Debunking the myths of open-loop payments in transit

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Op-Ed: Debunking the myths of open-loop payments in transit
An agency’s user base will not adopt any technology, no matter how appealing, if it falls short on practicality or expectations.

Pavel Iliev
Dec. 26, 2025
6 min read


Open-loop payments have grown in popularity due to their perceived convenience, speed and ease of use, allowing riders to simply tap their preferred bank card for travel. While their appeal is driven by the promise of a modern, user-friendly experience, open-loop technology has numerous drawbacks, such as implementation challenges, integration costs and ongoing transaction fees. In this article, I’ll share my perspective on the subject, debunk some common myths and offer agencies advice on achieving the best results with the technology.

How political pressure overrides good strategy

Policymakers sometimes market open-loop technology as a sleek, modernization strategy that offers greater convenience, lower costs and higher ridership. The push for full open-loop adoption in transit undermines the reality that many agencies still rely on monthly passes and concessions. Open-loop systems currently lack support for more flexible fare structures unless layered with complex eligibility processes or closed-loop add-ons.

High upfront costs for hardware, software and payment processing platforms fees can be problematic for smaller agencies that may not have the same resources as larger operators. Attempting to roll out open loop as a complete replacement rather than an enhancement can be shortsighted, forcing agencies to abandon their existing closed-loop infrastructure, like smart card systems.

Payment modernization needs to reflect rider behavior, not political hype

Open-loop projects are often unsuccessful because they fail to address the diverse needs of the existing rider base. By neglecting to support popular products like monthly passes, agencies risk alienating a majority of users who may be forced into a less convenient or more expensive system. Let’s take Transport for London’s (TfL) success with contactless fare payments, for example. Many have tried to replicate the model, focusing on the city’s high adoption rates of open loop. ..............(more)

https://www.masstransitmag.com/technology/fare-collection/blog/55337003/op-ed-debunking-the-myths-of-open-loop-payments-in-transit