As workplaces, shopping centers and entertainment venues reopen and recover to pre-pandemic levels, public transit plays a critical role. Transit agencies are evaluating ways to offer riders exceptional travel experiences via bus, train, subway or ferry, and contactless payments are proving to be a key component of public transport operators’ strategies.
10% - Visa transactions in U.S. made with a tap of a contactless card1
Click here* to see a short demonstration on how contactless payments work
INFRASTRUCTURE INVESTMENT AND JOBS ACT WILL FUEL CONTACTLESS PAYMENTS
The passage of the $1.2 trillion Infrastructure Investment and Jobs Act means billions in funding will flow to projects that jump-start innovation. In all, $66 billion is targeted to be invested in expanding public transit and rail networks, $39 billion is provided for public transport, and another $7.5 billion is targeted for electric vehicle infrastructure.2 The law explicitly includes language about funding for the acceptance of fare payments via credit card reader, including contactless technology, for safety, sustainability and accessibility reasons.
Explaining how projects will get priority funding, U.S. Department of Transportation Secretary Pete Buttigieg stated that the agency is “working very hard to make sure that ‘innovation’ isn’t just a buzzword that loses its meaning, but a means to an end.”3
Funding will reach all communities in need. USDOT wants a process that makes it easy for any municipality, regardless of size, to apply for funding, and participate in the programs.
Deputy Secretary Polly Trottenberg remarked that the legislation will allocate funding for the replacement of nearly 2,000 subway, light rail and commuter rail cars. Additionally, about 10,000 fossil fuel-powered buses will be replaced with zero-emission vehicles. 4
MEETING PASSENGER EXPECTATIONS
Passengers have made it clear that they prefer contactless payments. In Visa’s Future of Urban Mobility study, 88 percent of riders surveyed expect to pay with a tap on trains and buses1. The report also states there are more than 700 U.S. transit projects underway that include the introduction of contactless tap-and-go payment methods.
It’s time to say goodbye to outdated fare collection systems, prepaid rides, confusing kiosks, paper tickets, proprietary transit-specific apps and handling cash. Open-loop contactless transit solutions allow passengers — whether frequent commuters, locals or visitors — to simply use their existing contactless credit card, debit card or mobile wallet to tap to pay for a ride in less than a second.
In addition to removing friction, tap-to-ride programs typically reduce costs for passengers and operators. Let’s take a closer look at this important modernization trend for mass transit that is shaping the future of public transit nationwide.
THE CHALLENGES OF TRADITIONAL FARE COLLECTION SYSTEMS
Paying for public transportation is often frustrating for commuters and tourists alike. Here’s a quick recap of things that can impede the passenger experience and add costs for operators:
- Ticket kiosks
Self-service kiosks are often the first point of friction at a station. Lines can build up, resulting in missed rides. Confusing interfaces, too many fare choices and language barriers often result in multiple attempts to purchase a ticket. And mechanical parts related to card readers, cash handling and ticket issuance can result in down systems and high maintenance costs. - Prepaid tickets and proprietary transit apps
While frequent commuters often purchase transit plans and load electronic tickets onto a proprietary, closed-loop app on their smartphone, occasional riders and visitors simply want to purchase a trip and be on their way. Tracking balances and knowing when to top-up transit cards can result in missed rides. Plus, the value on lost prepaid cards typically can’t be recovered. - Cash handling
Exchanging cash — via human or machine — is slow, expensive and open to fraud and theft. Additionally, it slows boarding time, which leads to longer transport times. Plus, an idle vehicle produces higher emissions, which is harmful to people and the environment. - Paper tickets
Paper transit tickets can easily be lost or misplaced. Confusion about how to use for turnstile entry/exit can cause backups in the station. And paper is wasteful, adding extra cost for operators and creating litter near and around a facility.
