The Mayor’s Page

Dear Sir/Madam!

You are the Mayor of a tremendous city with a transit system. We can help you answer some of your questions about Open Loop fare transit systems and OpenFare specifically.

Does my City need Open Loop fare collection system?

This depends on your particular case. There are numerous advantages and disadvantages of the open loop. They can be better for one transit system and worse for another. We cannot help you to answer this question without deep understanding of your particular circumstances. However, this page can help you in the two following situations:

a) You have already decided that you need an open loop system and you wish to understand better what kind of open loop system you need.

b) You are still reluctant to implement open loop. Then, maybe this is because you need something from the open loop that classic open loop systems do not have but OpenFare does.

Why would I need OpenFare rather than a classic open loop?

Maybe, you don’t. It depends on your case. Let’s see the following two extreme cases:

You less likely need OpenFare if:

  • Your transit system is heavily oriented on railway and subway, with stationary turnstiles and fare enforcement
  • Your buses and streetcars (if you have any) serve trustworthy (by the credit card companies’ standards) patrons. Most of them have credit cards, they usually commute daily to their jobs and change their commuting habits rarely
  • You have relatively short  route lines, you have flat fares and you are going to stay this way.
  • You have a very good closed loop system that most of your transit patrons already use and you do not need to upgrade or extend this system in the nearest future
  • You do not have a lot of tourists and occasional transit patrons in your city
  • Most of your patrons are not big fans of various technical gadgets

You most likely need OpenFare if:

  • Buses and streetcars constitute a significant component of your transit service
  • Your transit patrons are sometimes not trustworthy. Many of your patrons do not have credit cards but have debit or bank (ATM) cards
  • The route lines are long and you have implemented or going to implement distance-based fares
  • Your transit system either is not well equipped with a closed loop system or your closed loop system lifecycle is coming to its natural end (either way, you need to invest in your fare collection system)
  • You have many tourists in your city and would like to have even more
  • Occasional transit patrons are a noticeable group
  • The patrons are significant part of your constituency and they are mostly fans of new technology

What are the benefits of OpenFare?

OpenFare works with all types of contactless payment cards, including debit cards and bank (ATM) cards. Classic open loop systems work only with some types of contactless credit cards. OpenFare, under certain circumstances, can also work with other types of contactless or barcode tokens.

Even with limited set of credit cards, the classic open loop systems take the risk of the first ride and over-the-contactless limit risks. OpenFare does not have those risks.

The above factors may become crucial in transit systems with many occasional non-trustworthy (from the credit card companies’ standpoint) patrons.

The most advantages of OpenFare are revealed on buses and streetcars with wireless validators. The classic open fare capabilities are limited there: they become overexpensive, risky, and provide worse patron experience.

See detail explanations here.

I have heard that Google Wallet and Apple Pay will make Open Loop easy to implement. Is this true?

These services (including Android Pay) will make the cardholders’ (and your transit patrons’) life more convenient. These services will allow them to keep many virtual payment cards in their smartphones rather than real cards in their pockets or real wallets. All the rest will be the same. The open loop will not become cheaper or less vulnerable to fraud because of these services.

There is a common misunderstanding that Google Wallet and Apple Pay will allow fast and safe fare collection in front of validators by some electronic funds stored inside the smartphones, like the closed loop cards do. The Google and Apple still require online transaction approval and are not fast enough. Even worse, a second cloud server is needed to participate in the approval of such a payment transaction and this may make the tap latency even higher. This means that your transit turnstile or bus validator cannot wait and must allow the patron to use the service before the payment is approved.

It is possible (in the future) that these electronic wallets will allow storing virtual transit closed loop cards. It will be more convenient to the patrons of multiple transit systems but these virtual cards will still be closed loop. Each of them will work only in their specific transit realm. They will not share the balance like OpenFare does.

OpenFare will benefit a bit more from Google and Apple services, just because it can work with broader types of contactless or barcode tokens and share the prepaid transit balance across many participating transit systems.

Please, do not forget also, that the ubiquity of smartphones with reliable NFC (contactless) capabilities is still low (especially of Apple ones). These devices are fairly new on the market and they are on the highest end of the price line. Some of your patrons will not be able to afford them.

What is “Account-based Fare System”?

This term, “Account-based Fare System” sometimes causes a confusion. Not all account-based systems are open loop. This is what you always need to keep in mind and ask a potential vendor presenting you an account-based system, what type of cards their system uses. Please see details here.