Frequently Asked Questions

By Transit Agencies

Question: We operate in a small town with minimal tourist or business traffic. Despite this, our City Council, along with councils from similar towns, is advocating for the implementation of an open-loop system over a more cost-effective closed-loop system. Why might this be the case?

Answer:  While it’s true that a closed-loop system could adequately handle most of your ticketing requirements, it’s important to consider the preferences of your patrons. Many people prefer not to carry an additional card, such as a transit closed-loop card. Furthermore, your patrons and City Council members are not always confined to your town. When they travel to other cities and are able to use their credit cards for public transit instead of purchasing local transit cards, they appreciate the convenience. They desire the same level of convenience in their own city, hence the push for an open-loop system.

Question: Is it accurate to say that closed-loop ticketing is less expensive than open-loop ticketing?

Answer: While it’s generally true that closed-loop ticketing systems are less expensive than traditional open-loop systems, this isn’t the case when you opt for UniTiAg. With UniTiAg, open-loop systems can actually be more cost-effective than closed-loop ones. Here’s why:

  • The cost for merchant services via UniTiAg is lower than that of a traditional open-loop system, and is roughly equivalent to what you would pay for a closed-loop system.
  • You can establish your concession and unbanked patrons’ cards using the same contactless EMV technology. This eliminates the need to issue separate closed-loop cards, install a second reader in your validators, or maintain two sets of software. For example, you may issue white-label contactless cards for specific groups, such as local college students who are eligible for free rides.

Question: How does UniTiAg manage to secure more affordable merchant services?

Answer:  UniTiAg is able to secure cheaper merchant services due to a higher level of transaction aggregation. For instance, if a credit card transaction costs a merchant $0.10 plus 5%, it’s beneficial to have multiple rides covered by a single payment transaction. UniTiAg facilitates this through OTRB payments, effectively lowering the credit card acquiring costs. Debit card adoption in UniTiAg is higher (see another FAQ), and debit card transactions are usually charged less by acquirers.

Question: Why does UniTiAg adoption requires lower capital expenditures?

Answer:  Lower capital expenditures on the UniTiAg adoption are attributed to the following factors.

  • The exclusion of point-of-sales functionality from your validation software.
  • The potential to minimize, if not completely eliminate, your PCI DSS scope.
  • The exclusion of complex payment scheme rules for aggregating transit transactions in card-present acquiring. This provides you with greater flexibility when implementing discount and concession policies.

In essence, there’s no need for you to concern yourself with the regulations of Visa, Mastercard, AmEx, and other payments schemes for card-present Point-of-Sales transactions. UniTiAg handles these aspects through card-not-present transactions, directly dealing with your patrons.

Question: Transit patrons often find it cumbersome to top-up accounts before they ride, a friction that can lead to low adoption rates. How does UniTiAg mitigates this friction?

Answer:  Think about your experiences with services like Uber or Lyft, or online marketplaces like Amazon or Alibaba. Do you need to top-up your balance before you get into a car or place a purchase order? Usually, the answer is no. Similarly, with UniTiAg and your transit agency as an online merchant. For your patrons who are credit cardholders and many debit cardholders with a good payment history, this friction is eliminated. They will be charged after their rides, for example, at the end of the day or when the total fare amount reaches a certain limit. This approach removes the friction associated with pre-ride top-ups and enhances the user experience.

Question: What factors contribute to the higher adoption rate of debit cards with UniTiAg?

Answer:  The key difference lies in the experience of low-income patrons who often maintain low balances in their bank accounts. With a traditional open-loop system, these patrons run the risk of overdraft each time they tap their cards. However, UniTiAg allows them to manage these risks more effectively as they have control over their relatively infrequent OTRB payment actions. This level of control reduces the risk of overdraft and contributes to a higher adoption rate of debit cards.

Question: We currently have an extensive closed-loop system and are considering upgrading to an open-loop system. However, we’re concerned about the need to retrain our existing patrons. Does this concern apply to UniTiAg as well?

