Should Public Transport Operators Invest in Open Loop Payment Systems?

We have seen the evolution of payment methods in the public transport sector over the years. From cash to paper tickets, from smart cards to mobile wallets, the way people pay for their bus rides has changed significantly. But what is the next step in this journey? Is it open loop payment systems?

What is open-loop payment?

Open loop payment systems are systems that allow customers to use their existing contactless bank cards or mobile devices to pay for their public transport fares, without the need to buy or top up a separate transport card. This means that customers can simply tap and go, without having to worry about having enough balance or carrying multiple cards. In the previous article Efficient and Convenient: The Rise of Open-Loop Ticketing in Public Transport , we discussed the differences between open-loop payment and closed-loop payment in detail.

Why should public transport operators invest in open-loop payment systems?

1. Increase customer convenience and satisfaction

The open-loop payment makes the payment process more convenient, fast, and secure. Customers don’t have to queue up to buy or top up a transport card, or worry about losing or forgetting their card. Besides, they can use the same payment method across different modes of transport, such as buses, metros, trains, and taxis, and don’t have to purchase multiple transit cards or tickets.

2. Reduce operational costs and complexity

Public transport operators can save on the costs of issuing, distributing, and maintaining transport cards, as well as the costs of handling cash and processing transactions. They don’t have to deal with multiple payment schemes and intermediaries and can leverage the more secure and reliable existing infrastructure and standards of the banking industry. As a result, the fare collection and reconciliation processes are simplified.

3. Obtain valuable data

Through recording every transaction, the operators can get access to real-time and granular data on customer behavior, preferences, and travel patterns, which is valuable for public transport operators. They optimize their network planning, service delivery, pricing, and marketing strategies based on accurate data. Therefore, they can offer personalized services and incentives to customers, such as dynamic pricing, loyalty programs, and targeted promotions.

What operators should consider when investing in open-loop payments?

1. Interoperability and compatibility of ticketing terminals

Operators need to ensure that their ticketing terminals can accept various types of contactless bank cards and mobile devices, as well as comply with the technical specifications and security requirements of different payment networks and schemes. It’s an important issue for public transport operators to select a ticket validator that is reliable enough to accept open-loop payments.

Related Telpo product: Telpo validator T20

The Telpo T20 is a ticket validator designed for the complex public transport environment. It can accept multiple payments and satisfy different fare collection needs. By passing the certification of IP65 and IK08, the long service time is ensured.

l Accept all payments: Support both open-loop and closed-loop payments. Support EMV cards, Calypso cards, transit cards, QR codes, paper tickets, etc.

l Leading protection level: IP65 waterproof and dustproof, IK08 impact-proof, anti-static, strong temperature resistance.

l Superior performance: Android 12 OS, Quad-Core 2.0GHz processor.

2. Regulation and governance of open loop payment systems

Operators need to comply with the legal and regulatory frameworks of different jurisdictions and authorities. They also need to establish clear roles and responsibilities with their payment partners and service providers, as well as define the terms and conditions of their service agreements and contracts.

Though there are some challenges and risks that require careful planning and management, open-loop payment systems are an emerging trend in the public transport sector that offers many benefits for both customers and operators.

As a public transport validator provider, Telpo is committed to supporting our clients in their transition to open loop payment systems, by providing them with innovative solutions that are secure, reliable, interoperable, scalable, and cost-effective. Welcome to contact us for more details!

Tag: open-loop payment system, open payment, open-loop ticketing, ticket validation machine, public transport fare collection