UNDERSTANDING THE BENEFITS OF OPEN CONTACTLESS FARE PAYMENTS
By adopting open-loop contactless payment systems, transit operators can extend passengers a fast, easy and secure way to pay for travel. Unlike proprietary closed-loop systems, open tap-to-ride systems allow travelers to simply pay their fare with the wave of their contactless credit or debit card, mobile phone or wearable device near a contactless transit reader upon entering a bus, turnstile or gate.
Fast and convenient
Passengers use their own preferred payment method to travel immediately, without having to understand the details of local fare structures or tickets, and without having to stop at a kiosk, buy a paper ticket, download an app or preload a proprietary stored-value card.
Cost reduction
A fast and convenient payment alternative lessens the dependency on cash, boosting overall productivity. The technology behind tap-to-ride solutions allows a passenger’s daily trips to be bundled into one transaction, which eliminates multiple authorization fees for operators. Passenger fare caps and discounts can be automatically calculated and applied.
Secure and sustainable
Shifting from physical tickets and cash enhances security and reduces fraud. Transit operators benefit from the high security standards employed in EMV payment cards. Plus, reducing or eliminating paper tickets, cash handling and idle time at stops is good for the environment.
GETTING STARTED ON THE FAST TRACK TO MODERNIZATION
Implementing a modern, contactless open-loop payment system for public transit involves collaboration between multiple parties including transit operators, transit solution software and fare engine providers, payment gateways and acquirers.
To ensure success, transit operators should plan and implement an end-to-end process that incorporates budgets, technical requirements, expected timelines and dependencies, and partner engagement strategies.
MONTEREY-SALINAS TRANSIT EMBRACES TAP TO PAY
In May 2021, Monterey-Salinas Transit (MST) became the first California transit operator to implement open contactless fare payment technology on buses. The program is part of the California Integrated Travel Project, led by Caltrans, to improve travel planning and payments across the state. Bringing the system to operational readiness was a coordinated effort involving Caltrans, Visa, Cybersource (a Visa solution), Littlepay, AC Soft and U.S. Bank.
Contactless payment readers have been installed at the front of each MST bus. Passengers can pay for journeys by simply tapping their own debit, credit or prepaid card from Visa or Mastercard. They can also choose to use a digital wallet in their payment-enabled phone or wearable device. Paying with their existing card removes the need to stand in line to purchase a separate transit pass, load a special app or handle cash while boarding. They simply use the same card that they use to buy a cup of coffee to tap and pay for their rides. The passenger benefits of contactless payments include speedier transaction times and the convenience of being able to pay for fares using the bank card or smartphone they carry everywhere.3
MST also implemented “fare capping,” which ensures that a rider will not be charged more than a certain amount per day, no matter how many times they ride — if they pay with the same contactless card or mobile wallet. Frequent riders that purchase unlimited weekly or monthly GoPass fares will not incur any charges for the remaining time period once the value of the pass is met.
BEST PRACTICES TO TRANSFORM YOUR TRANSIT SYSTEM
Interested in learning more about how tap-to-ride contactless solutions can help optimize costs while offering passengers a better experience?
Visit our Contactless Payments for Transit Resource page to access our e-book (5 reasons to go contactless with fare collection), infographics, videos and other helpful information.
SOURCES
- Visa “Future of Urban Mobility” survey: June 2021 (conducted by Wakefield Research among 9,000 adults who take public transportation in nine markets: US, Singapore, Australia, Canada, UK, Mexico, S. Africa, Italy, and France)
- Intelligent Transport. What's in the Nation's New Infrastructure Law and How Soon Will We See Shovels in the Ground? May 2021.
- USDOT Outlines Path Forward With New Infrastructure Law. Govtech.com. Jan 19, 2022
- US DOT Officials Share Plans for Infrastructure Funds. Govtech.com. Nov 9, 2021
This is not intended to serve as a recommendation or solicitation for the purchase or sale of any particular product or service. It does not constitute advice and is issued without regard to any particular objective or financial situation.
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CalTrans is a copyright of the state of California. Cybersource is a copyright of Visa and VISA INTERNATIONAL SERVICE ASSOCIATION.
