The Truth about Open Payments
Towards the end of last year, Mobility Payments held a spirited webinar to debate the pros and cons of Open-Loop Payments in transit, with panelists from Europe, Australia and Asia. At the end the moderators stated that they plan to hold a second session, as they only covered two of the eight topics they had planned – clearly not short of conversation. I hope when they arrange this, they’ll also take the opportunity to correct some of the misconceptions about Open Payments that came up during the first webinar. While some of these points are widely accepted, they are wrong.
For starters, one panelist mentioned how there is a loss of data integrity in an Open Payment system. While more systems may be involved in the payment transaction flow, the ability to reconcile each of those systems should be a standard requirement, and therefore a non-issue, for all Open Payment projects.
Another perceived limitation of the Open Payment systems is the inability to support concessions. As Paul Griffin of Littlepay pointed out, if an Account-Based system is driving the Open Payments implementation, the bank card presented by the rider is simply a token and can be tied to a rider’s account – and concession – just as easily as a Closed Loop card. MTA (NY) recently rolled out the ability for riders to be charged a concession fare when they use their registered bank card.
Transit is often sighted as a large retailer. One panelist stated that transit is not retail, explaining that transit has two tenets: social responsibility and policy, not profit. While I agree with both tenets, I believe that agencies should strive to offer all rider groups a first-class user experience. This is ultimately what all retailers strive for; and offering Open Payments for those riders who have credit/debit cards does that by making the paying element of their journey easier.
It was interesting to me that the panelist who had implemented an Open Payment system spoke up repeatedly to shoot down the fears and threats that were brought up. He stated that the agency found the processing costs were in line with what was expected and that rider fraud did not materialize as much as they expected.
Someone pointed out that Sydney and London were examples of good rollouts of Open Payment projects and they attributed that to the marketing campaigns that supported the projects and educated the riders. The US Payments Forum recently held a webinar on best practices for customer messaging for Open Payment projects. Here is the link: https://www.uspaymentsforum.org/customer-messaging-for-transit-open-payments-webinar/#
As someone who has worked in the transit industry since 2005, I was shocked to see a blog post that summarized the webinar titled “Don’t Oversimplify Ticketing”. I have NEVER heard anyone mention the risk that a transit agency might oversimplify their ticketing system or fare rules. I still remember the first time Tina Mörch-Pierre (then in charge of the Revenue Department at DART) brought me DART’s fare policy. I expected an Excel file with two tabs: one for regular fare and one for concession fares, but she brought a tome over to my desk. Tina just laughed at my naivete.
Fare collection systems and rules that require riders to convert their money to transit currency, especially when they need to determine how much their ride is going to cost, create barriers to taking transit. It doesn’t have to be that way, and Open Payment projects can help eliminate those barriers.
Consult Hyperion has worked with Operators and Transit Authorities across the globe to help deliver efficient and equitable fare collection services. With our in-depth knowledge of payment specifications and experience in assisting with L3 certification, testing and implementation of Open Payment projects, we can help ensure your Open Payment project is successful. Want to know more? I’d be happy to chat.