So, there will be linkage!
Readers who’ve been at this blog a few times will recognize “A Few Remarks” as an intentional understatement.
https://www.mastercard.com/gateway/expertise/insights/closed-open-loop-transit-payments.htmlThis is a genially written article describing contactless public transit payment systems and the difference between The Before Times of Transit Payments and the two major categories now: closed loop (Orca Card and similar, where you have to set up a card — can be virtual, can be in an app / in a wallet / on your phone — and you manage balance through that) and open loop (OMNY’s tap to ride and similar). (I’m trying to stick to just one example of each type, and ones that I and/or my readers are likely to have experienced or talked to someone who has experienced. Yesterday’s post included a partial enumeration of systems around the world that I found when I went looking for them.)
The opening of the article is profoundly relatable for me, in that the inconvenient version presented first is “normal” for me over decades of riding public transit while traveling, and the second was my revelatory experience of OMNY a few weeks ago. The balance of the article covers what we discussed on FF last night: closed loop systems like ORCA, especially if they let you do everything on the phone, are an improvement over making you use a kiosk. I was happy to set up the app for our local commuter rail and use it to buy train tickets when I took the train to TD Garden for a concert. I am completely fine using the Amtrak website and app to buy Acela tickets ahead of time, choose seats, etc. Honestly, I don’t think I’d be comfortable planning plane travel and expecting to tap to pay! Weird! (I wonder if it exists? I mean, obviously, the major Tap to Pay efforts involving planes are for buying snacks or alcoholic beverages or whatever inflight.) I do understand — and value! — that more airlines are letting you pay for your tickets using Other Than Giving Them the Credit Card Information (Various Pay systems, but also PayPal, Venmo, etc.). But Open Loop systems mean that you don’t have to set up a card to traverse a city or a country as part of a longer trip. Back In the Day, you didn’t need a different system for getting a taxi everywhere, and the reluctance of the taxi industry to adopt a universal standard led to our world of Uber and Lyft. You don’t need a different Uber for every state / city / country.
Tourist and business travel destinations like NYC, Las Vegas, and similar work really hard to try to get travelers to use public transit instead of renting a car or taking a taxi / Uber / Lyft. Congestion is real and roads are expensive. Convincing commuters is one set of skills; convincing travelers is a different problem. Open Pay conceals a fair amount of complexity behind the simplicity of buy-a-ride-like-you-would-a-coffee. (To be fair, buying a coffee _also_ has a closed loop option in many cases, but again, you don’t need a different Dunkin or Starbucks app in every city you visit.) Complexity exists in several forms: discounts associated with under an age or over an age, paying for more than one person, and pay-at-start vs pay-at-end, and whether payment requires checking in, or checking in and checking out (I suppose there’s a transit system that is only checking out, but I haven’t found it yet).
OMNY supports passback (pay for second, third, etc. person using the same card or device) only after first use. Most systems do NOT support passbacks in any form. If you want the kid or senior or some other discount, you usually need to register your card or device in an account that validates your access to that discount. But the checking in vs checking in and checking out is deeply embedded in the idea of using public transit in a system and is pretty mind-boggling when first encountered. In systems where you check in, do your thing (including potentially multiple transfers) and then check out, and checking out is where you are charged for all those legs, errors can accumulate for a variety of reasons (system failures, user error, etc.), and recourse is generally by editing the route charge in an app. I just don’t know what to think of any of that.
At least one system addresses the kid issue by just letting kids ride free, altho I have no idea how that works, altho it looks like it’s mostly buses so presumably just waving them through?
Discounting schemes actually can become more flexible, and align very well with regional incentives to reduce use of personal vehicles. OMNY and many other systems charge less per trip to use tap to pay, and cap total fare over a period of time. This approach helps convert commuters, occasional users who live in the area, and people who are traveling in the area for work or leisure. Both Google Maps and Apple are working to integrate up to the minute (second?) arrival times for public transit and include that in their itinerary recommendations. THIS IS CRUCIAL! No amount of discounting is going to convince me to use public transit when I’m not sure I can actually get through the entire journey successfully (with an acceptable amount of walking and arriving in an acceptable time frame).
I have not yet seen any discussion of how EMV payments become viable for public transit as a result of reduction in interchange fees — still waiting to see that go by. It’s clear that a lot of systems, at least in the 2021 era, were very concerned with consolidated daily trips into a single charge at end of day. Judging by my experience of OMNY, at least when using Apple Pay, there is less concern, or they are relying upon the *Pay services to do the consolidation for them. For a very long time in the US, credit cards and cash co-existed, but legislation around debit card transaction fee charges (and interchange fees in general) tipped things pretty hard and we now live in a largely cash-free environment. While EMV works best with realtime internet access, it kinda worked in a batch version, but was subject to certain types of fraud. With internet access much more consistently and broadly available, it’s easier to rely on it for public transit payment purposes.
Germany has this odd closed system and you can buy a Deutschland Ticket or a 49E ticket.
https://handbookgermany.de/en/mobility#
It doesn’t work for intercity trains and buses but it does work for trams, in-city buses, subway, light rail, etc. They seem light on turnstiles and checking but if you are caught without a ticket more than once they really might prosecute you. Feels very German somehow. Everyone over 6 has to have their own ticket. It’s monthly, and you can cancel every month but it is a subscription. I just don’t get it, altho it is less weird than Swiss systems, which is also on brand.
