So, You want to be an AFCS Concessionaire in the Philippines?

Before you let your executives sign anything, take them to one of the busiest train stations in Manila. EDSA North would be a good choice. Go on a Monday morning at 5 am or on Friday after 7 pm, preferably during the rainy season. Let them observe the throng of humanity desperately trying to get home or to work. Make them queue first to buy a transit card, load it at a ticket kiosk and then use it. On the way back they should use a QRT code or a payment card.

After that, if they still have the will to live, get them to travel by bus, Jeepney and tricycle. There are many ways to enhance the experience. For instance, you could take a provincial bus without air condition for a couple of hours.

If they still think that they can develop, install and operate a new AFCS system and migrate the existing one, within one year, then you either work for Elon Musk or your leadership team is not easily scared by anything.

In other words, check out the local conditions before making any commitments.

If you have to agree to absurdly detailed performance standards, ensure that all the preconditions and obligations of other players in the system are listed as well. For instance, you cannot agree to some frequency of data upload when somebody else has control of the communication link with no obligation to maintain an uptime that matches yours.

Do not accept a specific performance requirement without a detailed description of how it will be measured and in what format it will be reported.

A simple example would be the time it takes for an EMV card ticket transaction to complete. Here you have to consider that you have no control over the time the card or mobile phone will use up. So you may want to specify that only the time spent on the validator side will count.

Then there is the question whether every single transaction must meet the requirement or whether you can average the processing time over a certain number of transactions or a certain time period.

In fact, all timing, frequency and accuracy requirements should have a range of acceptable values and should be measured as an average over a certain period of time. Without this, you will suffer because of a single botched upload, even so everything worked fine 99.9% of the time. The grantor will seek to justify their existence by spending 90% of their time looking for single, inconsequential exceptions.

As much as possible, remove small scale performance standards, especially those that are invisible to the end customers, the passenger and the transport operator. For example, if you want the passenger to see the ticketing transaction in their account within a certain period of time, it should not matter how fast and how often you upload data, as long as the passenger gets the transaction on time.

Make sure the concession does not limit your ability to innovate, even if it is through trial and error. Let’s say you have the idea that QR ticket data can be transferred as easily via NFC as via a camera and image recognition. If you find a transport operator willing to do a trial with you, neither the grantor nor other transport operators should have a veto in this.

Insist on transparency and openness. Starting with the concession agreement, everything should be freely available in a place that is not controlled by the grantor. All the data you report to the grantor should also be available at the exact the same time on a public website. In fact, what is wrong with the government downloading the data from the same place as the public in general?

Do you know the counterparts in your legal agreements? Is it the AFCS Scheme Provider, the government, the transit operator (or some holding/operating company), or is it all of them in some convoluted single concession agreement?

The concession agreement should separate the various functions and counter-parties. Resist any intricate constructions that try to anticipate future participants in the AFCS. Such things should be left to the scheme rules, which should be available at the time you sign the concession.

Who actually owns any of the parts of the system. For instance, to whom will you hand over the automated gates of a new station and who will sign the maintenance contract and pay for your services? You could end up handing over the gates to the transit operator, agree to the maintenance standards in some obscure part of the concession agreement with the DOTr and nobody who is clearly on the hook for your service fees.

If your concession agreement reaches a couple of hundred pages, you might as well not have an agreement at all.

Communication is a tricky business, especially when different cultures are involved.

Without a doubt, the concession agreement will include many reports and performance standards that are checked by the government. The problem is, do you have any recourse if the government takes your reports but does not give you a definitive answer whether you have met your KPIs?

The same problem may arise when you have to deliver certain documentation, seek clarification or request permission to do something.

Nothing will solve this problem entirely, but you could try the following:

Insist on dealing with government employees who have the authority to make decision. Most government staff has no authority whatsoever and listening to them is as valuable as asking your grandma for her opinion.

Never ever assume that you can use your position as a concessionaire to generate revenue in other areas. If anybody suggests that you should provide the AFCS services for free or below cost, because you can make money with "float" or retail payments or some other outlandish idea - run!

If you are looking at this from the position of an e-wallet or a bank or a payment system provider, you may think that you can leverage the AFCS functionality to bind your customers to your product more tightly, remember that the PAFCS is supposed to be an interoperable system that allows access to new issuers very easily. Your competition will watch you bleed money building the system and then jump on the bandwagon for a comparatively small cost.

Remember that there are only two sources of revenue in an AFCS system: ticket sales and government subsidies. That means any increase in your own revenue will be linked to an increase in ridership and increases in ticket prices. If the concession agreement predicts ridership growth or promises ticket price increases in the future, assume it is not going to happen. Search the Internet. There are good examples of concessionaires who had to fight for contractually agreed price changes.

Be conservative in your estimates of future passengers numbers and fare collection transactions. Just have a look when the MRT-7 concession was granted and where the project is now.

There is no scenario that I can see in which a foreign company can become the concessionaire for the Philippines AFCS without partnering with a Filipino company.

You need somebody who can navigate the many pitfalls of dealing with the government. Public transport and fare collection are highly visible activities that touch the life of many Filipinos. It is therefore not free of politics. Do a google search on price increase of beep cards a couple of years ago to see what I mean.

The problem will be to structure a deal that doesn’t leave the local company with all the risk of such a high profile concession while the foreign company stays in the background playing the innocent supplier.

The local company needs the backing of some beefy local business interest. I want to continue living in the Philippines, so I will be no more specific on that topic. Took me long enough to come up with a euphemism for what I mean.

The best for all parties would be to get the foreign company to have or open a local branch and enter into a JV with the local partner. God only knows what tax and legal implications that would create, so I’ll leave it at that.

A local partner who does not have the muscle and influence to weather dry or stormy periods during the concession period will drag you with them when they go down.

The end of the concession may seem very far in the future, but you, or your successors, will be glad if you think through it now. What happens at the end of your relationship with the Grantor? You do not want this become a messy divorce.

Ambiguous and open-ended statements like "The concessionaire will work with …​ to hand over …​" will cost you dearly in 2037. Be very specific what particular items you must hand over, in what form you hand them over and over what time frame you should do it.

For instance, do not just say that you will "train the staff of the new concessionaire", say that you will "provide a training manual and do three one-day training sessions over a period of one month to staff of the counter-party’s choosing. Further training will be provided at the discretion of the concessionaire and charged at …​ per hour."

“Have you thought of an ending? Yes, several, and all are dark and unpleasant." (J.R.R. Tolkien, The Fellowship of the Ring)

(1) G. Lopez, “GCash, Visa, Mastercard eye PH fare system concession,” Apr. 2026, Accessed: Apr. 30, 2026. [Online]. Available: https://business.inquirer.net/584884/gcash-visa-mastercard-eye-ph-fare-system-concession.

(2) J. I. D. Tabile, “DoTr eyes to award automated fare collection system project this year,” BusinessWorld Online, May 2026, Accessed: May 24, 2026. [Online]. Available: https://www.bworldonline.com/top-stories/2026/05/13/749166/dotr-eyes-to-award-automated-fare-collection-system-project-this-year/.

OpenClipart, “Man giving advice.” https://freesvg.org/man-giving-advice , May 2018, Accessed: May 24, 2026. [Online].