TransLink in Vancouver Hopes Enabling Riders to Tap Domestic Debit Cards Will Increase Use of Its Open-Loop Service

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Vancouver transit authority TransLink Wednesday launched the much-anticipated expansion of its open-loop payments service to include Canada’s popular domestic debit brand, Interac–hoping to increase adoption of what has been a little-used service.

The project also offers insight into how promotional deals with payments schemes can sometimes fund capital expenditures for the rollout or upgrade of fare-collection systems.

TransLink CEO Kevin Quinn confirmed during a press conference Wednesday that there would be no cost to taxpayers for the upgrade of more than 5,000 validators on the authority’s SkyTrain gates and on board its buses to accept cards and wallets bearing the Interac debit brand. Update: A TransLink spokesman confirmed to Mobility Payments that “the implementation of Interac Debit had no effect on TransLink’s bottom line.” End update.

Promotional Deal Pays Bills
Quinn did not say how the authority would pay for the upgrade and was not pressed on the matter, but as Mobility Payments reported in May, TransLink has a promotional deal with Interac worth up to CA$2.75 million (US$2.1 million).

That is in return for TransLink placing the Interac logo above logos for credit card brands Visa, Mastercard and American Express on validators, as well as promoting Interac on gates, at entrances to transit vehicles, on station boards, websites and “wherever fare information is posted,” as well as on ticket-vending machines–according to contract documents obtained by Mobility Payments. The prominently placed Interac logos were visible this week on TransLink points of sale.

Update: But TransLink did not receive all the money from the promo deal. According to the contract, Interac was to pay TransLink a bonus of CA$400,000 if it had launched the full rollout of Interac acceptance by August 2022 and thereafter providing six months of “steady” operation of the service. The spokesman from TransLink confirmed the contract clause.

“Interac offered TransLink an incentive if the technology was implemented by the early launch window of August 2022,” the spokesman told Mobility Payments. “Since the technology wasn’t implemented by then, TransLink did not receive the funding.” End update.

The contract also said TransLink would also receive an additional $100,000 for six months of steady operation, though it’s not clear whether that $100,000 also depended on launching by last August.

TransLink in announcing the plans to enable customers to use Interac, in November 2021, had said the service would launch “by the end of 2022.” So the bonus may have been an incentive for TransLink to launch early–a deadline it did not hit.

In any case, the promotional deal paid TransLink the bulk of the proceeds, CA$2 million, upon signing of the contract, in August 2021. That amount would have covered the capital costs of the Interac upgrade.

As Mobility Payments first reported in April 2022, a proposal submitted by TransLink’s system integrator, Cubic Transportation Systems, said it would cost a total of CA$2.1 million to integrate Interac into fare terminals, including adding a new secure-access module, or SAM, to each of the contactless readers.

A separate change order to Cubic’s long-term contract with TransLink, signed in October 2021, called for TransLink to pay Cubic a little more than CA$1.95 million for the work to add the SAMs and to integrate and test the readers with merchant acquirers, among other tasks. That exactly matches the amount in Cubic’s proposal, less Canada’s 5% goods and services tax.

The SAMs were supplied to Cubic by Brazil-based Planeta Informática, the largest such deployment of Planeta’s VSAM technology, and the first outside of South America. The Metropolitan Transport Authority, or ATM, in Barcelona is also planning to use similar types of SAMs to launch open-loop payments.

Officials in Vancouver Wednesday played up the Interac launch. In addition to TransLink’s Quinn, Rob Fleming, provincial minister of transportation and infrastructure for British Columbia, also attended the press conference, along with William Keliehor, chief commercial officer for Interac Corp.

Keliehor said two-thirds of British Columbians say they want to use debit cards or card credentials in mobile wallets to pay for fares, citing a survey that Interac itself commissioned. TransLink is the first transit agency in Canada to enable Interac, but others are implementing it, including STL, which serves Montreal’s largest suburb, Laval. Metrolinx in Toronto supports Interac on its airport line.

Tapping Compass Still Incentivized
But it remains to be seen how much the addition of the Interac option will increase use of open-loop payments for TransLink.

Open-loop payments accounted for only around 2% of trips for TransLink earlier last year, compared with around 96% of rides paid for with the authority’s closed-loop Compass card. The authority recorded ridership of around 220 million in 2021. Update: The penetration rate of contactless payments remain unchanged at around 2% in the fourth quarter of 2022. End update.

Before accepting Interac, the only types of open-loop cards customers could tap were credit cards. While TransLink can also technically accept Visa- and Mastercard-branded debit cards, these transactions are handled by the schemes like credit cards.

TransLink still does not offer customers using open-loop payments any fare capping or discounts. Customers, in fact, pay the same amount for rides if they tap bank cards as they do when paying with cash. By comparison, riders save around 20% by tapping their Compass cards.

Update: The agency spokesman said TransLink would charge cash fare rates for Interac debit users, the same as it does for customers who tap credit cards to pay. And it has no plans to bring open-loop fares on par with lower rates customers pay with their Compass cards.

“Customers get a discounted rate through stored value on Compass products to encourage routine transit use,” he said. End update.

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