Apple Pay in Open Loop Transit Fare Collection

Let’s see how Apple Pay fits the open loop transit fare payments.
Apple Pay is a service and Apple (only Apple) smartphone application that provide the following:

  • Online payments to participating e-merchant. To certain extent, it is similar to some other payment services such as PayPal.
  • Payments for services within an Apple smartphone application, for example when you want to buy more audio books or music.
  • A sophisticated wallet that can keep various means of payments (such as credit or debit card contactless applications), and numerous loyalty cards, passes, and coupons. Currently, the loyalty cards, coupons and passes can only be accepted via a barcode displayed on the device screen but we should expect that this can be done via contactless channel as well. Currently, only AmEx contactless card application can be used within Apple Pay wallet.

How Apple Pay can be used in the open loop? It  is more convenient and secure for the patrons than real wallets with plastic cards. But from the classic open loop system standpoint, tapping a phone with Apple Pay wallet at the validator hardly can be different from tapping a plastic contactless cards because of two reasons:

  • First, Apple Pay, in order to make a secure transaction, requires one more server participating in the transaction. You should expect even slower transaction than the one initiated by a real contactless card.
  • Second, for the matter of security, Apple Pay uses so-called “tokenization” when the merchant receives an encrypted token instead of the card number. With this, the transit agency cannot associate a card used at tap-on turnstile with the one used at the tap-off turnstile (within a reasonable time, of course).

OpenFare is another story. Apple Pay has one feature that can be useful with OpenFare. It is the ability to create and load over-the-air loyalty cards, coupons or pass cards. When a patron registers his or her credit or debit card with OpenFare, an OpenFare pass card can be loaded into his/her Apple Pay wallet on the phone, over-the-air. OpenFare will immediately propagate this pass number to all validators. After that, instead of the patron’s credit or debit card, this pass card will be used when the phone is tapped at a validator. This provides better security. Classic open loop systems cannot use this feature because they do not register cards.

Another Apple Pay feature, which can only be used by OpenFare, is its pay service. Patrons can use Apple Pay to top-up their prepaid transit balances.

Overall, please do not forget, that Apple devices with contactless channel are still very rare. On the other hand, if your validators can scan barcodes pretty fast, you can use OpenFare pass stored in the Apple Pay Wallet.

With this, please bear in mind  that barcodes and contactless passes are cloneable. Only OpenFare can make them quasi-non-cloneable by means of changing them very often and proactively propagating the fresh ones to the validators.