Article Highlights

Key Takeaway:

Transport for London is working on a system to tie discounts for seniors, students, disabled persons and other concessions to open-loop cards and devices. The big London transit authority could make the move after it introduces account-based ticketing in three to four years.

Key Data:

Transport for London runs the showcase open-loop payments service globally–with more than 60% of its trips paid for with contactless EMV cards or credentials in NFC wallets.

Organizations Mentioned:

Transport for London
SL (Stockholm)

Transport for London is working on a system to tie discounts for seniors, students, disabled persons and other concessions to open-loop cards and devices, the agency confirmed to Mobility Payments.

A spokesman for the London transit authority, however, said the development work was still in the “very early days.” He added that any introduction of the service would be available across the various transport modes that Transport for London oversees. In other words, the agency “would look to apply wherever the concession is valid on our (contactless) pay-as-you-go system.”

Supporting concessionary discounts with contactless debit and credit cards has been a challenge for transit agencies and this difficulty is one of the reasons that backers of closed-loop technology regularly give for agencies to stick with their own transit cards.

While perhaps a handful of transit agencies have introduced concessionary discounts for users of open-loop payments or are experimenting with it, Transport for London’s work on the service would be especially noteworthy. The agency runs the showcase open-loop payments service globally–with more than 60% of its trips paid for with contactless EMV cards or credentials in NFC wallets.

One reason supporting discounts with open-loop payments to date has been difficult for transit agencies is that it requires some sort of registration process for customers seeking the concessions. Open-loop payments users often wish to remain anonymous or don’t want to hassle with registration.

The discounts must be linked to open-loop cards or credentials in the back office, since it would be impractical, if not impossible, for bank-issued credit and debit cards to sport photos of users entitled to discounts or to store additional information on the cards’ smart card chips.

Many transit agencies, including Transport for London, issue separate closed-loop transit cards with user photos to customers eligible for concessionary fares. This identifies them to conductors or other staffers in case they need to verify that the concessionary card is valid. Transport for London uses its closed-loop Oyster card for this.

Observers say Transport for London could begin tying concessionary fares to open-loop payments after the agency launches its planned account-based ticketing system, which is expected around 2025. It could then associate the discounts or free travel in the back office, linked to a particular credit, debit or prepaid account or presumably to a card credential on an NFC device.

Transport for London offers discounts to a range of groups. In addition to seniors, students and disabled persons, that includes veterans, low-income persons, adolescents, even people serving apprenticeships.

The agency already enables customers to register their contactless EMV cards, just as they can register their Oyster cards. This lets users check their fares, view their journey history, apply for refunds and receive targeted emails based on their recent travel–though unregistered users can also access some transaction history on the agency’s website and in their banking apps.

Tim Jefferson The Human Chain
Tim Jefferson

UK-based Tim Jefferson, senior consultant for The Human Chain/FirstPartner, noted that a large majority of users of open-loop payments in London don’t register their cards, at present. But he added: “There’s obviously more people that are likely to register for their concessions, because they either get free travel or they get heavily discounted travel,” he told Mobility Payments.

With the move by transit agencies globally to account-based ticketing, Jefferson said he expects more agencies to support discounts for customers with open-loop payments, including in North America.

“Concessions will be available on open loop as we move forward because that’s the way that the market is moving,” he said, noting that agencies see it as a way to reduce costs and complexity while expanding service.

Transit agency Storstockholms Lokaltrafik, or SL, in Stockholm, said it is already offering discounts for seniors, students and youth tied to open loop. 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 said it 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.

In the U.S., a program backed by the state of California to help transit agencies procure open-loop payments technology is experimenting with support for discounts for seniors. The system does a one-time eligibility check with the state’s Department of Motor Vehicle database to verify that customers who request a senior discount are 65 or above. Then the eligible customers can immediately start tapping to pay fares, their cards associated with the discounts in the back office.

The system hasn’t worked with tokenized credentials in NFC wallets, but developers were working on a fix for that problem.

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