Open loop refers to payments that can be made at most retail outlets using international standards, while closed loop means it only works with specific retailers, usually based on proprietary technology.

Open-loop transit payments generally refer to the use of bank-issued contactless credit and debit cards instead of closed-loop transit authority/ operator alternatives, such as the MetroCard in New York City or the Bay Area’s Clipper Card…

The fundamental reason U.S. transit agencies have been hesitant to deliver since the first launches and pilots has been the time it takes to authenticate the card when it is tapped at the gate. Prior to contactless EMV, the only way the agency knew they were definitely not seeing a fraudulent card, and that they were going to get paid, was to conduct a full online authorisation to the card issuer.
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