Answer:  UniTiAg offers the flexibility to maintain the same fare and validation policies that your regular patrons are accustomed to with your closed-loop system. Traditional open-loop systems often require you to modify your policies to comply with the strict and complex transit transaction aggregation rules set by payment schemes. This is why most open-loop projects are supplementary to existing closed-loop ones and typically offer only adult flat fares. With UniTiAg, your regular patrons may not even notice a difference between what they can do with their closed-loop cards and open-loop cards.

Question: Is it necessary to maintain closed-loop cards for unbanked, concession, and low-income patrons when transitioning to UniTiAg?

Answer: The answer is both yes and no. UniTiAg allows you to implement a closed-loop system using white-label contactless EMV cards. These cards are essentially closed-loop, meaning they are not accepted outside your area of operations. However, they utilize the same technology as open-loop systems. This means you’re not juggling two different technologies simultaneously. For example, you only need one card reader at the validator for all cards, and one set of validation software. Furthermore, some of your concession and inclusion programs can be implemented on regular prepaid contactless EMV cards. This approach provides a seamless transition for your patrons while maintaining the benefits of both systems.

Question: How can parents equip their children with open-loop cards?

Answer:  This is a perfect example of what UniTiAg can do that traditional open-loop systems cannot. A parent can request non-payment white-label contactless EMV cards for each child, set up an OTRB for each child’s card, and pay the OTRBs using the parent’s payment methods via UniTiAg. This provides a seamless and convenient solution for families.

By Ticketing Systems Vendors

Question: Does UniTiAg pose a competitive threat to us?

Answer: No, UniTiAg does not compete with ticketing system vendors. Transit Agencies rely on your expertise to implement their ticketing systems. Your role includes implementing the TA fare and validation policies in the TA central system and validators, reconciling transit operators within the TA, and implementing the UniTiAg API.

You can view UniTiAg as a cost-effective acquiring solution that also serves to unify and simplify your systems.

Question: As a significant portion of the COFC is paid to us by transit agencies, we’re concerned about having to share it with UniTiAg. How does this impact us?

Answer:  This situation is actually beneficial for both parties. UniTiAg is able to reduce merchant service fees due to its advantageous position in negotiations with acquiring processors, thanks to the increased transaction volume.

While it’s true that the scope of your work per project may decrease due to the simplified card-not-present acquiring environment and reduced capital expenditures of your customers, this can lead to more successful projects, more customers, and higher fare volumes. Additionally, your services will become more standardized as there’s no need to support interfaces with numerous acquirers. Your validation software will also be more standardized, eliminating the need to support card-present payment schemes and undergo numerous EMV Level-3 certifications.

This creates a win-win situation.

Question: We’ve already invested in validators. Now, to transition to UniTiAg, we need to modify the validator software. What are the cost implications of this change?

Answer:  The transition to UniTiAg actually simplifies the software requirements for your validators. The upper layer of validation software, which in a classic open-loop system would implement transactions for Visa, Mastercard, and other payment schemes (known as the EMV-Level 3 layer), is not required with UniTiAg. Instead, this layer needs to support a significantly less complex software implementing the simple UniTiAg API. Remember, there will be no card-present transactions, and your validator will no longer function as a point-of-sale. Generally, such software implementation should be less costly and can be implemented significantly faster. We can provide you with the business requirements that will allow your validator software development team to estimate the expenses.

By Two-Sided Marketplaces 

Question: We have concerns that card schemes, such as Visa and MasterCard, may not approve of their cards being used as passes rather than as means of payment at validators, which are no longer point-of-sale systems. How does UniTiAg address this?

Answer:  In the UniTiAg, these payment cards are indeed used as a means of payment. However, instead of being used at card-present point-of-sale systems, they’re used in OTRB payments. UniTiAg ensures that the OTRB cannot be paid with a card different from the one tapped at the validator, with the exception of non-payment white-label cards. This maintains the integrity of the payment process while providing the convenience of a pass-like system.

Question: How do we generate revenue from a UniTiAg project?

Answer:  Currently, the COFC is estimated to be between 7% and 12% of fare revenue, excluding capital expenditures. A significant portion of the COFC comes from merchant service fees. UniTiAg reduces these merchant fees and also decreases capital expenditures, thereby increasing your share of the revenue.

The estimated annual fare revenue from public transit systems around the globe is approximately USD 300 billion.