Article Highlights

Key Takeaway:

Offering discounts for seniors, disabled persons and others is an important fare policy for most transit agencies. But to date, few agencies have been able to support these discounts with open loop.

Key Data:

Chart: Transport for London-Open-Loop share

While more and more transit agencies globally are enabling their customers to tap credit and debit cards and NFC wallets to pay fares, there are obstacles limiting growth.

Besides problems accommodating unbanked and underbanked riders who cannot or will not use bank cards or smartphones to pay fares, perhaps chief among the concerns is how to support discounts for seniors, disabled persons, students and others with open loop.

“With concessionary fares, open loop remains a challenge.”

That’s according to Shashi Verma, CTO for Transport for London, who is a pioneer in the large-scale deployment of open-loop payments.

While Transport for London runs what is considered to be the most successful open-loop fare payments service globally, it has yet to enable the various categories of riders eligible for concessionary discounts to pay with contactless credit and debit cards and wallets. The agency must issue special closed-loop concession cards for this purpose.

Shashi Verma
Transport for London’s Verma

“There is no difficulty in applying a different fare for different (open-loop) cards,” Verma told Mobility Payments. “The challenge comes in stopping abuse of these discounts. With no information on the card itself, it is difficult for the gate to have enough information to distinguish easily between a discounted card and one that is not.”

Verma will talk about this and other open-loop topics next week as a panelist for the much-anticipated second edition of the online debate series, “The Pros and Cons of Open Loop Payments.” The event, scheduled for June 27, is co-organized by Mobility Payments and independent payments and identity organization APSCA. Download the event brochure. Sign up to attend the webinar.   

Panel of Experts

Concessions will be one of the main areas of focus for this latest edition of the series, which debuted last October. The forthcoming event features an all-new panel of experts.

Besides Verma, the panel includes Bas van Weele, program manager for the world’s first nationwide rollout of open-loop payments, in the Netherlands. The Dutch program is now believed to be taking the uncommon step of implementing support for concessionary discounts with open loop.

The panel also includes longtime industry veteran Silvester Prakasam, fare advisor and former head of the fare system for Singapore’s Land Transport Authority, as well as for LTA’s international commercial arm, MSI Global. The authority launched open-loop payments in 2019, Asia’s largest such service. Prakasam is well-versed in the challenges that transit agencies would face to enable customers to receive senior and other discounts with their credit and debit cards.

Çınar Basmacı, a board member for Turkish fare card and technology supplier Kentkart, will also serve on the panel. Kentkart claims to be one of the few vendors that have implemented a live service linking open-loop cards and credentials with concessions. Kentkart is sponsor of the event.

And rounding out the panel is Paradon Nitaya, a 25-year veteran of the payments industry, who has held senior roles at major transit agencies in Thailand and has considerable international experience in fare payments in Hong Kong, Singapore, India and Dubai.

The debate will also cover another often thorny issue transit agencies must deal with when offering open-loop payments: merchant service charges, including interchange and acquiring fees. And if time allows, the panel will discuss whether it’s realistic for agencies to go all-in with open loop technology, or if they should continue to run completely separate open- and closed-loop fare systems.

Policy Issues Have to be Resolved

Concessionary discounts are involved in one-third or more of rides for many agencies, but there are few live implementations of riders being able to tap to pay with open-loop cards or wallets while receiving the discounts.

This fact can be seen as limiting the growth of open loop.

For example, Transport for London, or TfL, has said that customers pay for more than 60% of all pay-as-you-go trips with credit and debit cards or open-loop cards in NFC wallets. Pay as you go is the agency’s dominant fare-payments option. But when TfL also includes rides paid for with season tickets and passes in that calculation, open-loop penetration drops to 54% of total trips. And if it further includes concessions, the share of journeys paid for with open loop falls substantially again, to 42%, Transport for London told Mobility Payments in December. Some believe the actual open-loop penetration figures are lower.

The impact is similar in Singapore, where Land Transport provides concessionary discount fares to seniors and other riders amounting to 35% of its trips. When it includes these discounted trips, the share of open-loop payments falls from more than 30% to around 20% of all journeys, as Mobility Payments has reported.

Yet, neither agency appears to be working on enabling riders to receive concessions with open-loop cards and credentials.

Andrew Anderson, Transport for London’s head of customer payments, told Mobility Payments in February that supporting concessions with open loop is something that the agency has been “considering,” but added that there were no imminent plans to do it. “It’s just not an immediate priority,” he said.

