USA transit fare system evolution

Reece Martin posted an interesting video, So you built the wrong transit system, that examines the American penchant for building cheap light rail systems that don’t make long term sense. Public transit is a waste of money to Americans with money, so cheap is only way to fund and build public transit infrastructure. The problem is this cheap short term thinking costs more money in the long run. It’s a ‘one size fits all’ mentality.

But as Reece points out, systems can evolve from humble beginnings. Many private Japanese rail lines started out as street trams (that evolved from horse trams) but evolved into the heavy duty regional rail lines we have today. Fare system have evolved too, from paper, to mag strip, to IC smartcard and now mobile devices.

Transit fare systems in America suffer from the same short term cheap thinking, on full display on the MTA OMNY system, the world’s first EMV only open + closed loop fare system. When it’s completed in 2023, barring more delays, MTA will have farmed out every aspect of their fare collection and OMNY transit card issue to banks.

Not to rehash points I already made about OMNY, but Reece’s wrong transit system analogy struck a chord. And unlike rail system evolution, once the transit fare system in locked into the bank payment card infrastructure, from technology (EMV) to payment network processing (VISA, mastercard, AMEX, etc.), it will be extremely difficult, if not impossible to change anything later on.

But why is America so short sighted when it comes to public transit, never investing in a long term self-sustaining viable business model? I ran across an interesting take that explains it neatly. The USA will never have a transit platform business because public transit is a welfare and jobs program, not a self-sustaining business model:

Public transportation in the US is generally very bad and very heavily subsidized. It’s cheap because extremely little service is being run, and the government picks up most of the bill.

Public transportation in the US is less of a way normal people get around, and more of a welfare program and jobs program. Even in places where public transportation is a way normal people get around, e.g., NYC, it is run more like a jobs program than an essential public service.

Reddit user Sassywhat

Open loop fare systems are also vulnerable in new ways nobody predicted: imagine the mess if payment networks go down in a cyberwar, à la the Moscow metro when digital wallets and bank payment card networks were suddenly and omniously turned off. In the case of OMNY where, unlike Moscow metro, everything is EMV payment networked…there is no backup in-house payment settlement system, there is no plan b.

In other words not only is OMNY EMV one size fits all. it’s all or nothing.

OMNY white-label card completes the EMV only OMNY system

After a long gestation, and a COVID related delay, the good old swipe MetroCard replacement finally shipped, OMNY card: a white-label EMV bank payment card using the mastercard payment network, not a MIFARE or FeliCa smartcard like San Fransisco Clipper or Tokyo Suica. MetroCard missed the transit smartcard revolution of the late 1990’s, so MTA and their ticketing system management company Cubic Transportation Systems decided to go all in with a new system built using EMV payment network processing i.e. using ‘open payment‘ regular EMV contactless credit/debit cards for mainstream transit fare, with dedicated white-label EMV prepaid debit transit cards, the MetroCard replacement, relegated to a backup role.

OMNY is envisioned and designed as a ‘one size fits all’ approach where bank card EMV payment networks (VISA, mastercard, American Express, etc.) are promoted as transit tickets since everybody supposedly already use bank cards for all daily life purchases. The addition of fare capping, basically a OMNY closed loop card feature for open loop, further encourages regular credit/debit card use and reduces the need for issuing OMNY card. Any MTA very much wants to get out of the card issuing business.

One problem with one size fits all open loop thinking is it ignores reality. Different people have different transit needs: minors, seniors, disabled, daily commuters with set routes, people without credit cards and so on. Even with fare capping open loop cannot handle these well, if it did TfL would have killed Oyster card long ago. One thing is certain, the piecemeal OMNY rollout has not been an easy transition for MetroCard users. As of February 2022 only 24% of MTA riders use OMNY, that’s a lot of MetroCard. I predict most will only switch from MetroCard when forced to do so when swipe readers are turned off at the gate in 2024.

What is OMNY card?
OMNY card is a private branded ‘white-label’ EMV prepaid debit card that comes with a CVC/CVV security number from a mastercard issuing agency, similar to private branded credit/debit store cards. Ventra tried a similar arrangement years ago. Ventra has a long glitchy open loop history from its debut with the ill-fated mastercard debit Ventra card. Streets Blog had this to say about it in 2017.

Arguably it’s a good thing that the Ventra prepaid debit card is going the way of the dinosaur. The debit card function debuted with a long list of fees that had the potential to siphon of much of the money stored on the card, including:

A $1.50 ATM withdrawal fee
A $2 fee to speak to someone about the retail debit account.
A $6.00 fee for closing out the debit balance
A $2 fee for a paper statement
A $2.95 fee to add money to the debit account using a personal credit card
A $10 per hour fee for “account research’’ to resolve account discrepancies

“These fees were probably not any different than other bank cards offered by Money Network or Meta Bank or other predatory banks,” says Streetsblog Chicago’s Steven Vance, who reported on the issue at the time. “But it was shameful for the CTA to be aligned with that.”

