Open-Loop Contactless Payment Systems Keep Transit Agencies, Riders Running Smoothly

Contactless payment adoption skyrocketed in early 2020 as consumers turned to technology to address in-person restrictions and health concerns. Now, nearly 60% of global consumers prefer contactless methods over magnetic-strip cards, cash or PIN and chip-enabled cards.

As workers and students return to hybrid or fully on-premise work models, they expect their payment preferences to carry over to their daily commutes. Many transportation professionals have reacted accordingly, adopting new and innovative payments technology to reduce fares and bring riders back to public transit vessels.

The obvious next step for transit authorities looking to stay ahead of the curve is to enable open-loop contactless payments, a system that allows riders to use any payment — card, mobile wallet or wearable — even if it is not part of their practices. Still, 17% of transit firms remain reliant on bespoke systems, which are often problematic because they can be slower and less efficient than modernized ones, and their software is typically more difficult to update due to its unique features. The volume of open-loop EMV cards in ticketing is anticipated to increase from 24.8 million to 136.9 million globally by 2025, a clear indicator that consumer behavior is still evolving.

In the Transit Payments Report: How Contactless And Digital Wallet Options Are Changing The Way Commuters Pay, PYMNTS examines how transit officials can seamlessly incorporate new payments technology without overwhelming riders and employees. It also discusses how open-looped contactless payments can reduce costs for riders and cater to their safety concerns as they slowly return to the rails.

Around the Transit Payments Space

The Metropolitan Transit Authority (MTA) will roll out a four-month pilot program of their new fare collection method beginning March 1. New York City riders will now be able to use the tap-and-pay One Metro New York (OMNY) system to take advantage of discounted fares normally afforded to riders who paid upfront costs for weekly or monthly passes. Riders will now be able to pay as they go, with fares capped at $33 per week, after which point rides become unlimited. The forthcoming policy change is one part of an initiative to bring travelers back to public transit venues.

Similar trends are hitting the rails internationally. Railway stations in the United Kingdom are ramping up their contactless payment technology for their health- and safety-conscious passengers. Their Integrated Railway Plan will enable travelers to use touchless technology via debit or credit cards at more than 700 railway stations through the North and Midlands. The new technology will be slowly implemented over the following three years and include tram and bus networks, according to the U.K. government. The final goal is to eliminate ticketing queues and fare offices while simplifying fare pricing.

For more on these and other stories, visit the Report’s News & Trends.

Dallas Area Rapid Transit on the Benefits of Contactless Payments for Commuters, Transit Employees

Remote work and health concerns led to a staggering drop in ridership for public transit authorities across the U.S. As employees return to work and pandemic fears subside, transportation professionals are using technology to cajole travelers back to the tracks. Nicole Fontayne-Bardowell, interim chief financial officer at Dallas Area Rapid Transit (DART), said commuters are beginning to see the benefits of mobile and contactless payment options and are using them at a higher frequency to fund their rides.

To learn more about how contactless payments are reducing fares and enabling riders to pay-as-they-go, visit the Report’s Feature Story.

Deep Dive: Open-Loop Contactless Payments Are the Future of Public Transit Fares

Transit authorities historically have relied on “closed-loop” payments to collect travelers’ ride fares. The pandemic altered consumers’ payment expectations, however, and now a growing number of transit authorities are reacting by enabling “open-loop” capabilities. In fact, 92% of transportation firms plan to incorporate touchless payment and ticketing options to bring riders back post-pandemic in hopes of reducing fares and encouraging riders to resume their daily commutes.

To learn more about how account-based ticketing is authorizing riders to make fare payments via digital wallets, smartphones and wearables, visit the Report’s Deep Dive.

About the Report

The Transit Payments Report: How Contactless And Digital Wallet Options Are Changing The Way Commuters Pay, a PYMNTS and American Express collaboration, offers coverage of the most recent news and trends regarding advancements in digital payments strategies for transportation authorities.