a Westpac MasterCard and Telecom payment account were used to open replicas of passenger gates already installed at key railway stations, with electronic monitors showing credit balances.
I know that waving your phone in front of the smartcard reader is the way of the future, so it’s good that Auckland won’t be left behind on any of these developments. However, I’m also glad that Auckland Transport has got its priorities right and is making sure that the core system is in place as soon as possible, rather than tinkering around with add-on extras like linking into mobile phones:
But Auckland Transport says its priority is to ensure an updated version of the plastic Hop card is ready for travel on trains from October 28 before allowing a smartphone trial.
“We want to make sure the core system working the cards is 100 per cent ready to go before we open it up,” chief operating officer Greg Edmonds told the Herald.
It’s exactly a month until the new AT Hop Card becomes available for use on the rail system. Auckland Transport have also sorted out a good way of transitioning those who already have Snapper Hop Cards. This was explained at the September Board Meeting of AT: 
I still think it’s going to be pretty messy during the transition period – with two HOP cards in place – some being able to be used on some services but not others, some services not accepting HOP at all. And so on. But at least we’re seeing progress.
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Mr Anderson you are poking things with a stick with this post
Are the things dead, or smelly? If not…
Anyway, looking forward to finally getting a HOP card. Refused to get one from Snapper.
One problem I can foresee with this is that using a smartphone for this is that it will not be a single “wallet”
We already know from the IRD document that “Hop cash” or what ever it is called cannot be used for micro payments, therefore to do micro payments with your phone you will require a separate balance of “card cash” to be able to buy a drink and paper.
Thus you will have to have 2 balances on a single device ( not exactly an ideal solution) – will you be able to easily shift money between the balances? (Is it even possible to shift money off a hop card without a purchase??)
I guess it depends on the finer details which we don’t know yet. If you had your bank and HOP card linked together then why would you need a separate HOP balance?
Because “Hop money” is a pre paid account where you set up an auto-top up amount or manually add cash.
It is not designed as a conduit to go and fetch the cost of your ticket from your bank account each time you undertake a “hop money” transaction
Yes but I’m sure they could work something out with the banks/Telecom for some kind of shared wallet, alternatively it could just require an automatic top of to be set up so that when your card gets down to $10 it tops up for you (the system does have that capability already so it would just be a matter of enforcing if using your phone)
Nope, didn’t know that! What IRD document?
And even if it was, it can be changed.
35. A single HOP Card will be able to hold all three AIFS Products (pre-paid trips, period passes and stored value) simultaneously. The HOP Card will not be able to be used to purchase other goods or services.
http://www.ird.govt.nz/technical-tax/product-rulings/2012/product-ruling-2012-02.html
Product rulings 2012
Auckland Transport HOP Card
Applicant: Auckland Transport
Ruling Number: BR Prd 12/02
This product ruling applies to the sale of smartcard-based ticketing media by Auckland Transport for use on the Auckland public transport network to the public, and the loading of an amount of stored value, pre-paid trip or period pass to be used for travel on buses, trains or ferries, and the use of the card by a cardholder to undertake travel.
Ruling applies: 1 June 2012 to 1 June 2015
From the IRD document:
Now that is weird. I can understand passes and prepay tickets loaded onto the HOP card being subject to GST, but I’m struggling with the concept of the wallet part of card being subject to GST…
Think of it as a gift card that you can later redeem for transport goods and services,
You are being supplied a card with a value of x for future redemption, thus it a product/service being supplied to you and thus GST is payable at the sale (load) time)
– there are some cases where vouchers are GSTfree ( ie the GST is paid when you redeem them) but in reality it is just a timing argument about when the Govt gets its money, , ( now or later)
So theoretically, pre loading a visa card is the same – no?
Hang on. Does this mean that we pay GST when we load money on the account and then again when we use the account to pay for a service? If so, I won’t be using it. I will have a HOP card just for PT.
I’m sure there won’t be double dipping of GST – as an end user you will only pay GST once on the transaction. This will be more of an internal accounting / IRD payment rule that Thales / AT will need to apply. AT Hop probably differs from Visa in that the user is confined to spending on PT services. If AT had said that the card could be used for other purposes, presumably they could then keep the GST component of the topups until the user makes their journey. Wonder how much interest they lose because of that. Makes you wonder what rule applies to Snapper though, which can be used for other payments.
That IRD ruling is quite clear: no wallet functionality on a HOP card. At which point it ceases to behave like cash and becomes a pre-purchased voucher, and because it can only be used for pre-defined transport purchases there’s no possibility of GST double-dipping.
The ruling states that for the purposes of timing when GST is collected, it is deemed collected at the time of loading not the time of use.The reason IRD issues these rulings is so that there’s no question about when the GST must be returned. Because the value can sit on the card for longer than a single GST reporting period, if GST wasn’t collected until time of use the operator would be getting to use the unpaid GST for their own purposes, and the IRD doesn’t like it when businesses get to use GST as an interest-free cash loan.
If HOP could also be a wallet it would be a different situation, because the GST would then be returned by the retailer at the time of a purchase being made. This would also change the way the money on the card gets reported by the operators, because they could no longer treat it as a pre-payment. By issuing this ruling IRD have clarified what a HOP card is and how the operators must treat reload transactions.
What will be interesting is to see if the price using this is free. By that I mean the HOP cards will normally cost $10 which my understanding is kind of like a bond due to the cards being able to go into a negative balance to allow people to complete the journey they are on. With this they could surely have the details linked directly into a bank account to enable it to work and therefore the app itself could be free.
Only out-of-control capitalism would charge you to use an app that makes you spend money more easily…
An idea to make our existing activities more convenient….hmmm.
Only naive socialism would turn the good into bad, and then blame in on capitalism
Loading on visa is not buying a voucher.
You have effectively bought the right to travel, when you exercise that right is up to you. The goods and services in question (domestic transport services) are subject to GST, so the supplier is liable for GST upon payment (because payment is received in advance of issuing an invoice or making the supply).
Vouchers are GST-free when you don’t know whether redemption will be for a taxable (subject to GST – e.g. travel) or non-taxable item. Not sure its so relevant in NZ but in, say, Australia if you buy a $100 coles voucher, you don’t whether all the purchases will be subject to GST or not (e.g. fresh food). So the seller can only determine his GST liability on redemption. The same wouldapply if you put money on a Coles stored value card.
For GST they are called monetary (subject to GST on redemption) vs non-monetary (subject to GST when purchased).
That should have read monetary” or non-monetary “vouchers”
No Bryce, you aren’t paying twice.
The amount you have loaded on is the total GST-inclusive value of services you can purchase. As you use it, the GST-inclusive value of the service (the ticket price for each journey) will simply be deducted from the balance.
As Greenwelly says – you’ve just paid for the service up-front, that’s all.