Lithuanian Capital Expected to Procure ‘cEMV-as-a-Service’ Open-Loop System

Pavel Byrkin

Vilnius, the capital and largest city in Lithuania, is expected to contract for an open-loop payments system with a “cEMV-as-a-service” procurement model–a model starting to be seen elsewhere, as well, Mobility Payments has learned.

Vilnius transit authority Susisiekimo paslaugos issued a request for information, or RFI, late last year for the project, which had a deadline of last month, a finance manager for the agency told Mobility Payments. She would not say when the agency planned to issue a request for bids for the open-loop contract.

When it does, the contract is expected to be similar to a contract signed recently by another transit agency in Lithuania, Klaipėdos keleivinis transportas, or KKT, which serves the seaport city of Klaipėda. KKT plans to launch open-loop payments in July.

It follows another cEMV-as-a-service procurement in Venice, Italy.

With this model, transit agencies hire vendors to operate a separate open-loop payments service for them, giving the vendors a percentage cut of the open-loop revenue. The agencies also seek to shift the risks of rolling out open-loop payments to the vendor.

Software-as-a-service payments service providers and mobile-ticketing vendors are pitching a similar type of service, but agencies often hire an acquirer separately. Also, few, if any, mobile-ticketing SaaS platform providers have gone live with open loop beyond the trial stage.

Acquiring Included in Lithuanian Contracts
Both the open-loop contract in Klaipėda and the one expected in Vilnius will require the winning vendor to bring its own acquirer–all for the same percentage fee.

The agencies believe they can reduce the risk of rolling out open loop. If few customers tap to pay with their credit or debit cards or card credentials in NFC mobile wallets, the agencies pay little.

And in case open-loop takes off, the Lithuanian agencies cap the total fee revenue vendors can receive. They also are seeking to make the vendor cover first-ride risk–that is, the risk a customer will tap to pay with a fraudulent card or with insufficient funds in their bank accounts. After the first ride, the customer’s card or credential would be on a blacklist on the terminal.

As Mobility Payments reported last month, KKT in Klaipėda hired Estonia-based Ridango to set up and operate its open-loop service. Ridango will receive fees totaling a maximum of €1.4 million (US$1.5 million), according to tender documents. The contract will end when the cumulative fees reach this amount, whether the contract has lasted five years or not. The actual percentage Ridango is receiving of open-loop fares collected has not been released.

According to the tender documents in Klaipėda, the open-loop service provider is required to implement and run the system at its “own expense, risk and responsibility,” a clause expected to be included in the tender documents from the larger city of Vilnius.

For both open-loop services in Lithuania, the terminals must accept contactless EMV cards and credentials in NFC devices branded by Mastercard and Visa on board the agencies’ buses. The systems must support distance-based fares, fare capping and other features of the mass transit transaction model, or MTT, from Visa and a comparable model from Mastercard. But the agencies appear to have reserved the right for requirements of their contracts to diverge from the MTT model. And if they do, the vendor still has to support this.

In Klaipėda, Ridango, as the service provider, will mainly provide the fare calculation, payments gateway and integration and maintenance of the system, in addition to hiring the acquirer. The acquirer is expected to be LHV bank of Estonia, which Ridango has worked with before.

Ridango had already provided EMV-ready terminals to KKT in Klaipėda under a separate account-based ticketing system. 

The Estonian vendor obviously has a leg up on the forthcoming Vilnius contract since it also is providing validators to Vilnius transit agency, Susisiekimo paslaugos, under a separate “account-based ticketing” contract. Ridango announced that ABT deal in July 2022.

Under that ABT contract, Ridango is providing terminals that are EMV ready and also can scan mobile tickets, according to the open-loop RFI from Vilnius. Ridango also has committed to keep these terminals certified for level-1 and level-2 compliance from specifications group EMVCo. The level-2 certification would include support for at least two schemes, Visa and Mastercard.

Susisiekimo paslaugos, also known as JUDU or SI, oversees operators with around 700 buses and trolleybuses serving Vilnius. The agency now collects its fares with a closed-loop Vilnietis card program, which is based on low-end Mifare Classic technology; as well as with two mobile apps. One is the city’s m.Ticket app, and the other is the Trafi app. The card and mobile apps use separate systems.

The Vilnius buses and trolleybuses have validators, but the transit agency also relies on inspectors with handheld validators, which can read the contactless card as well as scan QR codes in the mobile apps.

Ridango said last July that Susisiekimo paslaugos handles 346,000 daily trips. The transit agency said in its RFI that its new system must be able to handle up to 700,000 total rides per day. It added that inspectors do an average of 14,000 inspections per day.

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