Closed-loop payment systems allow transit operators to give riders more choice and value with a range of innovative eCommerce capabilities.
Changes in working styles mean many of us commute less regularly than before but still expect to get the best fares and deals when we take public transport. We expect to be able to pay conveniently, as cash has given way to digital payments in other areas of our lives. Cities and transit operators that meet these expectations can put themselves in a better position to maintain and grow ridership.
In many cities, proprietary (or closed-loop) cards are a convenient alternative to paper tickets. Originally, topping up a closed-loop card involved using cash or a card at a ticketing machine. Over time, evolving digital payment systems—underpinned by flexible payment platforms—have enabled operators to offer additional eCommerce capabilities, including account-based ticketing programs.
Riders who set up online or mobile app accounts with a transit operator get more choice and have more control over their closed-loop cards. Depending on the operator, account holders may be able to check and top up their pay-as-you-go credit; review their journey and payment history; add season tickets, passes, and applicable discounts; and apply for refunds or replacement cards.
More choice and value for account holders
As operators and their solution partners continue to develop account-based ticketing programs, riders get access to more advanced features, such as:
- Automatic top-ups of their closed-loop card balances from their linked bank account
- The ability to buy app-based tickets that use a variety of fare media, including QR codes
- Options for buying travel passes in-app that may have discounted fares
- Automatic fare-capping that limits the cost of riders’ pay-as-you-go journeys
- Recurring billing for riders who want cost-effective travel without making an upfront investment in a travel pass
In some cases, riders can even register their EMV® bank card in their account for use in place of a closed-loop card—so they don't need to carry around an extra card but can still reap the benefits of a closed-loop system.
And when riders set up accounts, transit operators have the opportunity to gather data about them in order to offer increased value. Using this data in with a tokenization service, for instance, can help an operator offer rewards and incentives that strengthen riders' commitment and loyalty and drive increased revenue.
Protecting against fraud
Inevitably, transit operators can be as vulnerable to fraud as any other eCommerce business, with the same potential for revenue losses and customer dissatisfaction. Closed-loop systems in particular can be a target of attacks such as card testing, account takeover, and first-party (or friendly) fraud—all of which can have a financial impact, cause reputational damage, and deplete customer trust.
Transit operators and their solution partners should enable end-to-end security to safeguard revenue streams and protect passengers, no matter how they pay. With the right fraud rules and systems in place, operators may see annual savings as well as a reduction in chargeback rates—all while shielding customer data, reducing reject rates, and ensuring more fraud is successfully identified.
Innovations in fraud management
Recent innovations that can help transit operators manage and mitigate fraud include:
- Machine learning, to simplify fraud detection using automated risk scoring for each transaction
- Customizable rules engines that test fraud strategies on historical transaction data—helping operators gauge how things would play out in the real world
- Real-time behavior analysis to automatically recognize good, bad, and new transactions and increase acceptance rates, lower review rates, and boost transit operators’ bottom lines
- Account takeover protection, to identify and block fraud at the account level and reduce the potential for fraudulent transactions down the line
To support and adapt to an ever-expanding range of payment options, a transit operator's ticketing and payment acceptance system can benefit from an open, modular payment platform—one that can securely handle mass transit transaction volumes and schemes, multiple payment channels, and distinct transit authorization needs.
Working with a payment partner who understands the challenges of fraud management relating to mass transit payment acceptance can help ensure a solution that's ready to enable the next generation of urban mobility payments while helping protect transit operators’ reputations, revenues, and riders.
So, are you ready to create new payment experiences for riders? Read our guide to discover how you can incorporate secure, cost-effective, and scalable solutions that simplify payment acceptance and help you keep pace with the evolving payment landscape—today and tomorrow.