Discussions on introducing ‘Open Loop’, a precursor to Apple Pay’s transportation card, 

Publication date: 2024-03-24 12:05 Page: 2024-03-25 Page 2

Promotional image for Visa contactless transportation payment in Hong Kong. 〈Source=Visa〉

As the number of foreign tourists visiting Korea increases due to the coronavirus pandemic, the introduction of 'open loop', which is a precursor to the application of Apple Pay transportation cards, is making rapid progress.

Open Loop is a system that allows you to pay fares on domestic public transportation using a credit card used overseas without a separate transportation card issuance process. It is necessary to upgrade or replace domestic transportation card terminals to meet EMV (Europay, Mastercard, Visa) certification, which is the standard for global processing companies.

According to the industry on the 24th, Visa Korea is currently pursuing a feasibility study with a consulting firm regarding the introduction of open loop in Korea. We began discussions with key stakeholders. As public transportation is the main means of transportation for tourists in Korea, the introduction of open loop is essential to increase the convenience of payment for them. Once open loop is introduced, Apple Pay's delayed support for domestic transportation cards will also naturally occur.

Currently, the only means for foreigners to use open-loop (contactless) payment in Korea is the 'K Airport Limousine', which has about 60 units that travel between Incheon Airport and major areas of Gangbuk and Gangnam in Seoul. It supports physical Visa contactless credit cards as well as Apple Pay simple payment. This is interpreted as the impact of the business agreement signed in May last year between Visa Korea and the Korea Tourism Organization on the introduction and expansion of contactless payment systems in domestic transportation. It has been reported that Korea Information and Communication's integrated multi-pad 'Easy Check EP763' has been introduced as an on-site payment terminal, and considering this, it is expected to be easily introduced to taxis and metropolitan buses in the future.

Foreigners visiting Korea have difficulty purchasing and using public transportation, including the subway. The ticket vending machines installed in subway stations do not currently support credit card payments, and the new ticket vending machines scheduled to be introduced in the future have not yet been confirmed to apply to overseas credit card payments.

Payment experts believe that the cost of building transportation card terminal infrastructure to introduce open loop domestically is not as large as expected. It is analyzed that many terminals currently in operation on buses and subways can apply EMV certification through software upgrade without device replacement.

Rather, it appears that the reason for the delay in introducing open loop so far is due to the time and cost issues required to build a central settlement system that operates at the back end of payments. When open loop is introduced, consumer social welfare can increase, including the expansion of Apple Pay payments, but the key is whether it is possible to persuade domestic businesses by quantitatively proving the real economic effect compared to the construction cost. The benefits of introduction include reduced costs for ticket vending machines and operating personnel, and increased use of public transportation due to increased convenience.

In fact, the number of contactless ride payments in the global market reached 1.6 billion as of last year, an increase of about 30% compared to the previous year. In addition, the proportion of contactless transactions among face-to-face transactions used by Koreans overseas in the second quarter of last year was calculated to be 40% and is gradually increasing.

Reporter Hyungdu Lee dudu@etnews.com

Original Source : 애플페이 교통카드 전초 '오픈루프' 도입 논의 스타트 - 전자신문 (etnews.com)