pull down to refresh
No. They don't. They just pay up like everyone else, or get insurance with their merchant bank. I know because I was a designer of this system back when I was still young and smart.
There IS something called "transit rules" which are a tad more flexible on how you do automagic auth, but much more stringent on the allowed amounts, than what for example a hotel may do, because there's no speaker in a subway gate that tells you they're over-authing, like the hotel desk clerk. But you don't have that problem with an online payment, because you can just say: yo we will auth you for $25, done.
The reason for $25 is because that's the cost of a chargeback on everything except amex. So If you charge under that, you actually use beloveth game theory to prevent chargebacks.
My statement though isn't that cards and their networks are awesome. My statement is that the Matts of this world that appear to have zero knowledge of how that works, should shut the fuck up and focus on the real benefits of using LN: no KYC, no trust, no 3 day settlement delay (depending on what you define settlement as), lower fees and a great subaccount system that you can just put in place without permission.
I guess I always assumed subway systems do enough volume that they get special deals with credit card companies. But for somebody who makes a niche API that does not necessarily have such a large captive customer base, couldn't they mostly get ripped off? I haven't yet used one of the subways where they let you use your cc as a ticket (or I'm just stodgy and always still buy the ticket at the machine).
You're point is fair, though. CCs are big enough that they will doubtless have many solutions to this. My statement was too strongly worded.