A microtransaction model based on blockchain technology to improve service levels in public transport sector in Sri Lanka

Ticketing mechanism in a public transportation system is a major factor which defines the service quality of the system. Current online payment systems (credit/debit cards, PayPal, etc.) are not compatible with micropayments because transaction processing companies need a minimum transaction amount to make the transaction profitable for them. Therefore, an acceptable micro-transaction model is required in the micropayments domain. In blockchain systems, a third-party intermediary is not facilitating the transactions. Therefore, transaction fees decrease drastically. Using consortium blockchain concept, these fees can be further minimized when proof of work is also handled by a set of approved entities. In this study, an Ethereum based micro-transaction model is proposed to be implemented within the ticketing system in Sri Lankan public transport sector. Bus tickets are programmed as Ethereum smart contracts to handle the payment distribution. Consortium blockchain concept is used in the blockchain-based model where there are regulated bodies as nodes such as the national transport commission to handle the proof of work. Digital currency and Quick Response (QR) codes are incorporated to identify and complete the transaction process. The methodology of this development-oriented research can be described under three major phases. In the first phase, interviews were carried out with relevant stakeholders to identify the process of the current system and its limitations. Also, a broad and extensive study of literature was done parallel to this. During the second phase, identified issues, limitations and downfalls were addressed by designing a novel architecture. In the final phase a prototype is being developed to demonstrate the architecture, In the final phase a prototype is being developed to demonstrate the architecture, then prototype validation and testing were done with simulated data and several key use cases in the domain. The preliminary results of the prototype model show signs of considerable improvement in the service level of the public transport ticketing process and a significant reduction of transaction fees.