Cities around the US are revolutionizing their public transportation systems to enhance urban mobility*, boost sustainability, and increase access for their residents. The key to this transformation is contactless payments – replacing tickets, prepaid cards, and other inefficient traditional payment methods in mass transit systems.

Historically, many transportation operators have maintained “closed loop”* payment systems – requiring riders to use a reloadable card to store funds and record transit activity. This approach to payments is limiting for both riders and operators – the cards typically can only be used in one transit system or mode, and transit agencies pay transaction fees each time a rider initiates a new trip.

Given these limitations, transportation agencies are increasingly adopting “open loop”* systems instead. This allows riders to use their preferred payment method – credit card, debit card, mobile device, or smart watch – to contactless pay for trips at the turnstile or vehicle interface. This technology creates the massive possibilities for enhanced urban mobility and flexibility – consider the benefits of adopting an open-loop transit system in your area:

Increased ridership. Public transportation is vital for connecting urban residents with services, education, healthcare, and more; in fact, the CDC and Johns Hopkins* have documented massive negative effects on public health for those who cannot access reliable transit in U.S. cities. That’s why transit operators must adopt innovations that boost access and ridership. Research from Visa* shows that transit agencies that adopt open-loop ticketing systems experience 6 – 10% increases in ridership in the following years.

Flexibility. Gone are the days of dedicated, reloadable transit cards, bus tokens, and paper bus passes. Open loop payments enable transit agencies to create fully digital ticketing systems and integrate solutions from multiple vendors. This could include capabilities to allow riders to seamlessly switch* from one type of transit to another (like from a light rail to a bus) or switch from one transit system to another (like from a city system to a county system) – creating a holistic commute experience from door to door.

Scalability. Upgrading a transportation system from existing fare-collection mechanisms may seem daunting – but it doesn’t have to be. Transit operators can add open-loop solutions incrementally, lowering upfront costs and scaling at the pace they need. With inexpensive hardware and straightforward implementation processes, agencies can build smart cities, connect less common transit modes, like cable car, trolleybus and ferryboat to larger transit hubs, and launch a seamless fare collection system.

Operational cost savings. Each time a rider boards public transportation, agencies incur transaction fees; that means riders who have to take multiple modes or make multiple trips daily end up costing operators in closed-loop systems. Open-loop acceptance takes away those costs, allowing transit agencies to consolidate multiple trips per rider each day and settle in one transaction. Research from Visa* confirms the operational advantages of moving the complexity of fare payments out of transit operations and into banking/clearinghouse institutions – ultimately reducing processing costs and decreasing financial risks for operators.

Actionable insights. Traditional closed-loop systems offer limited insight into how riders are moving around urban spaces and where/when they need transportation services. With open-loop technology, operators have nearly real-time data about transit activity levels and trends, which they can use to optimize routes*, frequency, and availability across multiple types of transit. In fact, Visa research* shows that nearly 70% of surveyed transit agencies cited improved access to data for system planning as a moderate or large benefit of contactless payment systems.

As transit agencies invest further in urban mobility, contactless payment innovations and open-loop systems can help accelerate the transformation. Contact us to learn more.

* By selecting this link, you will leave Elavon content and enter a third-party website. Elavon is not responsible for the content of, or products and services provided by this third party, nor does it guarantee the system availability or accuracy of information contained in the site. This website is not controlled by Elavon. Please note that the third-party website may have privacy and information security policies that differ from those of Elavon.

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