PAR Deny Lists – a new way of dealing with fraud
The PAR Solution: Blocking Fraud at the Account Level Littlepay
Five years from now, will paper tickets be retro, QR-codes archaic, and smart cards a quaint relic from transit payments’ archives? Will actual wallets be carried any more? Or will smart devices be the only thing we need to shop and pay for everything, from food to transit? The debate between open loop EMV vs closed loop smart cards for fare collection rages on.
While cash remains entrenched in the fare collection ecosystem today, we can see a tomorrow not far off when the transit payments landscape could look simpler. One payment method for all your travel, shopping and other spending – the bank card or mobile wallet you carry everywhere.
As the industry continues to debate where the future of transit and mobility payments lies, most transit operators agree that cash is no longer king. Expensive to handle and process, transaction times are slow and this leads to long dwell times, station congestion and boarding bottlenecks.
For years, the smart money has been on contactless payments displacing cash in public transit, bringing convenience and ultra-fast transaction speeds. They can be processed more efficiently than cash and transactions are traceable, reducing the burden on customer service centres.
The question is which contactless payment method should transit operators provide to become riders’ go-to solution for fast, frictionless fare payments? This post looks at two of the contenders: open loop EMV vs closed loop smart cards.
Closed loop smart cards are typically issued by transit operators and authorities and can only be used within their private ticketing system. Some transit smart cards interact offline with devices onboard vehicles, and others act as tokens, working in tandem with a back office.
Outside of Account Based Ticketing (ABT), closed loop schemes that can work offline require smart cards to have more logic on the card. Specialised devices are needed to validate the cards, enforce security and update their stored value or pre-loaded ticket at the point of use. These devices deduct a fare or validate a ticket when the passenger taps to board a vehicle.
In Account Based Ticketing, the smart card is used as an identifier to uniquely log passengers’ access to a transit system. Decisions about what to charge are made centrally in a back office, based on information associated with their account, which is collected when they tap into the system. This might include their eligibility for concessions, or details of any period passes held.
In open loop EMV fare collection systems, passengers can use their bank-issued contactless credit or debit card; prepaid EMV card; mobile wallet; or smart device, to pay for journeys. This means there are no costs associated with issuing or replacing cards, as this is handled by banks.
Open loop payment methods can be used to pay within many different systems (pretty much anywhere these days), and are funded by a centralised payment source, such as a bank or credit card account. Unlike closed loop cards, they don’t require a prepaid amount to exist in the system, unless the card being used is a prepaid EMV card.
Passengers tap their contactless card, or contactless-enabled smartphone or wearable, on a payment reader to validate it and access transit services. That tap is processed by a back office, which handles aggregation, fare calculation and settlement through the banking network. Depending on the fare rules configured by the transit operator, taps may be aggregated over a given period and fare caps applied, so passengers automatically pay the best value fare.
Smart cards’ dominance in transit ticketing has been challenged in recent years, as other payment technologies have emerged and gained popularity. It has become clear that there is no one-size-fits-all solution, and this has led to increasing adoption of centralised ABT systems. With a single view of a customer, they can have one or more different types of identifiers linked to it – which could be a smart card, QR code or an EMV card.
A passenger using an ABT transit ticketing system taps or presents their supported token to travel, and the data associated with that tap is used by the ABT back office to calculate the charge to the passenger for that trip.
A key benefit of an ABT solution is that any logic can be applied in the cloud to determine the amount to be charged. In addition, validator devices can be simpler and cheaper, as their role is limited to accepting a tap from a supported token. All the complexities around fares, capping and discount entitlement are managed in the cloud.
Stored-value, card-centric, closed loop schemes work offline; and, therefore, provide a solution to eliminate the losses incurred when poor connectivity causes downtime in ticketing solutions. However, now that EMV transit specifications also allow for offline authentication and processing, there is greater interest in ABT systems using a variety of tokens to travel. They can offer two of riders’ most important must-haves – value and payment choice.
As the open loop EMV vs closed loop smart card brigades continue to debate between themselves, we see many large transit operators around the world promoting their use of one, the other, or both. Here are some of the pros and cons:
As the open loop vs closed loop transit payments rages on, the adoption of contactless EMV transit payments continues to rocket in many countries, some of the most persistent concerns about deploying open-loop EMV systems are crumbling. Technology is advancing, rapidly opening up more rider-focused functionality.
What if EMV fare collection could allow prepayment, providing access to reservations, concessions and period passes? Could it cater for the unbanked? What if the same contactless card could be used for PAYG and mobile payments, and this unified payment experience unlocked a channel for valuable, real-time rider notifications?
As future blog posts will explore, we’ve reached a juncture where all this is possible. It will be interesting to see whether these innovations will be the catalyst for contactless open loop fare collection becoming the number one choice to displace cash from the transit system.
The PAR Solution: Blocking Fraud at the Account Level Littlepay
Overview For the most part, transit agencies around the world
The Basics of Processing a Payment In its most common