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Tap-To-Pay Transit Tech Is Cash-Poor, but Rich in Data

New technologies in contactless fare payment systems enable riders to not carry cash and can save them money through features like fare-capping. And for transit systems, they can be an informational gold mine.

Closeup of a person tapping a payment card on a tap-to-pay transit terminal.
A rider on the Clean Air Express commuter bus, serving the Central Coast in California, taps a credit card to a reader for fare payment. The new tap-to-ride system is part of a contactless fare-payment project being made available across several transit agencies in the state.
(Santa Barbara County Association of Governments)
Technology developments in transit fare payment are enabling residents to ride without cash, as so-called “cashless riders,” and opening the door to equity programs like fare-capping.

Coast RTA, a regional transit operator serving coastal South Carolina, has initiated new “tap-to-cap” technology aboard its 41 buses — so the most a rider will pay is $3.50 a day, regardless of how many trips they take. The system relies on contactless tap-to-pay credit or debit cards.

“Based on our conversations with riders, the only other thing I think we’d need to do would be a monthly cap,” said Brian Piascik, Coast RTA general manager and CEO, discussing fare-payment technology developments June 11 on a panel organized by U.S. Payments Forum, a policy and advocacy group focused on payments technology.

On the idea of initiating monthly fare-capping in addition to daily fare-capping, Piascik said monthly passes once offered that kind of a reduced rate: “But it was still $40 or $50 up front. And a lot of folks in that situation don’t have that kind of cash sitting around.” Coast RTA’s “tap-to-cap” has been in place since September 2022.

Fare-capping is often championed by transportation equity advocates as a way to corral runaway transit costs for low-income riders, since fares are capped at a certain amount for a set duration of time.

However, these programs are predicated on technology that’s able to track transactions, which was not possible in the old days of dropping money into a fare box.

Tap-to-ride fare payment systems like the one used by Coast RTA rely on what’s known in transit payment speak as “open loop” systems, where a rider doesn’t need an app or a pass specific to the transit agency to pay for fares. They simply tap a bank card onto the reader.

But open loop systems can go beyond fare-capping to provide rich caches of data that officials can use to design incentives, loyalty programs and even routes.

“I could tell you just about everything about every trip, where it happened, when it happened,” Piascik said, noting the data is “way better than we ever got out of our fare boxes.”

“We’ve always used our fare system to count passengers,” he added. “But the data I get from our open loop system is terrific, and it’s too much. It’s more than I’ll ever use.”

Government systems have been slow to adopt the kinds of payment technologies that have become ubiquitous across the rest of the consumer world, said Gillian Gillett, who leads the division of Data and Digital Services at the California Department of Transportation (Caltrans). The department worked with its umbrella agency, the California State Transportation Agency, on the California Integrated Travel Project (Cal-ITP) to advance fare payment technology across transit systems.

Cal-ITP provides dashboards and other resources to participating agencies to help them understand the benefits that come from open payments. The technology allows the transit providers to track the number of riders using debit versus credit cards, which “tells you something about your customers,” said Gillett.

“You should be looking at things like how many payments that I’m getting in my ticket vending machines are coming from customers that are paying with Cash App or debit cards,” Gillet said on the panel. “That tells you that a lot of people you thought were under-banked are probably banked. And therefore, do you really need the ticket vending machine to make that transaction?”

New developments in areas like digital driver’s licenses could be made interoperable with digital fare payment systems to quickly and accurately validate data like age, disability or veteran status — all of which are often linked to transit discount programs. But currently, officials at Coast RTA spend little energy in verifying details like a rider’s age, Piascik said.

“We are dependent on other entities for that. Or, we’re just letting the drivers kind of ‘feel it out,’” he said. “If a person looks like they’re over 60, then give them that [discount] rate.”
Skip Descant writes about smart cities, the Internet of Things, transportation and other areas. He spent more than 12 years reporting for daily newspapers in Mississippi, Arkansas, Louisiana and California. He lives in downtown Yreka, Calif.