Fare Collection: How We Pay For Public Transit is Critical to Securing Its Future

This article is written by Lee Biernbaum, Transit Advisory Group Lead at Masabi and it was first published in MassTransit magazine. 

The future of fare payments isn’t really about fares specifically, but the future of public transit broadly. Multiple external forces are screaming as loudly as they can that public transit is a key component of the solutions the industry needs for the next 100 years. Public transportation is the glue that will hold together the needs for livable cities, less congestion, cleaner air and to drastically reduced carbon emissions.

While this may run counter to what one generally hears from some transit tech companies, the future isn’t just about technology. There’s no silver bullet software or hardware that will fast-track the future. The future will be driven by institutional, organizational and policy priorities and the technology deployed to eliminate the constraints of 20th or even 19th-century technology, embracing flexibility as priorities change and unforeseen needs emerge. This future is a place where transit agencies put in place clear policies and standards that enable mobility and then ensure the public and private sectors work together to deliver the service riders need.

The technology isn’t the driver of the transit experience; the technology gets out of the way and becomes the unobtrusive tool riders use to comfortably get where they are going in the fastest way possible.

Account-Based Ticketing is a great example of a technology that is critical for delivering riders a seamless experience when using public transit. Account-Based Ticketing unlocks a step change in convenience by removing many of the obstacles and anxiety from the fare payment process, so riders can simply focus on where they are going and why.

Account-Based Ticketing means riders are no longer required to purchase tickets in advance or to know all the fare rules and exceptions. It also allows cash-constrained riders to enjoy the self-same benefits of weekly and monthly passes based on fare capping, which automatically charges the best fare for every journey.

Account-Based Ticketing provides a platform to introduce these advances in fare payments, but it’s also important to recognize this is asking riders, customer service agents and elected officials to do something different and potentially difficult.

For decades, riders had to be experts in the intricacies of local fare systems and to have perfect foresight about their travel. They optimize and find the right day of the week to buy their tickets and know which month to buy a 10-trip pass because of school vacation and are aware of the one route that charges an extra $0.25 fee because it crosses county lines.

Yet now, they hear they don’t need to worry about any of this anymore: "Bring whatever fare media you want, add funds anytime and in any amount, board any time you have somewhere to go, and you’ll be guaranteed to get the best deal!”

That’s a pretty big change. It takes a new mindset, both for riders and transportation professionals. It takes trust, but once that hurdle is passed, there will be room for some really innovative developments.

To move rapidly, the transit industry can run pilots and experiments, collect data on travel patterns, enroll test groups and feed those results into the next pilot or into permanent changes and with a Software-as-a-Service (SaaS) platform, this can be done without costly change orders or years of waiting for custom development.

With a SaaS platform, a transit agency could:

• Roll out off-peak fares to encourage more non-commute trips or to manage peak hours congestion.
• Introduce novel pricing, like discounts for families traveling with children or subsidies to help people headed to dialysis treatment to ensure transportation isn’t the barrier to good health.
• Offer premium fares for special event services like express buses to a big game or concert.

With tools like these, transit professionals can get really creative. They could, for example, start thinking about more dynamic pricing. Modern communications and display technology help to stay in touch with riders more easily, and dynamic pricing is nothing new. Anyone who has ever gone to a Happy Hour has experienced dynamic pricing, as have folks buying baseball tickets in recent years, not to mention in toll roads across the country. When fare media, validators and riders all work with an Account-Based Ticketing system, these changes can be introduced, evaluated and changed as quickly as they are needed.

The future demands equity

Account-Based Ticketing opens up the possibility for lots of positive change, but how do transit authorities make sure they are bringing everyone along?

Fare equity has become a major theme in the transit community during the past five years but now is the time to zoom in: Equity of what type? For who? When someone flags equity implications, is it referring to:

• People of color or members of other historically discriminated against groups?
• Those on low incomes?
• With no bank account?
• With mobility impairments?
• With cognitive impairments?
• Who doesn’t want to use a smartphone?
• Who doesn’t speak the local language?
• Who prefers to use cash?
• Who prefers anonymity?

What is the transit industry’s responsibility to each of these groups? They tend to be bundled together under the ‘equity’ banner, but the answer to the questions above will likely differ from group to group.

To equitably serve riders with physical or cognitive impairments, should specialist partners be brought in rather than simply changing the fare policies?

What about income? This is something that can be addressed with fare collection and fare policy.

A major step to flatten the impacts of income disparity is to introduce fare capping via Account-Based Ticketing – allowing people of all income levels to access the best fares previously limited to only those who could afford to pay upfront for a period pass.

As the political winds in some states veer toward zero-fare systems – without a clear replacement funding source – low-income fare programs can be an area of real opportunity here.

The costs of fare collection represent a small percentage of fare revenues. Those revenues are necessary to provide and improve the quality of the service riders care more about. In survey after survey, all riders – including low-income riders – say the most important improvements to public transit are higher frequency service and greater span of service.

Fare revenues also, of course, cover the costs of lower fares for those who need them.

What is blocking low-income programs, and how can it be addressed? The transit-centric future depends on identifying and resolving these blocks.

If it’s politics, put a pilot together and prove the benefits of a low-income program don’t require a system-wide zero-fare approach. If it’s legislative, make the case to the elected officials. If it’s about complexity, then now is a perfect time to be thinking about how to simplify this problem.

The U.S. government is offering support to solve some of the complexity surrounding low-income programs through the Federal Transit Administration’s Enhancing Mobility Initiative and other grants. The question is: Will transit agencies seize this opportunity? 

Further reading:

• What is Fare Payments-as-a-Service and why does it matter?
• 10 questions to ask before implementing an Open Payments contactless ticketing system for public transport
• Do Shared Fare Collection Platforms With Continuous Updates Herald The 'End of Obsolescence'?
• What’s the difference between Fare Payments-as-a-Service, Ticketing-as-a-Service and Fare Collection-as-a-Service?