Open Loop Has Limitations for Riders and Transit Agencies, Says French Closed-Loop Tech Supplier

Users of open-loop payments in France are mainly tourists and occasional riders paying for single tickets–not the transit agencies’ regular customers–the head of a company that implements closed-loop mobile NFC ticketing in France, told Mobility Payments.

Louis Brosse, CEO of Paris-based Wizway Solutions, contended that while there is strong interest in open-loop payments in France, it has its limitations both for transit agencies and customers.

As Mobility Payments has reported, a growing number of municipal transit agencies in France–now numbering more than 30–are accepting contactless debit and credit cards and open-loop card credentials in NFC wallets, or plan to do so. These consist almost entirely of small and mid-tier cities and does not yet include the country’s capital and by far its largest city, Paris.

On the other hand, while fewer cities have enabled customers to “emulate” their closed-loop cards or tickets and passes in NFC phones, that list does include Paris. And closed-loop NFC ticketing will support a range of fares, including discounts, noted Brosse.

‘Mainly for Tourists’
“Open payment is mainly for tourists and occasional riders using mainly physical payment cards and traveling with full-fare single tickets, not using nor downloading apps,” he said. “The customer experience is basically a payment experience, which retains…some simple fare structures.”

On the other hand, “mobile closed-loop ticketing is mainly dedicated to more regular customers, using all types of fares, including concessionary fares, which represent a large share of usage,” he continued.

The ticket types include daily, weekly and monthly passes, which are loaded onto the French closed-loop cards or digitized–“dematerialized,” as the French put it–in NFC-enabled smartphones.

Backers of open-loop payments, however, have noted that many transit agencies globally are enabling customers to benefit from daily and weekly, even monthly fare breaks, while not requiring them to prepay for passes. They do this by offering fare capping and pay-as-you-go payments. Customers mostly reach the caps when they hit a certain fare amount, not by accumulating a certain number of tickets.

For example, Transport for London’s open-loop service has offered riders daily and weekly fare capping for riders tapping EMV payments cards and NFC credentials for years. And the agency ensures that the amounts of the caps are no higher than what the customers would pay if they had bought daily or weekly passes.

Rome’s major transit operator, ATAC, enables users to tap their contactless credit or debit cards to ride with monthly passes, though this is not a pay-as-you-go cap. Customers instead have to prepay the monthly passes with the same EMV card they use to tap for rides.

Open-loop backers also say there are ways to support concessionary discounts with open-loop cards, though the technology is in its early stages.

Transit agency Storstockholms Lokaltrafik, or SL, in Stockholm, said it is offering discounts for seniors, students and youth. It requires customers to register their contactless debit cards, authenticate themselves to their banks and formally request the discounts from the agency. The discount application, if approved, takes one day to go into effect. The agency applies the discounts in the back office. But the discounts are only available on single tickets, the only fare type that contactless EMV payments cover.

And at least one agency in California in the U.S. is experimenting with support for senior discounts as part of the state’s Cal-ITP open-loop procurement program.

Growing Use
As Mobility Payments reported in February, Île-de-France Mobilités, the large transit authority serving Paris and the surrounding region, confirmed that it would make closed-loop digital tickets and passes available on most Android phones this summer and with Apple Pay by late next year. That is similar to creating a virtual version of its closed-loop Navigo card for both Android and iOS phones. Digital ticketing was already available for certain high-end Samsung phones.

The Paris transit authority uses Calypso-based Navigo cards for electronic payments on the Paris Metro, bus, tram and suburban trains.

Wizway, which was founded in late 2015 by large Paris transit operators RATP and SNCF, along with telco Orange and smart card maker Gemalto, now part of Thales, has worked on one or more of these Paris projects.

Brosse said transit networks serving such sizable French cities as Lyon, Lille Strasbourg, Toulouse and Nice are also offering mobile NFC ticketing on Android smartphones. The ticketing uses Calypso closed-loop technology.

Wizway worked with France-based Paragon ID on the projects in Toulouse and Nice, which are among those that use host-card emulation technology to store the virtual contactless tickets and passes in Android phones. Another technology supplier implemented the mobile NFC ticketing in Lyon, France’s third largest city.

Brosse, speaking at the Transport-Ticketing Global conference in London late last month, noted that many more transit networks globally support closed-loop virtual cards with Apple Pay and other Pays wallets, such as Google Pay and Samsung Pay, or in the agencies’ own Android apps. They include, in Asia Pacific: Tokyo, Hong Kong, Beijing, Shanghai, Taipei and Melbourne; in the U.S.: Las Vegas, Portland, Washington, D.C., and Los Angeles; and in Europe and Middle East: Moscow, West Midlands, UK, and those in France.

With officials, especially in Europe, seeking to break Apple’s lock on its NFC secure elements in its smartphones and smartwatches, the list of cities supporting virtual transit cards or digital closed-loop tickets could grow substantially in the future.

In France, both frequent and occasional riders use the NFC mobile ticketing implemented by Wizway, with a total of 1 million downloads to date. He said 3 million trips were paid for with the NFC digital ticketing across nine or more networks in France in the second quarter of 2022.

While the trip numbers are still relatively small, they are growing by around 30% per quarter, according to Brosse.

As far as the percentage of total trips paid for with NFC mobile ticketing, Brosse only released a figure for one transit network, which he didn’t name. That percentage is 15%. The percentages of the others are presumably lower.

There is strong room for growth,” he said he believes. “Some fares are not yet available on mobile and, most important, not all mobile phones are compatible on the field. Not yet.”

French transit networks, including in Paris, also allow customers to buy tickets on their NFC phones and load them to physical contactless closed-loop cards by tapping the cards on the backs of the phones. This accounts for more transactions than directly tapping NFC phones on transit terminals to pay with digital tickets.  

Affordable Add-Ons
Brosse sees the large number of open-loop projects in France as the result of affordable upgrades to the payments infrastructure by city transit agencies.

“There is definitely a strong interest for open payment in France, especially on small or medium-sized networks, where the cost of such projects by adding a limited number of compatible readers is more acceptable than replacing or updating the whole existing infrastructure of large transit agencies,” he said.

“But there is also a strong interest for closed-loop contactless ticketing on mobile,” he added. “Open-loop payments and closed-loop mobile ticketing, both involving NFC, are very complementary. We see more and more agencies wishing to provide both to their riders.”

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