Transit agencies want open payments but there are challenges

This study explores interest in, and the challenges faced by transit
agencies and operators in the adoption of open-loop payment systems. The
research team focuses in particular on the ways that agencies view
passenger needs in the context of adopting open payments. Challenges with
cash payments, an increasingly cashless society, and the expanding
offerings of digital payment options have spurred increased interest in
open-loop payments among transit operators. Paying for transit with cash
can require additional time at boarding, add extra steps for passengers
who must pay with exact fare, and result in service inefficiencies. It
presents security concerns for drivers, and administrative burdens for
agencies. While the full costs of cash handling vary per agency the cost
of handling and moving cash may be considerable. Pioneering transit
agencies are adopting open payment systems that accept credit cards, debit
cards, and smartphone/watch-based transactions. However, there is a huge
diversity among transit agencies and as such, agencies face different
challenges and to different degrees, when considering the adoption of open
payment systems. Challenges can include financial barriers, capacity
limitations, technological challenges, the duration of existing contracts,
competing needs, and a number of passenger challenges such as lack of
credit cards or smartphones. This study uses data collected from
California transit agencies in the fall of 2022 that gathered information
about agency perceptions of open-loop payments and the challenges with
adopting open fare collection systems, and whether assistance programs
would benefit transit agencies interested in adopting open-loop payments.
Even before the pandemic prompted agencies to consider open and
contactless payments, many agencies were exploring this option. Results of
the present study indicate that the majority of agencies are considering
or have considered implementing open payment systems, but agencies are not
fully aware of the assistance available from the California Integrated
Travel Program to help in the transition to digital and open payment
systems. Key challenges include the cost, as well as the technical needs
to implement open payments. Agencies also cited passenger familiarity with
technology and ability to have a bank account as potential hurdles. This
study sheds light on the challenges facing small to medium transit
agencies in the transition of California’s transit systems to open-loop
payment systems.