Prepaid Cards Play Key Role in New Contactless Transit-Payment Systems

By Kate Fitzgerald, Emerging Payments Editor

When upgraded public transit fare-payment systems went live recently in Chicago and Salt Lake City, contactless payment transactions soared into the millions. What’s more, prepaid cards are playing a key role in giving all riders the opportunity to use the tap-to-pay feature at turnstiles.

In Chicago and Salt Lake City, riders may use a reloadable contactless card and add value with cash, credit or debit cards at vending machines or go online to add funds and manage their transit accounts. In both cities, riders also may use a contactless credit or debit card to pay directly at turnstiles.

With the MasterCard brand imprinted on all transit cards, an optional GPR account is a significant element in Chicago’s new Ventra open-loop fare-payment system that launched in September 2013. This makes the Ventra card North America’s first large-scale dual-purpose, contactless card that enables access to two separate accounts from one card. And, transit authority officials in Salt Lake City said they may consider adding a network branded prepaid card option alongside the closed-loop contactless prepaid card in that city’s electronic fare-payment system that went live in October 2013.

The Utah Transit Authority (UTA) this month presented at the Smart Card Alliance’s Payments Summit, noting key milestones in the rollout of FAREPAY, the closed-loop prepaid reloadable contactless card it offers in partnership with InComm for public transit riders in the Salt Lake City region. UTA riders also may pay with contactless credit or debit cards, cash or legacy paper-based passes still in use. A major goal of upgrading electronic fare-collection systems is lowering operational cost, plus gathering data to develop distance-based fares that may generate more revenue, transit experts say. Gradually handing off the burden of fare payments to third parties and expanding the sale and distribution of fare cards within the general retail marketplace is another major goal of the project, according to Craig Roberts, UTA’s technology development manager.

So far, the strategy is working well, according to UTA, with InComm supporting FAREPAY card sales (at $3 each), card registration and the entire card-reload process, online with a credit or debit card and at 234 local retail outlets. More than 6,500 FAREPAY cards are in circulation, averaging more than 20,300 rides per week, accounting for about 2.5 percent of total riders. “Our merchants are very excited with this program, which we developed to work within their existing POS systems,” Phil Graves, InComm executive vice president, tells Paybefore.

UTA next plans to expand FAREPAY to replace tokens and punch passes, add a loyalty/rewards program for frequent riders and fare caps for monthly passes, Roberts said. UTA also is considering working with InComm to test an open-loop version of FAREPAY, to be sold alongside existing closed-loop version of the card. “If that’s promising and works really well, we may have both products on the j-hook,” UTA’s Roberts told conference attendees, but he gave no time frame for that plan.

Contactless on Track in Chicago

The Chicago Transit Authority (CTA) also reports positive results with Ventra, its contactless payment card program that launched last fall in a partnership with Cubic Transportation Systems Inc., which includes the optional GPR Money Network MasterCard Prepaid debit card issued by MetaBank and managed by First Data. Users may purchase a Ventra card for a $5 refundable fee by going to a CTA vending machine, contacting customer service via phone or the Internet to request to have it mailed, visiting the CTA’s headquarters or going to one of more than 1,000 local independent and chain retail outlets.

Some static surrounded Ventra’s debut in the first two months, due to some technical bugs Cubic and the CTA worked to resolve. Since the start usage has been strong, a CTA spokesperson tells Paybefore. More than 1.37 million Ventra cards were in circulation at the end of January, and more than 80 percent of all riders now are tapping to pay at turnstiles. The CTA doesn’t collect data on how many riders are using the optional prepaid card within Ventra to pay fares, the spokesperson says. “We’ve handed off the banking part of that to our partners as we focus on transportation,” she says.

First Data has not disclosed account usage numbers for competitive reasons, but an ongoing educational effort supports Ventra on the card’s Website, the CTA’s Website and through various events. “Chicago riders are learning to use the two accounts,” Mark Putman, senior vice president, First Data Prepaid Solutions, tells Paybefore. “With the growing number of consumers carrying multiple contactless cards, a technical learning curve had to be overcome first to make sure the riders were tapping their card rather than tapping their entire wallet or purse [triggering fare-payment from other cards],” he adds.

The CTA’s next goal is to add online registration for contactless credit and debit cards used for transit and eventually enable Ventra usage with NFC-capable handsets, the CTA’s spokesperson says. “On smartphones, the Ventra card will be represented within a mobile app on the handset, with all the same payment features,” she said. The CTA hasn’t yet announced a date for the launch of the app.