Italy’s Fourth Largest City Latest to Launch Open-Loop Service

_{(This premium article was originally published in July 2020. © Mobility Payments and Forthwrite Media.)}

Another of Italy’s major cities has launched open-loop fare collection, with Turin enabling customers to pay for rides on its one-line metro and certain bus routes by tapping their contactless EMV credit and debit cards, along with smartphones and smartwatches supporting NFC payments services. 

Turin, Italy’s fourth largest city, follows the country’s two largest cities, Rome, which launched open-loop payments last year; and Milan, which launched in 2018. In addition, Naples, Italy’s third largest city, and two smaller nearby cities, plan to launch the open-loop service later this year, according to plans announced last November, although it’s not certain to hit that deadline. But the Covid-19 pandemic, which hit Italy hard earlier this year, does not seem to have postponed plans by transit agencies. For example, Turin launched its rollout on schedule this month following an earlier pilot. 

The Italian cities are among several in Europe that see the benefit of giving customers the option to pay with their contactless bank cards and NFC wallets. That started with London, which fully rolled out its groundbreaking open-loop service in 2014. Since then, several other cities in the UK and Turkey have launched support along with agencies in Kiev, Moscow, Madrid and, late last month, Brussels, among others in Europe, North America and Asia Pacific. 

The cities are adopting the technology–with encouragement  banks and payments networks–as an option for riders. Most European cities, including those in Italy, have emerged from strict Covid-19 lockdowns. And the pandemic aftermath is expected to accelerate the already significant trend for transit agencies to implement open-loop fare collection. The agencies are keen to remove cash and limit interactions with agency staff, something that contactless and mobile payments helps them to do. Most agencies in Europe of any size already use proprietary contactless stored-value cards, but these require reloading, mostly done at vending machines and at ticket counters. This requires users to touch additional surfaces and interact with agency staff that some might consider risky.

Turin transit agency Gruppo Torinese Trasporti, or GTT,  launched its service on its 21-station metro and four routes of its buses. Other bus routes will be added later. Customers will be able to tap their Visa- and Mastercard-branded credit and debit cards and card credentials on NFC devices, such as smartphones and smartwatches supporting Apple Pay and Google Pay. The agency will add support for American Express contactless cards in coming weeks. UPDATE: A spokeswoman for SIA, which processes the open-loop transactions in Milan, Rome and now Turin, told NFC Times that other NFC wallets, including those that enable payments exclusively from smartwatches, such as Fitbit Pay and Garmin Pay, will also be able to be used to pay fares. “Customers can use any kind of device that allows (them) to virtualize a credit or a debit card,” she said. END UPDATE.

When riders tap their bank cards or NFC devices, they buy a single ticket for €1.70 (US$1.93). UPDATE: The service in Turin does not support daily fare capping yet, as the open-loop services in Rome and Milan do. Rome transit agency ATAC also offers what amounts to monthly fare capping, enabling customers to buy monthly passes on its website with a credit card and linking that credit card to the pass. They can then and use the card to pay fares for the month. The SIA spokeswoman said other cities are expected to support monthly contactless passes. END UPDATE.

AEP Ticketing Solutions is the electronic ticketing vendor for the Turin project, and Intesa Sanpaolo bank is likely the merchant acquirer. In addition to processing the open-loop fare payments in Milan, Rome and Turin, SIA also processes contactless fare transactions in Venice, along with what appears to be a pilot in Naples. UPDATE: In Milan, customers of transit agency ATM reportedly tapped open-loop cards for 11 million trips in 2019, as of October of that year. And Rome’s ATAC said it had enabled more than 2 million trips from customers tapping credit or debit cards or NFC wallets during the first five months since launching the service last September. Open-loop payments is mainly available for rides on metros in Milan and Rome. END UPDATE.

Outside of Europe, there are several rollouts of open-loop payments, as well, including in Sydney, Singapore, Guangzhou, Vancouver, Chicago, New York City and Portland, Ore., with more planned, including by smaller agencies.

Besides offering another “touch-free” option to users for payments, accepting open-loop contactless payments helps transit authorities and operators generally reduce their costs for handling cash and other expenses for running their closed-loop card programs. But even after launching open-loop fare collection, the agencies almost always have to continue to maintain the closed-loop card program, as well, for riders who do not have credit or debit cards or do not want to use them.  

Open-loop fare collection also offers more convenience to riders, who don’t have to top up closed-loop cards. And foreign visitors using the transit network usually can tap their own contactless credit and debit cards or NFC devices to ride, as long as the cards sport an international payments brand supported by the host transit agency. This allows them to avoid buying the local closed-loop card or paper tickets. 

But there are challenges to enabling contactless EMV payments of fares, as well, such as generally high costs to implement the technology, including installing certified POS terminals at gates and on board buses and building some type of back-office system to help manage the fare-payments service. 

In addition, riders tapping with credit and debit cards often don’t know the actual fares their cards will be charged until later, since unlike with retail purchases, transit fares are usually aggregated and processed at the end of the day. And agencies also have to warn their customers to avoid “card clash,” that is, unintentionally tapping more than one contactless card on the terminal. This forces the customers to take out the card or device they want to use to pay for the fare and tapping it against the reader, not their handbags or leather wallets, which might hold multiple cards. 

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