Anderson added that a substantial share of the concessions that the agency offers, such as those for seniors and certain military veterans, allow customers to ride for free during largely off-peak hours. The implication is that it might not be worth it for the agency to enable concessions with open-loop cards and credentials if no payment takes place. But these customers still have to tap in and out with their Oyster or other closed-loop concession cards to get the free rides.

Land Transport supports the 50% concessionary discounts it offers to seniors, disabled persons and students with its closed-loop EZ-Link card. Like Transport for London, the Singapore authority appears to have no plans to retire EZ-Link and is even tokenizing EZ-Link cards to make them part of its SimplyGo account-based ticketing service, which includes open loop.

Silvester Prakasam
Land Transport’s Prakasam

“Right now, there isn’t any need,” Deborah Wong, senior vice president, fare systems, at MSI Global, told Mobility Payments. She was referring to making the link between concessions and open loop in Singapore.

Prakasam said during a Visa-sponsored webinar in November that he believes it could take a few years to work out how to support concessionary discounts for seniors and other riders with open-loop cards and wallets.

Prakasam, like Verma, told Mobility Payments recently that he doesn’t believe there are any real technical difficulties preventing transit agencies from crediting riders with their concessionary discounts after they tap open-loop cards or NFC devices. “It is just another fare table and all computations are done at the back end,” Prakasam said. He implied that abuse could be a problem, however.

“Policy issues have to be resolved, e.g., concession passes can be confiscated. But how do you do it with a bank card?”

Establishing Eligibility: Key Challenge

New York’s Metropolitan Transportation Authority in late October was the first major transit agency to roll out concessionary discounts linked to open-loop payments. That feature, however, did not check the eligibility of seniors and disabled persons to receive the discounts. 

These customers were already qualified to get the concessions with the mag-stripe Reduced-Fare MetroCards they carry. They just have to link this eligibility in the back office to their preferred payments card or wallet credential. The situation appears to be the same with MTA’s white-label, closed-loop OMNY card. Customers will have to go through a somewhat onerous enrollment process with closed loop to establish eligibility for concession. They can only then apparently link this eligibility to a preferred bank card or NFC credential.

So MTA’s implementation is an incomplete solution to the problem of supporting concessionary discounts with open loop.

The key is how to verify that customers are eligible to receive the concessions without making the process too difficult for them. This is often the case today with closed-loop concession cards, with customers required to apply in-person at transit centers, by post or perhaps online, showing or uploading their ID cards and likely photos, and then waiting days if not weeks for their cards to arrive.

If customers could easily establish their eligibility for the discount, then make the link to their preferred open-loop card or credential, the agency would not have to issue as many special concession cards, said Prakasam in the earlier webinar.  “If this can be resolved, I think, yes, we can use (only) contactless EMV cards.”

In Turkey, fare-payments company Kentkart launched a concessionary discount service for open loop with a transit agency in the south-central Turkish city of Gaziantep. The service also establishes eligibility, a quick process using Turkey’s uniform electronic ID database.

“You need to have an accessible database to establish eligibility for concessions with a credit card,” said a Kentkart spokeswoman. “We did it in Turkey because we could link to the government database.”

The major earthquake that hit Gaziantep Province and the wider region in early February has curtailed the service. A larger issue is how well the Kentkart’s technology can scale, especially in countries without well-developed electronic ID databases.

In California, a state-backed open-loop procurement initiative, Cal-ITP, is also working with an online platform to speed eligibility checks.

It’s using a single sign-in platform,, from the General Services Administration, a U.S. federal agency. Seniors can prove their eligibility for the discounts by uploading an ID card on the federal website. Cal-ITP vendors then link that eligibility to the user’s preferred debit or credit card.

But the first, and perhaps still the only, transit agency using the service, Monterey-Salinas Transit, told Mobility Payments that only 60 seniors had signed up and used the eligibility process to receive half-off discounts with contactless payments since December 2022. They have received a combined 1,206 discounted trips with the technology over the past six months, according to Carl Sedoryk, general manager of the small agency.  

He attributed the low number of users and transactions to a “lack of awareness,” since the California bus agency has not extensively marketed open-loop payments yet. That should happen after it launches its full rollout of open loop next month, he said.

Still, it remains to be seen how much adoption of the open-loop concession service Monterey-Salinas Transit and other agencies that have implemented the technology will eventually see.

It’s also unclear how many other transit agencies now offering open-loop payments will be able to overcome the various challenges to enable their riders to receive discounts with a tap of a credit or debit card.

Experts will be on hand next week to discuss this and other open-loop topics.

“The Pros and Cons of Open-Loop Payments” webinar will be held June 27 at 3 p.m. Singapore time, 8 a.m. in London.

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