In the Digital Era, Can Transit Agencies Move Beyond Paper and Cash Payments?

As urban areas grow and access to mobile devices expands, transit agencies are exploring ways to make the public transit experience easier and more inviting. New technologies are allowing agencies to move away from paper fares and explore new options for riders to pay with digital accounts and mobile devices.

In the Bay Area, 22 transit agencies are set to go completely paperless by January 2020, with a new mobile app that allows riders to pay fares and reload accounts through their mobile devices. Other major cities like Los Angeles, Louisville, and Portland are making similar moves and leaving paper tickets in the past.

To better understand the implications of these trends, we sat down with moovel Platform Product Manager, Mindy Montgomery to have a conversation around the challenges and opportunities of paperless fare payment.

Move Forward: Technology has enabled a wave of new ways to pay for all kinds of goods and services, but as you look at the transit landscape today, what payment options are available in most places?

Mindy Montgomery: While there are a handful of cities where physical tokens or paper tickets are still the only ticketing options, most transit agencies now offer riders a range of choices. On the whole, options are growing and becoming more digital and contactless, paying by credit or debit card being the most common. In the Bay area, the Clipper system — a reloadable contactless smart card — has been adopted across the region’s agencies. In some major metro areas like Washington D.C., the government’s benefits program employs a physical prepaid card that employees can use to get around. Generally, riders now have a number of options at their fingertips.

Move Forward: So, payments are moving away from paper. Are physical cards next?

Mindy Montgomery: Cash is still used for more transactions than all other payment methods, with credit and debit cards as the next most common. However, we’re seeing a steady increase in payments through mobile apps. For example, TriMet’s Hop app — a tap and pay system using a virtual card that’s accessed on a smartphone — has seen relatively rapid adoption. Through the D.C. employment benefits program that I referenced earlier, moovel took that particular payment option and virtualized it so employees can use their smart benefits card virtually in a mobile application.

Right now, credit cards are the number one form of payment within our mobile apps. But when we launched with Google Pay and Apple Pay in Baltimore and the Bay Area, we saw fairly significant adoption right away. Given the rise in mobile payments in the retail sector and growing smartphone ownership, I anticipate that this trend is going to continue.

Move Forward: Are these trends that you see for cities of all sizes?

Mindy Montgomery: Actually, I’d say in most mid-market agencies, cash is still the most significant payment method. In San Antonio, for example, almost 50% of transit fares collected in 2018 were cash, and in Orange County, California, cash payments were close to 60%. So, at least for now, cash remains a very significant part of the transit payment landscape.

Move Forward: What’s your take on the future of cash payments?

Mindy Montgomery: It’s an interesting question because cash presents real challenges for transit agencies. It’s expensive, there’s opportunity for fraud, and on a bus for example, having physical currency sitting around is a liability. And, while most cash transactions will gradually be replaced as new technologies emerge, there’s another really significant issue to consider. Transit agencies exist to serve everyone equally and, according to Title Six of the Civil Rights Act of 1964, they must offer services with fair and equal access. Cash still has an important role to play in offering equal access. Because transit agencies serve the unbanked and the under-banked, preserving cash as a fare payment option is essential to ensuring transit remains accessible to all.

Move Forward: So, is there a way for cash to co-exist with mobile ticketing solutions?

Mindy Montgomery: Sure. There’s no doubt that the future is in contactless and digital payments, however, when you transition to a mobile solution or a card-based solution, you need to be able to serve people who don’t have access to a bank account — cash is their only option. That doesn’t mean that we can’t find ways to integrate the two. While people may not have access to banks, chances of them having access to a smart phone have become very high. Right now, smart phone ownership in the US is over 80%.

So, something we’re actively working on right now for our platform is allowing riders to load cash onto an app and then use that as a sort of ledger-based system, meaning they could load $25 onto a mobile app or card, spend that down and then reload. They would be able to do this at a convenience store or a grocery store, maybe even at a social service agency. So, it’s akin to a stored value solution or a pre-paid debit card.

When it’s all said and done, helping people access mobile payment options is critical to help transit agencies improve the ridership experience while preserving access for the entire population.

Move Forward: What excites you the most when you look at the trends in new payment technology and how they can serve the transit landscape?

Mindy Montgomery: I am most energized when I see more people have greater choice. I think that’s what we’re in the business of doing — creating more options to make transit easier and more accessible.

Just the other day, I was sitting on the bus and during my short ride, I saw every kind of payment option used. I had a visually validated ticket, somebody put cash in the cash box, someone had a paper monthly pass, someone else had a Hop card, and another had Hop on their phone. And again, I was struck by the realization that the more we meet people where they are and offer them solutions that fit within their daily lives, the more choice and freedom they have to travel in their cities.

We will continue to see new technologies impact our industry and it’s invigorating, but we must continue working to ensure there are equitable, streamlined and accessible entry points for everyone. And I think when those goals underpin everything we do and the services we provide, people are going to feel empowered to make transportation choices that work for them and meet their needs — and I believe we’ll have better cities because of it.

Learn more about other mobility trends for 2020 here.