Minneapolis' new transit deployment seems limited and even old school—it's a closed loop payment system that's only available on buses and not on the Twin Cities' expanding light rail system.

But a peek under the hood reveals two nuggets of technology that position the system for a future that can accommodate a variety of boarding and payment methods. The new bus card validators are using technology that's both EMV and Near Field Communication compatible, enabling the system to accept emerging payment technologies on the fly.

"The introduction of EMV also creates an opportunity for transit merchants to allow customers to utilize contactless payment options through their phones or contactless bank cards," said Rasheed Behrooznia, vice president of engineering at Cubic Transportation Systems, which installed the technology on the Minneapolis bus system.Riders use the transit agency's Go-To Card to load and pay for rides.

In the U.S., transit ticketing and payments technology is generally behind other parts of the world, but it is catching up, with Chicago among the leaders in the U.S.  New York, the U.S.'s largest transit system by a wide margin, still relies mostly on legacy payment methods but has made several efforts to replace its aging MetroCard. In Dallas, ticketing and transit payments technology company Vix is deploying contactless technology that will allow third party mobile wallets such as Apple Pay and Android pay to pay for rides.

The Minneapolis system did not provide details on its automation roadmap. The argument is open payments can enable wider innovation in transit systems by giving riders more flexibility, and thus increase usage of the system.

"A main challenge for agencies is to decide at what point and how to invest in the upgrades required to support EMV at points of payments," Behrooznia said.

For closed loop systems, the impact of EMV extends mostly to the ticket vending machines and payment terminals at customer services centers, Behrooznia said.

"In open loop systems, such as our system in Chicago…the introduction of EMV may necessitate changes at the readers deployed across the network," he said, adding Cubic could draw on its experience with clients in the U.K. and Australia to aid U.S. networks in the migration.

The choices for transit agencies also reveal the complexity of the EMV migration.

"It's not clear if the networks thought about all of the different kinds of merchants when they proposed the liability shift," said Ben Jackson, director of the prepaid advisory service at Mercator. "Certainly a fare box is different than a point of sale terminal in a store."

For transit agencies, the goal is to move to contactless payments that conform to the EMV standards, Jackson said. "Speed through turnstile or onto the bus is key, and waiting for a chip card transaction would slow down that process too much. If the conversion to EMV leads to increased adoption of contactless payments, then it may encourage more systems to consider open loop payments for boarding, rather than asking riders to use their cards to buy closed loop fare cards."

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