Public Transport

Smart cities and public transport

The more people have access to new technologies, the more likely they are to move to urban areas – a trend that is attracting a lot of attention around the world. More than two-thirds of the world’s population is expected to live in urban areas by 2050, creating enormous challenges in terms of pollution and traffic congestion.

The adoption of mobile devices and smartphones plays a key role in transforming consumer behavior, driving cities to connect and update. With the increase in the number of digital tools such as Smart Watch and NFC-enabled devices, access to (and sharing of) information has improved dramatically.

Thanks to Internet connectivity, communities have formed and the concept of sharing a car, a bicycle or any other means of transportation no longer seems marginal. On the contrary, it becomes vital in polluted and heavily congested cities where citizens are demanding access to mobility and better circulation.

Mobility is the key to successful economic growth and, as a result, it is also a priority for governments and public transportation companies. However, investing in good public transport infrastructure is only part of the equation: to make public transport services attractive to passengers, operators need to simplify and streamline fare collection and offer easy and convenient payment options.

After coins and paper tickets, the race for simplification has now shifted to a ticketing system based on open-loop technology, allowing contactless and paperless operations that save time and money for passengers and reduce paper waste.

How does the account-based ticketing system work?

Open-loop technology is a term used for transit payments as well as other related payments such as parking spaces, water parks, bicycle rental stations, toll gates, etc. Traditional or closed-loop payment systems, such as Oyster in London or Octopus in Hong Kong, require users to store their money on a card, converting it into credit with no repayment flexibility. Clearly, keeping money on a card eliminates the possibility of using it for other purchases.

The differences between open-loop and closed-loop technology are obvious:

  • Have you ever lost your card or been a victim of theft? The loss of a card in a traditional closed loop system is generally equivalent to the loss of money since you have stored a certain amount of money on it. Moving to an open-loop environment eliminates this risk, as account-based technology stores all information in the Cloud, where it is protected against physical or electronic theft and fraud.
  • Have you ever found yourself with a pocket full of cards but unable to find the right one to make a payment on the bus or subway? Closed-loop technology involves issuing separate physical cards that can be reloaded and used only for travel on a certain type of transportation. It is not practical for passengers because it restricts freedom of movement and flexibility. On the other hand, open-loop technology allows passengers to pay simply with a bank card, handheld device, smartphone or QR code scanner, offering additional freedom to the user and reducing the costs for companies to issue special cards.
  • Have you ever thought about adding modes of transportation to your growing network? Closed-loop technology makes this easy, but adding new modes of transportation can be very costly and time consuming, as it requires coding, infrastructure upgrades and sometimes report changes to properly analyze the new data. With open-loop technology, change is centralized. With plug-and-play technology, new modes can be integrated into your transportation network within 24 hours.

Closed-loop technology, such as coins, paper tickets, magnetic strips or even earlier versions of smart cards, have limited interoperability and intermodality. In addition, the balance of this technology is stored on the card, increasing the risk of losing all funds in the event of a loss. And forgetting to keep a close eye on your travel card balance could mean being left at a bus stop in the middle of the night. Open-loop technology solves this problem by allowing reloading via a mobile or Internet application.

Mobile App QR: Mobile App QR code

Open-loop technology also allows funds to be stored electronically in the Cloud, reducing the risk of fraud and facilitating the recovery of funds. With bank cards or mobile QR codes available on your personal account, where the verified payment card is stored, payment is much easier, more flexible and more secure. The image above shows how easy it is to use the mobile application for scanning QR codes.

The ability to reload online via the Internet greatly improves the speed of operations and reduces queues for paper tickets. Thanks to the digitization of operations, the risk of theft and fraud is greatly reduced, which improves profitability and reduces paper waste. The dematerialization of operations makes companies more efficient and helps protect the environment.