ETA:
This article is a “white paper”, so less enjoyable as a read than the Mastercard one, and less Here’s How You Do Things than the Germany handbook. It includes a naming system for the different check in / check out schemes that I describe above: Known Fare (check in only), Accumulated (check in and check out), and a Pre-Purchase model (this is where you have discounted fares for people on social support, or kids or seniors who get a discount or to reflect the value of a pre-purchased pass, etc. And you have to use the same device to use as you did to acquire or registered on).
https://cms.uitp.org/wp/wp-content/uploads/2022/06/WhitePaper-OpenLoop-10June-online.pdfWording in this thing is at times unintentionally hilarious. For example, many real world systems warn about what the rider should do to avoid card clash.
“When a contactless terminal is correctly configured, it will ensure that it is impossible to charge two cards or more if multiple cards are presented. This process then ensures that only the card that the passenger intends to pay with is charged when presented to the terminal.”
Somehow, that just feels both blame-y and optimistic.
Similarly, the Accumulated Model gives me the heebies, because I have no idea what the charge at the end of the journey is going to be, and knowing that recourse is possible does not reassure me when it’s an unfamiliar system and I have no idea whether I will be able to figure out the recourse system or how seriously that place will take my request for redress, if I’m only passing through. And yet here is the description:
“Accumulating multiple journeys into one financial transaction helps reduce costs for payment processing and also offers the best customer experience through clarity of fare charges.”
Yeah. I doubt it. I mean, I believe the payment processing, sort of, altho maybe only sort of, depending on how often people seek recourse. And I really doubt it on the clarity of fare charges, given how much website space is devoted to explaining to people the importance of checking out, and how to fix things when you didn’t check out (or where you needed to check out was broken, and now you have some open-ended trip and possibly an awful charge associated with that).
Then there’s this bit of confusion:
“Processing of the Pre-purchase Model approach is in any case a totally different scenario in terms of through- put since the passenger needs to interact with the validation device or the bus driver to identify the desired fare product to purchase.”
I don’t know what’s going on here. I assumed the Pre-purchase model was as I mentioned above (discounted bus passes, senior discount, kid discount, etc.). But maybe not? ETA: From the GenFare sales pitch, I think this answers my questions: “ The only time the driver may need to press a button with open payment is for the approval of student, senior, or other discounted fares. ”
Here’s a bus centric sales pitch, focused on the costs, equipment and employee requirements of handling cash, and how tap-to-ride can reduce all that:
https://genfare.com/blog/open-payments-operational-benefits/It also mentions pandemic era logistics and cost pressures and provider collapses in the closed loop media space:
“The cost of smart cards rose considerably during the pandemic, when the demand was low, and several vendors shut their doors. The lead time on ordering cards also grew to months rather than weeks. With open payments, banked customers will no longer need to use dedicated fare media, so not only will you need to buy fewer cards, but your workers can also spend less administrative staff time distributing cards and performing customer service functions.”
GenFare white paper linked in that above piece:
https://genfare.com/wp-content/uploads/2023/08/GenPayPaymentProcessing.pdfThe GenFare white paper includes a detailed description of how tap-to-ride works with bus fares:
“When a cEMV bank card or mobile wallet (“the card”) is presented
to the card reader on a farebox or validator, the reader confirms
the card is authentic and checks it against a locally-stored “deny
list” of declined cards. If the card passes these tests, the rider is
allowed to board, even though the transaction hasn’t yet been
approved by the issuing bank.
2. Meanwhile, the reader encrypts sensitive cardholder data (card
number, expiration date, etc.) using an encryption key. The
encrypted transaction is then sent to Genfare Link®, Genfare’s
cloud-hosted central data system, which passes the encrypted
transaction to the payment processor. The processor uses
a matching encryption key to decrypt the data and send the
transaction request to the issuing bank for authorization. It also
tokenizes the transaction for tracking purposes in Genfare Link.
3. The issuing bank returns an accept or decline message to
the payment processor, which relays it to Genfare Link. If the
transaction is accepted, Genfare Link records the transaction in a
central account database. If the transaction is declined, Genfare
Link adds the card number to the deny list, which it broadcasts to
all fare collection devices every few minutes. Cards on the deny
list are rejected the next time they are presented. To remove a
card from the deny list, the cardholder must pay for rides obtained
using the denied card.”
That last bit is a little horrifying. On the one hand, you maybe rode but didn’t have the money tp pay. Making you catch up makes sense. But if there was an error, or if someone stole your device or whatever? Especially given that a lot of this stuff works without PIN or face or anything? Hmmmm. Presumably there is some onerous recourse out there. But yikes. OTOH, I can absolutely imagine using low or no-balance prepaid cards to ride being used as a scam around this whole thing, too.
https://www.kittelson.com/ideas/the-benefits-and-drawbacks-of-a-cashless-public-transit-system/This is a blast from the pre-covid past. Open Pay isn’t really described, and there’s a more explicit concern about inequity, and not everyone having smartphones.
In the course of this reading, I’ve learned about FitBit Pay (which is gone as of July 2024, rolled into Google Pay) and Garmin Pay. This is from Garmin about transit payments:
https://www.garmin.com/en-US/garminpay/transit/