In the ever-evolving landscape of public transportation, the methods of handling payments have undergone a significant transformation. Transit agencies, responsible for ensuring seamless and efficient commuter experiences, are now faced with a pivotal choice: SaaS (or Cloud) Deployment of Open-Loop payment systems, or traditional On-Premise payment solutions.
This paradigm shift in payment processing technology has brought about a compelling debate, with many transit agencies increasingly opting for cloud-native solutions. According to Statista, SaaS spending almost reach 200 bln USD in 2023 and will continue to grow onwards.
In this blog, we will explore benefits of choosing cloud-native solution compared to on-premise alternatives.
Model differences
Cloud-native open-loop AFC solutions refer to payment systems where the infrastructure, including servers and software, is hosted and managed by third-party cloud providers, offering remote access, scalability, and automatic updates. Cloud-based systems often follow a subscription or pay-as-you-go model, reducing the initial capital expenditure required for on-premise hardware.
In contrast, on-premise payments involve payment systems operated on an organisation's own physical servers, providing greater control but requiring on-site access, manual maintenance, and infrastructure investments.
Cloud-based solutions excel in accessibility, flexibility, and security, while on-premise solutions maintain control but necessitate more extensive in-house management and resources for the operator.
What is better for transport operator: cloud or on-premise
A multitude of compelling factors often leads many transit agencies to view cloud-based open-loop payments to be a more effective alternative compared to on-premise solutions. However, the choice between cloud and on-premise solutions depends on an organisation's unique needs, budget, and goals.
What is the Future of Open-Loop Payment Systems for Transit Agencies?
The future of open-loop payment systems for public transit operators is characterised by a convergence of emerging technologies and shifting consumer expectations. The transportation payment solutions marketsize is projected to reach 28bln USD in volume by 2027. These systems will increasingly integrate with various mobility services, offering passengers a seamless multi-modal transportation experience. Contactless and mobile payments are getting much traction in recent years and the popularity of contactless cards is projected to only to increase, given increasing internet and smartphone penetration among all generations in all types of environments: from small cities to large magepolices and regions.
The adoption of cloud deployment for open-loop payment systems represents a transformative shift in the realm of public transportation. Cloud solutions offer transit agencies unmatched scalability, flexibility, and safety, enabling them to efficiently respond to changing passenger demands without the burden of costly hardware upgrades. This not only optimises operational efficiency but also enhances accessibility and convenience for commuters, ultimately increasing ridership and overall customer satisfaction. The cloud open-loop ticketing system holds great potential as a payment option for public transportation. Although there may be hurdles to overcome during its implementation, the benefits it brings to both transportation providers and commuters justify the investment for transport operators.