After a backlash, most of these fees were reduced or eliminated, but CTA retail outlets were still allowed to charge Ventra card holders a fee of up to $4.95 to load cash on the debit sides of their cards. So maybe it is for the best that the CTA is getting out of the bank card business.

StreetsBlog Chicago December 2017

Let’s hope the OMNY card issuer and MTA do a better job of hiding their white-label OMNY prepaid debit card fees. Because let’s face it, even though OMNY card is ‘closed loop’ it still uses the same EMV payment network that open loop cards do. I call it faux closed loop because OMNY doesn’t process their own fare payments, nor does OMNY as yet offer commuter passes, student discounts, etc. And OMNY station kiosks that have yet to be installed will be modified ATM machines that take money instead of dispensing it.

A digital version of OMNY is advertised to launch on Apple Pay and Google Pay ‘soon’, although MTA now says it ‘expects’ to launch OMNY iOS and Android apps necessary for adding OMNY to Wallet in 2023.

When the OMNY digital card finally launches expect the same rebranded version of mastercard closed loop Ventra and Opal digital cards, all managed by Cubic. As most of the open loop systems in North America, UK and Australia are designed and managed by Cubic it’s helpful to compare their ticketing system profiles.

Transition bumps in road
When you carefully analyze the different systems and Express Mode transit support listed on the Where you can ride transit using Apple Pay support page, one condition becomes clear: current transit systems do not support Apple Pay Transit cards and EMV Express Transit when the system uses both MIFARE and EMV open loop. It’s a choice between supporting one or the other, not both. I suspect Apple does this because of the complexity supporting MIFARE and EMV mixed mode operations on the same transit system.

OMNY is a new system however, built completely on EMV and EMV only. When Apple Pay OMNY launches, OMNY will be the first system to support both EMV as an Apple Pay transit card and EMV Express Transit mode for credit/debit cards. There is a catch however similar to using Apple Pay China T-Union cards: turning on one card for Express Transit turns off other cards.

This happens when cards share the same NFC ID number which results in card clash at the gate reader. When cards share the same ID, only one card can be set for Express Transit mode at any one time. For EMV cards this applies to payment cards as well so Express Transit Card settings will likely turn off any activated payment cards when an OMNY card to turned on, and vice versa. Otherwise the complaints from Apple Pay MTA users would be endless.

OMNY headache: MTA Railroad ticketing
After OMNY card is launched on Apple Pay and Google Pay, the next OMNY challenge will be integrating Metro-North and LIRR commuter rail ticketing. A difficult task as none of the train line are equipped with NFC card readers. MTA has yet to unveil any commuter rail ticketing integration details. Ventra has the same problem, commuter rail ticketing remains the age old conductor visual inspection, no tap and go contactless for you. And as ever there are thorny open loop user data privacy issues.

OMNY truly represents the state American public transit as it tries to get on board with mobile payments. Progress is good and welcome but a real next generation vision with meaningful forward development of American public transit will continue to be a confused mess despite endless broken promises to fix it…simply because people with money and means don’t use it. If they did, things would have been fixed long ago.

Updated 2022-03-01

Dear Jane, we fucked up, sincerely MTA

The piecemeal MTA OMNY rollout is a lesson how not to do a transition from old system to new system. A case where poor design, poor management choices and unanticipated user interaction, each insignificant in isolation, snowball into a nagging long term problem.

The problem goes like this:

(1) Apple Pay Express Transit is opted in by default and iPhone users don’t always know it’s on. They don’t care about using Apple Pay credit cards on OMNY anyway because fare options are limited and OMNY isn’t installed everywhere and won’t be until at least the end of next year. They use good old MetroCard and put iPhone away in the right pocket or purse carried on the right shoulder.

(2) When the user gets to a OMNY fare gate they swipe MetroCard with its peculiar forward swipe motion on the reader which is located above and behind the OMNY NFC reader, which is positioned low and angled at pocket level. As “MetroCard sucks, it may take several (forward) swipes to enter”, the user leans into the gate while doing this and boom: OMNY reader activates iPhone Express Transit and charges fare without the user knowing it.

Default opt in Express Transit has been with us ever since Apple Pay Suica arrived in 2016. But transit cards are not credit cards and everything was fine. Things got sticky when iOS 12.3 introduced EMV Express Transit that uses bank issued credit/debit/prepaid cards for transit on Apple certified open loop systems. Currently these are Portland HOP, NYC OMNY and London TfL.

