Open-loop vs closed-loop ticketing: why public transport is moving toward open-loop

The way commuters access and pay for public transport has changed significantly over the past decade. Dedicated transport cards, paper tickets, and cash-based fare collection systems were designed for networks where journeys were relatively simple, operators worked independently, and payment options were limited.

Today transport environment looks very different. Cities are becoming more connected, mobility services are expanding, and commuter s expect the same convenience they experience in retail and banking. Visa claims 44% of commuters identify convenience as the biggest benefit of contactless transit payments, while 32% say the availability of contactless payments would encourage them to use public transport more often. Transport for London reports that contactless payments now account for more than 70% of pay-as-you-go journeys across its network from metro bus to rail, up from around 31% in 2016. As expectations evolve, transport authorities are looking for ways to remove friction from the commute journey while maintaining operational efficiency.

What began as a payment innovation has evolved into a broader transformation of fare collection, with transport authorities adopting account-based platforms that simplify operations and support future mobility services. Instead of requiring commuters to use a dedicated transport card, open-loop systems allow travel using a wider range of payment identifiers, including contactless bank cards, mobile wallets, wearables, QR codes, and transport accounts. Built on account-based principles, these systems offer greater flexibility, interoperability, and scalability than traditional closed-loop models.

What is open-loop and closed-loop ticketing?

The distinction between open-loop and closed-loop ticketing is often explained through the payment method used by the commuter. In reality, the more important difference lies in how fare collection, commuter accounts, and travel entitlements are managed.

Closed-loop ticketing systems are typically card-centric. Commuters use a dedicated transport card or ticket issued by the transport authority, with value, travel rights, or account information linked directly to that transport media. These systems have supported public transport networks for decades and continue to provide a reliable method of fare collection, particularly in environments where dedicated transit cards remain widely used.

Open-loop ticketing takes a different approach. Built on account-based principles, it allows commuters to identify themselves using a wider range of payment methods and identifiers, including contactless bank cards, mobile wallets, wearables, QR codes, and transport accounts. Fare rules, balances, concessions, and journey history are managed centrally rather than being stored on a physical card. This architecture also enables operators to introduce fare capping, concessions, and new fare products without updating devices across the network. This creates a more flexible environment where commuters can move across operators and transport modes without needing multiple tickets or dedicated transit media.

The shift toward open-loop is not simply about introducing new payment methods. It is about creating a scalable, interoperable foundation that allows authorities to manage fares centrally, integrate multiple operators, and deliver a more seamless commuter experience.

Key differences between open-loop and closed-loop ticketing

At first glance, the differences between open-loop and closed-loop ticketing may appear technical. In practice, they have a direct impact on how easily a transport network can scale, integrate new services, and respond to changing commuter expectations.

The comparison highlights a broader industry shift from card-centric systems toward account-based platforms. Instead of storing balances and fare logic on individual cards and devices, open-loop systems centralise these functions, making it easier to introduce new tariffs, connect additional operators, and support multiple transport modes within a single ecosystem. The flexibility is one of the main reasons why transport authorities around the world are investing in open-loop fare collection as part of their digital transformation strategies.

Open-loop vs closed-loop ticketing at a glance

How open-loop & closed-loop ticketing works

In an open-loop environment, commuters use a payment identifier they already carry, such as a contactless bank card, mobile wallet, wearable device, QR code, or transport account, to access public transport services. Rather than storing balances, tickets, or fare rules on the payment media itself, these elements are managed centrally through an account-based ticketing platform.

When a commuter taps or scans to begin a journey, the system records the transaction and applies the appropriate fare rules in the back office. This enables fare capping, concessions, and automatic best-fare calculation without requiring commuters to purchase tickets in advance.

Closed-loop ticketing systems rely on dedicated transport media issued by the operator, typically a transit card or smart ticket. Value, travel rights, and account information are linked directly to that transport media, which commuters must obtain and top up before travelling.

Closed-loop systems remain widely used and are particularly effective for concessionary schemes, student travel programmes, and commuters who prefer dedicated transport products. As networks become more interconnected, however, maintaining dedicated transport media can increase operational complexity and limit flexibility.

Benefits of open-loop ticketing for passengers, operators, and authorities

The benefits of open-loop ticketing extend beyond payment convenience. By centralising fare collection, account management, and tariff processing, transport authorities gain greater control over how fares are managed, updated, and distributed across the network.

For passengers, open-loop removes the need for dedicated transport media and reduces friction throughout the journey. Payment can be made using bank cards, mobile wallets, wearables, QR codes, or transport accounts, while account-based ticketing enables fare capping, concessions, and automatic best-fare calculation.

For operators, centralised fare management simplifies the introduction of new products, tariffs, and concessions without requiring updates across the network. Digital fare collection also reduces the costs associated with cash handling, ticket distribution, and dedicated top-up infrastructure. Few research suggest that introduction of open-loop infrastructure can reduce costs by almost half for the operator.

For transport authorities, open-loop creates a scalable framework for network growth. New operators, transport modes, and mobility services can be integrated more easily while maintaining a consistent fare collection environment and a unified view of commuter activity. It also helps create interoperable transportation ecosystems where citizens, tourists, pilgrims, and occasional riders can access multiple services using familiar payment methods such as bank cards or mobile wallets, removing the need to purchase dedicated transport media for each network they use.

Why transitioning to open-loop

The transition to open-loop ticketing is already well underway across some of the world's largest transport networks.

London is widely regarded as one of the most successful examples. Contactless payments now account for more than 70% of pay-as-you-go journeys across the Transport for London network, demonstrating how quickly commuters adopt open-loop fare collection when barriers to access are removed.

Singapore has followed a similar path through its SimplyGo programme, allowing commuter s to use contactless bank cards and mobile wallets directly across public transport services. The programme operates within a network supporting more than 7 million commuter journeys each day, illustrating how open-loop ticketing can function at national scale.

In Saudi Arabia, O-CITY has supported the digitalisation of public transport through deployments with operators including SAPTCO. Working across multiple city transport networks, the platform enables account-based fare collection, centralised fare management, and support for multiple payment methods within a single environment. Through large-scale deployments, transport authorities can manage fares, products, and commuter services centrally while maintaining flexibility across different operators and transport modes.

Similar principles are being applied in Ajman, UAE, where O-CITY powers contactless and account-based fare collection across buses and taxis. Commuters can pay using EMV bank cards, mobile wallets, wearables, and QR codes, while a dedicated mobile app supports trip planning, live tracking, and digital ticketing. The emirate's transport network carried more than 10 million commuters in 2023, demonstrating how open-loop ticketing can support growing urban mobility networks.

Open-loop ticketing is changing how commuters access public transport, but its greatest impact is on how transport networks are managed. By moving from card-centric systems to account-based platforms, authorities can simplify fare collection, expand payment choice, and create a more accessible transport ecosystem for residents, visitors, and occasional riders alike.

Follow the link to explore how O-CITY helps transport authorities modernise fare collection through open-loop, account-based ticketing: https://www.o-city.com/en/open-loop-payments