Open-loop Contactless Payments in Transport

26 Aug 2019

  • Australia has embraced the convenience of contactless transactions, with one of the highest rates of adoption in the world;

  • In an open-loop contactless payment system, commuters pay their transport fares using their contactless scheme Visa, Mastercard or AMEX credit or debit card, smartphone (digital wallet) or wearables;

  • Transport for NSW recently announced that open-loop contactless payments will now be made available across all Opal-enabled buses, post enabling other modes of transport.


Point of View


EMV technology has allowed payment systems to offer customers the option of quick and frictionless contactless payments. Contactless payments are payments that are made by waving or tapping an EMV contactless credential – usually a card or smartphone – against a merchant’s point of sale (POS) system. Credentials are shared with the POS using Near Field Communication (NFC) wireless data transfer.


Australia has embraced the convenience of contactless payments and has one of the highest rates of adoption in the world. According to Westpac research and statistics from Visa, 325.4 million Visa payWave payments made in 2017, up from 258.6 million in 2016. The research suggests that this 26% rise is only set to increase further in the coming years. Figures released by AusPayNet also indicate that more Australians are shifting towards using their smartphones for payments, with three in five smartphone owners using them to make payments.


As the payment system evolves and the usage of contactless payments increases, applying contactless technology to transport ticketing is a natural progression.


Contactless payments were first trialled in 2017 and has since expanded to include all modes of public transport. Commuters will no longer be required to carry their Opal cards to travel. A Visa, Mastercard and AMEX card or mobile wallet credential (provisioned on their smartphone, tablet, or wearable) can be used to pay for transport. These are known as open-loop payment credentials. The same payment credential (card, smartphone/tablet or wearable) is required to be tapped on at the start of the journey and off at the end to appropriately register the trip.

For adult fares, rewards are the same when using either a scheme contactless payment credential or Opal card. The same payment credential must be used consistently to receive all discounts. Those using Concession, Children/Youth and Seniors Opal cards will still need to use their Opal card to receive their discounted fares and applicable travel rewards.


CBA plays a key role as the acquirer of the Transport for NSW transactions. According to CBA’s Business Customer Solutions Executive GM, Clive Van Horen, “cities and public transport authorities across Australia are realising the value this payments technology can deliver for both customers and transport providers alike. It demonstrates the future capability for commuters across the states and territories, and will ultimately make commuting across the country, and across transport networks a simpler and easier day-to-day process."




Before contactless payments were introduced in NSW, commuters were paying for their fares using transport authority-issued, closed-loop smart cards (Opal cards). In a closed-loop transport system, smart cards allow consumers to load funds onto them, either in-person at a top up machine or retailer, or online. The value can only be spent accessing the associated transport network that recognises the card. Each Australian state has its own version of closed-loop smart cards (e.g. myki in Victoria or Go Card in Queensland), creating a lack of interoperability across Australian cities. Commuters must purchase unique smart cards to use on public transport when they travel between states.


In an open-loop contactless payment system, commuters can pay for their fares using their contactless open-loop credential. Since they use EMV payment technology, open-loop contactless payment systems are generally interoperable globally. Commuters have the convenience of accessing transport services using their preferred contactless payment method and managing funds with their preferred bank.


Open-loop contactless payments in transport offer a series of benefits to transport authorities and customers, beyond those realised by a smart-card based ticketing system. These benefits lead to high adoption rates amongst customers looking to transition to an open-loop transport system.



  • Quick and Seamless – Commuters no longer have to queue to purchase or top up Opal cards. This is particularly beneficial for infrequent, interstate or international visitors, as they do not need to purchase a smart card prior to travel.

  • Secure and Transparent Payments – Customers can see the payment deductions in their bank statement or app. This allows them to match the transactions back to their journey when registered with the transport authority.

  • Convenience – Customers can simply ‘tap and go’ with the payment device already in their possession (i.e. credit or debit card, or smartphone). There is no need to tie-up funds in a closed-loop stored-value product.

  • Accessibility – Enabling contactless payments in transport increases the number of ways customers can access the transport network. This is especially useful for infrequent, interstate and international travellers, who may not understand the different ticketing systems in place.

  • Secure – Open-loop contactless payments leverage on EMV technology, the global standard for secure debit or credit payments using chip cards. EMV-compliant chip card payments protect against the use of counterfeit, lost or stolen cards and skimming. EMV technology is also used on mobile NFC devices emulating a contactless chip card, enabling a secure payment.

Transport Industry

  • Cost Savings – Enabling open-loop contactless payments for transport will allow transport authorities to close or reduce the number of ticket offices and smart card self-service machines. The reduction in cash handling, single use ticket printing, and producing and maintaining smart cards will help reduce operational costs.

  • Increased Patronage – Giving customers an additional way to pay for and access transport networks will reduce ticketing as a barrier to use. Therefore, the number of commuters using the network will increase.


Industry Initiative


AusPayNet played an active role in facilitating the adoption of contactless payment technology across NSW transit. While transit is an excellent use case to leverage payments technology, industry collaboration was required to ensure a consistent customer experience. The key difference between paying for an everyday purchase and paying for transit is that for the latter, you don’t know the total price when you tap on. The total fare price is shown when the customer taps off their payment credential at the end of their journey.


The Australian Open Loop Contactless Transport Payments Framework was established in collaboration with the payments and transport industry. The Framework’s aim is to ensure a seamless consumer ticketing experience and help transport authorities and their partners successfully implement open-loop transport payments. In response to TfNSW’s open-loop initiative, Andy White, CEO of AusPayNet, said, “the roll-out of contactless payments in Sydney is an Australian first. AusPayNet continues to be the home for cross-industry collaboration to support such innovation and I look forward to AusPayNet’s open-loop transport payments framework being used by more transport operators across Australia as they implement contactless payments.”


Open-loop contactless payments in transit is advantageous as it creates interoperability across different modes of transport, and potentially across every Australian state if implemented accordingly. The next phase of this project could see transport authorities setting a ‘customer hierarchy’ within this open-loop payment system. Customers will be able to pay for fares by tapping on and off using a different payment credential each time (i.e. tap on using a credit card and tap off using a wearable).



The opinions and views expressed in this publication are those of the authors exclusively and do not purport to reflect the opinions, views or official policy position of AusPayNet or its members. This publication is also subject to the AusPayNet Terms of Use and Privacy Policy available on the AusPayNet website.



Please reload

Technology and Innovation
Policy and 
Please reload


The opinions and views expressed in this publication are those of the authors exclusively and do not purport to reflect the opinions, views or official policy position of AusPayNet or its members. This publication is also subject to the AusPayNet Terms of Use and Privacy Policy available on the AusPayNet website.


Copyright © 2017 AusPayNet. All rights reserved.  

Read full Terms of Use

Privacy Statement