Feeling Pressure to Accept Open Loop but Worried about the Costs?
Propelled by some major implementations and enthusiastic support from credit card companies understandably keen to eliminate cash, the consensus seems to be that open loop is the future of public transport payments.
But is it that simple?
While open loop certainly offers attractive advantages over traditional proprietary closed-loop payments systems, it also presents several significant drawbacks–and major costs.
These issues are perhaps most problematic for small and medium-sized transport operators with existing-payment systems, who find themselves at a difficult crossroads. Should they accept the high costs of open loop, or proceed with their traditional approach, investing in more TVMs, service centers and personnel?
We have seen many occasions in the past when operators dreamt of eliminating cash, but quickly found they couldn’t ignore the unbanked community’s right to mobility–and the revenue it offers. Many such operators ended up with twin payments systems: Open loop for a substantial portion of passengers and a traditional method for everyone else.
The result? Two payment systems and two sets of suppliers. The worst possible scenario.
As this article will outline, getting the payment system right is fundamental to delivering the service that passengers deserve and demand. There is a third way–an innovative approach in terms of both technology and business model–and it’s a timely change for the industry.