Why do so many public transit agencies make it so difficult to…pay for public transit

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Unlike the normal free market business goal of “maximize profit”, public transit provides the benefit of reduced congestion and pollution, which leads to shorter travel times and cleaner air, respectively, for both users and non-users of the service. As a result, the short-term goal of a public transit agency can be thought of as “maximize use of the existing transit infrastructure”.

With this in mind, let’s consider some of the barriers to this objective that transit agencies place upon themselves today.

  1. Passes — passes force riders to make decisions well in advance of travel, leading to less transit use
  2. Transfers — complicated definitions of transfers and their costs is the direct opposite of what TNCs (Transportation Network Companies like Uber and Lyft) do by providing upfront fixed pricing
  3. Medium of payment — other industries have embraced debit/credit card standards for payment, while transit agencies require the purchase of a proprietary payment card

1. Passes

The idea of passes is antiquated — while it made sense in a world before electronic payment, it serves no real purpose today, only adding needless decisions for riders, which could decrease the use of transit. Every month, potential transit riders must decide whether or not to purchase a monthly pass. While this is a simple decision for people with regular and predictable commutes, it’s a difficult decision for someone who has an unpredictable schedule (e.g. works part-time, travels for work). If he/she opts not to purchase the pass, it could cause him/her to increase their use of TNCs (Uber, Lyft) since their transit spend isn’t capped and/or unfairly end up paying more than the cost of a monthly pass for their use of transit.

The solution is to simply cap the total fares collected from a rider for each of the time periods where passes were previously sold. TriMet in Portland, Oregon ingeniously refers to this as earning a pass. It’s simple — the first 2.5 hours on a bus or train costs $2.50; after the first 2.5 hours, if you use it again, you are charged another $2.50 and you’ve earned your day pass, which allows for unlimited rides for the remainder of the day. TriMet applies the same concept to monthly passes.

2. Transfers

Not only is it technically complicated to define and implement what transfers are acceptable (is it the most direct route by distance, the fastest route, can only certain transfer points be used), complexity creates confusion and requires user education. Inevitably, riders may not understand the rules and over-estimate the cost of their trip on transit, which could lead to a user opting for a TNC ride instead of the bus. Further, riders may feel the need to check their statements to ensure the transfer was coded correctly, which could lead to costly call volume and refund requests.

Shifting from complicated transfer rules (such as the TTC in Toronto, which used to define it as “a one-way continuous trip”, but has recently changed to 2 hour time-based transfers) to simple time-based transfers (in Portland, Oregon, all payments are valid for 2.5 hours of travel on an unlimited number of routes and vehicles) eliminates this complexity for riders.

3. Medium of payment

Many transit systems mandate use of their proprietary payment card (e.g. NYC’s MetroCard, San Francisco Bay Area’s Clipper Card). Without the card, riders can either pay cash (e.g. San Francisco Muni) or on some systems such as the trams in Melbourne, Australia, not ride at all. Further, these cards often carry purchase fees ranging from $1 for New York City’s MetroCard to $6 for Toronto’s Presto Card. Then, these cards must be have value pre-loaded prior to use, which sometimes takes up to 5 days (e.g. San Francisco Bay Area Clipper Card) and may not be doable online (e.g. New York City’s MetroCard).

This is once again, another barrier to using a service, for which we are trying to encourage use! London and Portland, Oregon’s systems do solve this problem by allowing riders to tap any credit or debit card with contactless technology or a phone using Apple or Android Pay on a reader to pay their fare. In case riders don’t have access to traditional banking, both systems offer traditional reloadable transit cards as an alternative.

The future

In addition to the suggestions outlined in this article, transit agencies can go further — why do weekly passes have to start on Mondays? Why do monthly passes have to start on the 1st of the month? If the intent is to increase transit usage, let’s charge the fair (no pun intended) maximum price for any 24 hour, 7 day, 30 day, annual, etc. window of travel. This removes any complication or decision around purchasing or not purchasing a pass to get the best price — all riders will always get the better price between pay-as-you-go or pass pricing without facing the decision to purchase / not purchase.

Just because transit is generally operated by government agencies doesn’t mean we should accept low standards of payment accessibility. Amazon is revolutionizing retail payments by completely automating the process in their Amazon Go stores. Let’s set the bar high for how easy public transit payments should be!

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Business Strategy & Operations

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