11 Must-Know Terms for Account-Based Systems in Public Transport
Over the last few years the transit industry has been flooded with new terms such as EMV, contactless, first tap risk, open-loop and account-based ticketing. In fact, many people would consider these terms to all reference the same thing. That’s not necessarily the case.
Whether you are starting your investigations into account-based ticketing or have known about it for some time, these 11 key terms are sure to help you and your colleagues assess the pros and cons of this model, using common language and understanding.
1. Account-based: is a fare-collection system where the proof of entitlement to travel, and any records of travel are held in a back-office and not necessarily on any physical media held by the passenger. Account-based can operate in both an online and offline world using risk-managed revenue protection techniques as appropriate.
2. Card-based: where the funds, proof of entitlement to travel and any primary records of travel are held directly on the card. All equipment in a card-based system must be able to perform fare calculations and update travel records directly to the card each time it is presented.
3. Open-loop: refers to a payment source (could be a card, mobile wallet, QR code) that is widely accepted by multiple merchants. The issuer and acquirer can be different. Visa and Mastercard are both considered to be open-loop cards. WeChat Pay in China is considered to be open-loop as it is so widely accepted.
4. Closed-loop: is a payment card from a single issuer (Transport Authority or Operator), where funds are pre-loaded onto that card. The card can only be used to pay for products and services at merchants recruited by the same payment card scheme.
5. EMV: stands for Europay, Mastercard and Visa, the three companies that originally created the standard. The standard is now managed by EMVCo, a consortium with control split equally among Visa, MasterCard, JCB, American Express, China UnionPay and Discover. Only contactless EMV (cEMV) is applicable to mass transit systems (as opposed to contact EMV).
6. Contactless: refers to a contactless card which has a chip embedded that can communicate with a payment terminal or transit equipment, via NFC. Contactless is not exclusive to EMV. For example, MiFare is also a form of contactless. It is important to understand whether the reference to contactless is for an open-loop or closed-loop card.
7. Online: refers to a fare collection system where the fare calculation and revenue protection takes place in the back-office in real time. This requires a network connection such as ethernet, Wi-Fi, 3G or 4G.
8. Offline: refers to a fare collection system where the fare media authentication and revenue protection does not rely on a real time communication network. The authorisation occurs locally (gates/readers) and relies on the application of lists to that equipment.
9. First tap/ride risk: in an account-based environment, is when customers are presenting their own fare media that is not pre-registered with the Transit Authority, so there is a risk that they will not have the funds to pay when the transactions are billed to the account. The amount of risk is dependent on the highest value fare that could be taken in the maximum amount of time before payment is billed and a new list is applied to block the fare media from the system.
10. Pre-pay: the ability to pre-load funds onto a card, account or token to travel.
11. Post-pay: refers to the ability to travel first and pay after. EMV compliant systems are typically post-pay, which is where the first tap risk becomes important. However, account-based systems could be pre-pay, post-pay or have both options available for the passenger.
To learn more about account-based ticketing implementations, please see our research “Insights from Early adopters”.