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NFC TIMES Exclusive Insight – Another major U.S. transit agency has introduced a virtual closed-loop card for Apple Pay in September, with the Los Angeles County Metropolitan Transportation Authority, or Metro, announcing the move. It comes a couple of days after the Washington (D.C.) Metropolitan Area Transit Authority, or WMATA, announced it had put its SmarTrip closed-loop card on Apple’s NFC-enabled devices, as well.

Metro had confirmed plans for the virtual TAP card in July, but had disclosed it much earlier, nearly two years ago. The plans call for Los Angeles transit officials to also support Google Pay. The agency confirmed those plans Thursday. And a spokeswoman for WMATA in Washington, D.C. also confirmed to Mobility Payments’ sister publication, NFC Times plans to support Google Pay and perhaps in other NFC wallets. That support would come no later than the end of the year and likely sooner.

Transit officials noted that concerns about the Covid-19 pandemic influenced their decision to introduce mobile payments and enabling reloading of their cards in apps–in order to reduce interaction between customers and transit staff and vending machines.

Both transit agencies are putting development of their closed-loop fare cards ahead of any plans to also accept contactless EMV credit and debit cards or bank card credentials on NFC devices for fares.  

Metro’s virtual TAP card for Apple Pay will be very similar to the virtual SmarTrip card WMATA announced earlier this week. Both will enable users to add the virtual cards and reload them with value in both the Apple Wallet and in a separate agency app for iOS devices. The virtual cards can only be used in the Apple Wallet.  

Users can also buy transit passes in the TAP app and SmarTrip app and these will also be loaded onto the virtual cards in Apple’s Wallet. In addition, for Metro, users can buy passes to the agency’s Metro Bike Share program. The bike share readers can’t currently accept passes from NFC phones or watches yet.  

The TAP app also enables users to manage multiple cards in their TAP accounts, including reduced fare cards; conduct trip planning and view transaction history. The SmarTrip app has some of these features, as well.  

U.S.-based automated fare collection vendor Cubic Transportation Systems, which developed and maintains the closed-loop card programs in both Los Angeles and Washington, D.C., and which is working on a revamp of the TAP card program, implemented the mobile apps for both agencies. Metro and WMATA worked with Apple mainly to enable the virtual cards, which are stored on embedded chips in the NFC-enabled iPhones and Apple Watches.   

Once on the devices, Metro customers can pay for rides or redeem passes on buses and light rail, as well as rides with 25 transit agencies in Los Angeles County that accept TAP. As with SmarTrip cards from WMATA and some other transit agencies globally, Apple has enabled the Express Transit feature for virtual TAP cards.  

It enables users to pay without unlocking or waking up their devices or authenticating themselves with Touch ID, Face ID or passcodes. They can even tap if their devices have only residue battery power. For the latter feature, they would need to be using the iPhone XS, XR and newer iPhones, which have the Power Reserve function. 

No Concrete Plans for Open Loop
Metro, the third largest transit authority in the U.S. last year in terms of ridership, most of it on buses, still appears to have no plans to support payments of fares with contactless EMV credit and debit cards or bank card credentials on NFC devices. That policy basically is unchanged from Metro’s position nearly two years ago, as Mobility Payments’ sister publication, NFC Times reportedthen. Less than two months ago, a Metro spokesman confirmed the agency’s position. 

“Open payment is a capability that will cost money to develop and includes parameters that make equity more difficult for our seniors, disabled, students and low-income riders,” he told NFC Times in July, referring to fare payments with contactless EMV bank cards. “We will continue to explore the need and will continue our dialogue with the various bank card companies to determine when and if we would move forward.”

That policy runs counter to what is considered a general trend for large transit agencies to move toward accepting contactless EMV payments, following high-profile launches of this technology in London and, more recently, New York City, among other places. But Los Angeles is not alone in snubbing open-loop payments, which is being strongly backed by such payments schemes and Visa and Mastercard, along with banks.   

Another top five U.S. transit authority, the Metropolitan Transportation Commission, or MTC, which serves nine counties in the San Francisco Bay Area, earlier decided against supporting open-loop fare payments, at least for the near-term. Instead, like Metro, it was also focusing on its closed-loop payments card, Clipper, which is undergoing a $400 million-plus revamp by Cubic. It plans to launch a virtual Clipper card for Google Pay and likely for Apple Pay, as well. And WMATA in Washington, D.C., while planning to introduce open-loop acceptance more than five years ago, cancelled the project.  

In fact, the first transit agency in California to introduce contactless EMV fare payments appears likely to be Monterey-Salinas Transit, a small bus operator that plans to test the technology for six months starting in September. The transit agency is getting much help from the California Department of Transportation and Visa to implement the project, which the department seems to think could demonstrate a “standardized payment method across different transit agencies.” That’s despite the fact the contactless EMV fare technology is already being used by several transit agencies of various sizes globally, although not by the two largest agencies in California, Metro and MTC. 

Some transit agencies are opting instead to promote and expand their closed-loop fare payment systems. The agencies balking at open-loop say the option is expensive and does not eliminate the need for maintaining their established separate closed-loop card systems for customers who have no bank cards or don’t want to use them for fares. In addition, it’s more difficult to support concessionary fares for senior citizens, students and disabled persons with open-loop cards.  

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