Beyond the Turnstile: Adding Open-Loop Functions to Transit Fare Cards

Boston, MA — December 18, 2013 — Mercator Advisory Group’s new research report, titled Beyond the Turnstile: Adding Open-Loop Functions to Transit Cards, examines the opportunities and risks faced by transit agencies enabling commuters to use their cards outside of paying fares.

The Chicago Transit Authority recently opened up its fare collection system to contactless cards of all types and added an open-loop purse to its new Ventra card. While the ride has not been smooth, the CTA is working through the problems and providing lessons for other agencies that might want to offer similar cards.

"Change comes slowly to transit systems because of large legacy systems, costs, and political considerations, but opportunities still exist for intrepid program managers who can manage complexity," Ben Jackson, senior analyst of Mercator Advisory Group's Prepaid Advisory Service, and author of the report, comments.

Other transit agencies in the United States have moved to contactless fare collection systems and some have provided additional perks to their riders who show their cards in local businesses. In some other countries, transit agencies have opened up acceptance of their fare cards to various degrees to allow commuters to use their cards for more than fares.

Well-constructed open-loop and transit hybrid card programs have the potential to become large players in the prepaid card market. Before that can happen, program managers, issuers, and transit agencies will need to work together to ensure that the programs function correctly in a way that is acceptable to the many stakeholders involved.

The report has 22 pages and 5 exhibits.

Companies mentioned in this report include: Bank of America, Chase, Chicago Transit Authority, Cubic Corp., Dallas Area Rapid Transit, First Data Corp., Delaware River Port Authority, the Port Authority Transit Corp. (PATCO), Los Angeles County Metropolitan Transportation Authority , Massachusetts Bay Transportation Authority , Metro Transit Authority of Harris County Houston, Texas, Metropolitan Atlanta Rapid Transit Authority, Miami-Dade Transit Agency, New York Metropolitan Transportation Authority, Octopus Cards Ltd., Ready Credit Corp., Southeastern Pennsylvania Transportation Authority (SEPTA), Utah Transit Authority, Washington Metropolitan Area Transit Authority, Xerox Corp.

Members of Mercator Advisory Group's Prepaid Advisory Service have access to this report as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits.