San Francisco Plans to Launch Open-Loop Payments Next Year; Will Maintain Strong Closed-Loop Clipper Card

San Francisco Bay Area transit officials are standing by their estimate for a launch of open-loop payments in 2024, as part of their account-based ticketing rollout, featuring a next-generation closed-loop Clipper card.

The launch of the fare system overhaul, including open loop, had been scheduled for completion this year. Officials revised that schedule late last year, granting system integrator Cubic Transportation Systems more time to complete the rollout. Officials cited staffing problems and chip-supply shortages as reasons for the delay. The original contract with Cubic in 2018 was for $461 million, which included 10 years of operations and maintenance.

The money also included nearly 7,000 new validators and EMV-enabled readers that Cubic has been rolling out for Bay Area metro gates, buses, light rail, ferries and cable cars.

A spokesman for the Metropolitan Transportation Commission, or MTC, the transportation planning agency for the nine-county Bay Area, confirmed to Mobility Payments the planned2024 launch of open loop.

The authority’s Clipper Executive Board–made up of representatives of the more than 20 transit operators that accept Clipper–said last November that customers of all the operators would be able to start tapping credit and debit cards and NFC open-loop wallets to pay in the summer of 2024. The board is expected to stand by that estimate in their meeting scheduled today, according to a Clipper 2.0 system update document MTC has posted. Bay Area Rapid Transit, or BART, the region’s subway operator, was among the first of agencies to announce the forthcoming open-loop service earlier this month on X, formerly known as Twitter.

The open-loop service will include fare capping (potentially daily, weekly and monthly) and free transfers for users tapping physical and digital bank cards, just as for the Clipper card. But users will likely not be able to get concessionary discounts for seniors, disabled persons, youth, students and low-income persons, like they do with Clipper. And only Clipper will support monthly passes.

Use of closed-loop Clipper has reached around 90% of prepandemic levels in 2019, with customers tapping more than 1.1 million unique Clipper cards last month. That takes in both physical and virtual Clipper versions, the latter with Apple Pay and Google Wallet.

Open-loop will become an option, and, except for concessionary discounts, it appears that San Francisco Bay Area transportation officials are not planning to price open-loop fares at a premium as compared with Clipper, like they do for cash.

The move would make San Francisco the largest U.S. public transit market after New York and Chicago to support open loop. Other large transit markets, Boston and Philadelphia, in the U.S.–a country not for its use of public transit–are also planning to add open loop as part of their much-delayed fare-system upgrades.

MTC has hired payments processor or acquirer Fiserv to handle transactions for the next-generation Clipper card system, which likely refers to transactions when customers would top up Clipper  with bank cards. It’s not clear whether Fiserv would be able to handle open-loop fare payments at the gate, platforms or on board buses and other vehicles. France-based Paragon ID is one of potentially two card suppliers of next-generation Clipper cards.

The planned open-loop service in San Francisco reduces the potential market for the state-backed open-loop procurement program, Cal-ITP, which mainly targets small agencies in the state.

Besides serving BART and San Francisco’s major bus operator, Muni (as well as the city’s well-known cable cars that), 22 other transit operators in the Bay Area use Clipper and, therefore, will be expected to accept open-loop payments when after MTC introduces it. Many of these are small operators, but include the medium-sized AC Transit, which serves Oakland and surrounding areas of the East Bay.

As Mobility Payments reported earlier this month, transit agencies signing up to accept Clipper are restricted by Resolution 3866,  which among other provisions, forbids the agencies from establishing “other fare-payment systems or fare policies that could deter or discourage” customers from using Clipper. Violation of the resolution could cost the transit agencies funding.

The spokesman for MTC said the resolution, first promulgated in 2010, is still in effect.

“MTC recognizes that some Bay Area transit agencies may need to implement short-term solutions to meet their unique requirements,” the spokesman told Mobility Payments. “With that said, MTC expects Bay Area transit agencies to leverage the regional investment in the enhanced functionality of the next-gen Clipper system.”

In the unlikely event that a Clipper-accepting transit agency would want to buy and implement open-loop validators through Cal-ITP, the Clipper board “might conceivably choose to look the other way,” he added.

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