A brief history of transit fares: closed and open loops

Transit agencies have spent decades investing in ways to make paying for transit faster, cheaper, and more reliable. Tokens gave way to paper tickets, which gave way to smart cards. If you’ve ever bought a card to store cash value that can only be used on one transit system, you’ve used a smart card. Smart cards are also called “closed loop” systems, meaning that once a dollar bill is inserted into the system, it can only be used within the closed system of the transit agency. 

Now in the United States, smart cards are giving way to “open loop” ones. The global banking system is considered one big “open” loop, and it includes every bank, every ATM, and every card already in your wallet or on your phone. You already pay for coffee, dumplings, and rent within this open loop system. Open loop has been the norm in Europe and parts of Asia for several years, and now, several US transit agencies allow you to pay to ride the bus with open loop, too.

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Who benefits from an open loop system?

Open loop systems are much cheaper to operate for the transit agency. Larger agencies can easily save millions of dollars a year by no longer having to provision smart cards or tickets.

Open loop got a big boost during the pandemic and the era of social distancing. As opposed to buying a smart card, swiping it, and waiting for the machine to validate it, tapping a bank card reduces the amount of time riders and operators have to spend in close proximity to each other.

What about riders? Nearly all riders can save time and money by paying with an open loop bank card. Open loop fare payment systems work especially well for tourists and people who don’t ride transit frequently. These riders have the most to gain from skipping the whole “buy a separate card” process and simply paying with their existing bank card. 

Commuters who receive transit benefits on an open loop commuter debit card also benefit. Rather than having to constantly transfer funds between a commuter debit card and a smart card, these riders can simply tap to pay with their commuter debit card on the bus or train and ride. Learn more about how this works with the Jawnt Pass.

It’s not all roses and on-time arrivals though, of course.

• Transit agencies save money by not having to provision smart cards, but they do end up paying higher transaction fees to the payment processor each time a rider taps to pay. This is currently a point of contention within the industry.
• Many riders qualify for discounted fares by being seniors, veterans, students, etc. Those riders simply use a different smart card to ensure they’re charged the discounted rate, but bank cards can’t automatically distinguish between riders this way. Fortunately some leading agencies, most notably in California and New York, are piloting ways for seniors, veterans, and others to still receive their fare discount when they tap their bank card to ride.
• Bank cards can’t entirely replace cash, because so many riders either have to or choose to pay with cash. Cal-ITP estimates that 26% of California residents are either unbanked or underbanked. Open loop transit fares have been proven to actually expand financial inclusion, but the fact remains that transit agencies may be able to retire smart cards and tickets, but will likely always need to accept cash.

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Where can I pay via open loop in the US today?

As of December 2024, the following transit agencies accept transit fares through an open loop fare payment system:

• Chicago Transit Authority (2013)
• New York Metropolitan Transportation Authority (2019)
• Las Vegas / Regional Transportation Commission of Southern Nevada (2020)
• Monterey-Salinas Transit (2021)
• Santa Barbara Metropolitan Transit District and Clean Air Express (2021)
• Miami-Dade Transit (2021)
• California’s “Far North Group” / Humboldt Transit Authority, Lake Transit Authority, Mendocino Transit Authority, and Redwood Coast Transit Authority (2023)
• Philadelphia / Southeastern Pennsylvania Transportation Authority (2023)
• PATH / Port Authority of New York and New Jersey (2023)
• San Diego Metropolitan Transit System (2024)
• Boston / Massachusetts Bay Transportation Authority (2024)
• New Haven / CT Transit and River Valley Transit (2024)

Coming soon:

• Sacramento Regional Transit
• Washington DC Metro
• Los Angeles Metro

Did we miss an agency? Drop us a line and let us know! openloop@jawntpass.com.

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