In recent years, there has been an increase in the use of mass transit systems. This has led to a corresponding increase in the use of electronic ticketing systems. These systems allow passengers to purchase tickets and pass-through fare gates without having to fumble with cash or coins. They also enable transit agencies to track usage patterns and collect data on ridership.

There are several different systems in use by transit agencies around the world. They fall into two broad types of ticketing systems, closed-loop and open-loop.

Closed-Loop Ticketing

As the world increasingly moved toward a cashless society, many transit agencies turned to closed-loop ticketing systems. These systems allow riders to use cash, or a credit or debit card to purchase a contactless transit card and then use that same card for all travel on the system. Generally, a closed-loop card is restricted for use with only the transit agency or operator that issued it.

There are several benefits of closed-loop ticketing for both riders and transit agencies. For riders, it means no more waiting in line to purchase a paper ticket; they can simply walk up to the transit gate and tap their closed-loop contactless card to enter. For transit agencies, closed-loop ticketing can help reduce fraud and improve operational efficiency.

Fare calculations are generally done between the closed-loop card and the transit gate, checking the balance on the card against the fare calculated to allow or deny travel. Alternatively, transit agencies have implemented, or migrated, to account-based ticketing system that calculate fares in conjunction with closed-loop cards.

Open-Loop Ticketing

More recently, we have seen a big change in how people are able to pay for transit. Instead of topping up a closed-loop card, riders can travel and pay directly with their contactless bank debit or credit card, smartphone, or mobile phone with wallet app. This is called open-loop ticketing, and it’s currently being rolled out to cities around the world.

One advantage of open-loop ticketing is that it’s more convenient for riders. They don’t have to carry around cash or a closed-loop card, and so can help speed journey times up, and reduce the number of missed connections and delays. This also widens the rider base, irregular riders that do not have closed-loop cards, can hop on a bus or train instead of taking a taxi.

For transit agencies, cash and paper ticket based travel is not tracked centrally and closed-loop tap information can often be delayed in being sent to back office systems. This means that open-loop ticketing can help track ridership patterns more accurately.

For open-loop cards, fare calculations are always done in a back-office account-based ticketing system, after the rider has completed all trips for the day. This allows the system to calculate the best fare, based on all ticket types available on the transit system, and charge the open-loop card appropriately.

Account-based Ticketing

In many cities, public transit riders can use account-based ticketing systems. Account-based ticketing allows riders to create an account with a transit agency, which is used to pay for fares. This system offers several advantages over traditional fare payment methods, including the ability to track spending, earn rewards and receive notifications about upcoming events or service disruptions.

Some account-based ticketing systems require pre-paying for travel, adding value to an account before being able to access the transit system, whereas open-loop uses the card that is tapped at the transit gate as the payment method, so no pre-loading is required.

Account-based ticketing is a convenient and flexible way to pay for public transit that can offer benefits to both riders and transit agencies, this is particularly true when looking at the last mile problem.

Last Mile Problem

Public transit agencies are increasingly focused on the “last mile” of passenger trips. This is the distance between a transit stop and the passenger’s final destination (home, work, shopping, etc.). A variety of solutions are being explored to address the last-mile challenge, including:

• Shuttle buses: Operating smaller buses on routes between transit stops and popular destinations
• Bike sharing: Making bicycles available for short trips between transit stops and nearby destinations
• On-demand: buses and cars that will pick riders up from stops and drop them at their final destination

Using account-based ticketing solutions agencies are looking at how to combine the transit agencies existing infrastructure with other independent suppliers of transportation, into one overall fare for a door-to-door journey.

There has been a debate since people started looking at open-loop ticketing on its suitability for different fare models, modes of transport, concessions, and discounts.

We would be very interested to hear your views on these topics. Feel free to send us an email.

Authors: David Lunt, Technical Director, Australia & Eugene Lishak, Associate, Canada, Payments Consulting Network

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David and Eugene have worked on ticketing systems since 2011 and 2008 respectively. They both bring a wealth of knowledge to the Payments Consulting Network on this topic.

This is part of a series of transit articles we will be publishing in the next few weeks.

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