HOP and TfL don’t have problems with Express Transit. Both systems use contactless exclusively. HOP has stand alone validators, not gates. TfL gates have the NFC reader located on the top. OMNY on the other hand will have MetroCard swipe cards around for years to come: the OMNY transit card replacement is still in development with no release date. With the slow transition pace and current gate design expect the OMNY Express Transit problem to be around until MetroCard is dead, and OMNY is complete with the new tap only card.

In retrospect MTA should have done it this way: (1) rollout out the OMNY card MetroCard replacement first and add open loop support as the very last thing, (2) design better OMNY gates in two kinds, dual mode NFC + swipe, and single mode NFC only. This way MTA stations could do what JR East stations do: start with single mode tap only express gates on the edges and dual mode gates in the middle. As the transition progresses the dual mode gates get fewer and pushed to the sides with single mode gates taking over.

Apple could help by keeping automatic Express Transit opt in only for native transit cards (Suica, SmarTrip etc.). EMV Express Transit should always be a manual opt in. I understand Apple’s perspective: they want to present Apple Pay Express Transit as a seamless one flavor service, not good/better/best Express Transit flavors. The reality however is that the current technology powering EMV open loop fare systems isn’t up to native transit card standards. Apple can’t fix that.

Unfortunately MTA has taken the dumb path of blaming Apple instead of fixing their own problems. New York deserves a world class modern transit system, OMNY is an important step in building one. MTA management performance so far doesn’t inspire much confidence. Let’s hope they focus on the rollout and deliver it without more delays or problems.


Why is MTA OMNY asking Apple to fix Face ID?

MTA is asking Apple to fix Face ID. We all know that using Face ID with face masks sucks but the MTA situation is special. It’s a perfect storm of 2 separate issues, the Face ID with face mask problem and the OMNY rollout problem combined in a COVID crucible.

The MTA OMNY rollout started in May 2019 with Apple Pay EMV Express Transit support, aka Open Loop. This means regular credit and debit Apple Pay cards work for transit on new OMNY readers. It sounds great but there are downsides: open loop doesn’t support the full set of MTA transit fare options so many users have to stick with the good old MetroCard swipe until the native OMNY smartcard arrives.

Lately we don’t hear much about the OMNY card. It seems delayed along with the rest of the OMNY rollout. And because the rollout is delayed, open loop isn’t really useful because the entire system doesn’t support it. The old chicken or egg problem.

One outcome of this mixed mode is the long running complaint of unwanted Express Transit fare charges that has been constant with OMNY transit gates since the very beginning. Many users who still use MetroCard may not be aware that Express Transit is on when going through an OMNY gate. If iPhone gets close enough to the reader, bingo.

This should not be happening, so the stock advice is ‘turn off Express Transit’. The mixed mode MetroCard/OMNY open loop rollout seemed like a nice idea but implementing Express Transit before the system was completed turned out to be a bad call compounded by the COVID crisis, a victim of poor gate design, poor planning and execution.

The irony here is that iPhone users riding MTA end up turning off Express Transit, the very thing that helps keep face masks on. MTA is asking Apple to help but a ‘how to use Face ID with face masks’ ad campaign courtesy of Apple isn’t going to fix anything.

Until the OMNY rollout on MTA is completed and Apple comes up with something better than the iOS 13.5 Face ID tweak, New Yorkers will have to deal with it and use passcodes. After all, commuters with Face ID iPhones in Japan, Hong Kong, Singapore and China have been wrangling with face masks for years and Apple never lifted a finger. Get used to it.

MTA OMNY Apple Pay Express Transit User Problems

Apple’s decision to offer Apple Pay EMV style Express Transit as a iOS 13 feature when adding cards to Wallet may not have been a good idea after all, especially on the work-in-progress mixed environment that is MTA OMNY. Manual swipe MetroCards will be around for a few years, and with Cubic Transportation running the show it is anybody’s guess when OMNY, the system and the MIFARE MetroCard replacement, will completely in place and running smoothly.

For every tweet saying Express Transit is great, there are plenty of complaints of unwanted OMNY charges because iPhone users didn’t know Express Transit was turned on. The thing is iPhone and Apple Watch have to be damn close for a read. Unless the device is in a pants or coat pocket or wrist that brushes on the OMNY reader, accidental reads can’t happen. Nevertheless Apple would have happier New York City customers keeping EMV Express Transit off by default, and leave default on for the native OMNY transit card, whenever that arrives.

UPDATE: The MTA OMNY reader + Apple Pay Express Transit problem in detail here