Report lays out way forward for US transit agencies to adopt open loop contactless fare payments - NFC World

BARRIERS: The reports recommends steps specified arsenic cutting interchange fees to summation unfastened loop adoption

Transit agencies successful the US would payment from introducing unfastened loop contactless fare outgo systems but wide adoption “has remained elusive” owing to challenges that some the US nationalist proscription and payments sectors request to address, according to a study by the Washington DC-based Brookings Institution probe group.

The How amended outgo systems tin amended nationalist transportation study shows however enabling passengers to wage for their fares with their ain contactless recognition oregon debit paper enhances the lawsuit experience, improves ratio by speeding up boarding times, cuts currency handling costs and tin promote much consumers to usage nationalist transit service, thereby reducing biology interaction and improving societal inclusion.

It besides examines the existing transit payments scenery successful the US — including the ongoing aviator rollout of unfastened loop contactless fare payments successful California — and makes the lawsuit that transit agencies successful different states and regions whitethorn beryllium reluctant to follow unfastened loop contactless fare payments owing to a “perfect storm” of issues including:

• the comparatively high, adaptable oregon unpredictable interchange fees charged for paper transactions by banks and different payments processors;
• the request to instrumentality systems that are besides susceptible of offering fare capping and discounted fares crossed wide categories of passengers;
• the request to physique successful solutions for unbanked passengers and the imaginable interaction of dilatory transaction processing times connected underbanked passengers;
• the outgo of upgrading fare postulation hardware and back-end systems and the request to renegotiate existing contracts with fare instrumentality providers.

However, the study states that these issues are “not insurmountable” and that “transit agencies and fiscal institutions are moving unneurotic to make solutions to these challenges, but greater innovation successful this abstraction is needed to promote the wide adoption of unfastened payments successful transit”.

Steps to adoption

According to the report, the cardinal steps that could beryllium taken to summation adoption are:

• debit and recognition paper systems reducing interchange costs for transit payments that would connection “significant savings” to transit agencies;
• transit agencies considering a broader scope of factors erstwhile deciding whether to determination from a closed loop to an unfastened loop payments strategy and the implementation of solutions specified arsenic account-based ticketing oregon integer individuality technology;
• further probe into the development, implementation and usage of unfastened loop contactless fare outgo systems and the recognition of champion practices successful different “high-volume, low-dollar sectors” specified arsenic parking, electrical conveyance charging and toll payments.

“As agelong arsenic outgo transaction costs stay elevated, the benefits to these agencies of moving toward unfastened payments are much limited, reducing incentives for galore transit agencies to determination guardant with the superior concern required to transition,” the study says.

“That said, for larger transit agencies, it is wide that with the maturation of integer payments modernization of outgo systems is simply a question of who and when, not if.”

California began introducing fare capped unfastened loop contactless ticketing successful May 2021, expanded it further successful July 2021 and added enactment for discounted fares successful October 2022.

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