Earlier this month, over 300 public transportation and fare collection professionals gathered in Chicago for Transport Ticketing North America. This was the first Transport Ticketing event outside London, where Transport Ticketing Global has gathered for 15 years to advance the field of mobility payments. This North American event focused on the state of the industry closer to home, and our Director of Product Partnerships, Ruth Miller, attended. Here are a few of her takeaways.

Benefits and open loop

Most transit agencies entered the late 20th century accepting cash or tokens as payment, and then moved to “closed loop cards”. A closed loop card looks like a regular bank card, but is only accepted within the “closed loop” of the agency’s own fare machines and card readers. Now many agencies are moving towards accepting “open loop cards”. These cards are the bank cards already in our wallets, and we can use them on the global open financial system (banks, stores, online, etc). Open loop has a lot of advantages, mainly that they’re less hassle for users, and they aren’t expensive for transit agencies to print and manage.

One potential drawback is that the global financial system, by default, doesn’t distinguish between bank cards when it calculates price. Anyone paying with any card buying the same cup of coffee is going to be charged the same amount. But transit doesn’t quite work that way: seniors and veterans often pay a different rate for transit, and employers and public services might subsidize some or all of the cost of the ride. It would be a shame for SEPTA, for example, to have such successful programs like SEPTA Key Advantage and the Zero Fare Program, which rely on closed loop technology, and then roll out open loop payments and lose their ability to subsidize passes. 

This is a challenge that’s very interesting to Jawnt. We’ve been paying close attention to Cal-ITP’s work with eligibility verification and fare discounts on open loop. In 2022, Monterey-Salinas Transit became the first transit agency to automatically apply senior and later veteran fare discounts to qualified riders. These riders have to enroll, which is something Jawnt has some experience supporting with our pre-tax employer benefits. We’re excited to see what happens next in this space and look forward to being a part of it.

Incentives and cash back

Several speakers mentioned loyalty incentives and cash back programs. Maybe you’ve carried around a card in your wallet that you asked to get punched when you bought a sandwich, so that you could turn it in and get your eleventh sandwich for free. My favorite pastrami place has an electronic version, so it’s no surprise that transit agencies are exploring this practice digitally, too. It also feels like a natural extension of fare capping, where you pay for individual transit rides up to the cost of a monthly pass, and then your trips the rest of the month are free. If agencies are willing to be flexible on price, what kind of behavior can that encourage?

Personally I’ve been skeptical of cash back schemes for transit, perhaps because I don’t feel like I do enough with all the credit card, hotel, and airline points systems as I could. But speakers from Rebel and Velocia shared compelling case studies and advice.

• Start small. Don’t worry about addressing every potential user in the first phase. “Start with a start”.
• List segmentation. Riders that already use transit often need different incentives than riders that don’t. Perhaps if you start riding once a week, the program goal is to get you to twice a week, and moving someone who’s four times a week to six. 
• Micro-redemptions. Ensure the range of available incentives include a lower range that can be redeemed with as low as 24-48 hours’ effort. Don’t make people wait.

Sure, people will change their behavior while there are incentives available, but once the marketing budget runs out, then what? The speakers presented cases with data both before and after the incentives were in effect, and dollar for dollar, showed that rewards programs were often a good investment. This was also a good reminder to design a program to be able to produce longitudinal analysis. These programs are interesting options for employers looking to encourage transit and reduce demand for parking.

Transit as a pathway to financial inclusion

A frequent and valid concern about open loop technology is how to support participation for people without access to the global open financial system. The “unbanked” or “underbanked” are accustomed to paying with cash, face hurdles getting open loop bank cards, and are, as the concern goes, content with the current system.

Gillian Gillet, Cal-ITP’s program manager, argued fiercely that they’re not actually content with the current system. Being unbanked is expensive, thanks to predatory check cashing services and other fees. It can also be dangerous, because it often involves carrying around large amounts of cash. It’s not the case that millions of people prefer paying with cash: cash is often the best available option.

Gillian shared another success story from Monterey-Salinas, where the transit agency partnered with Cash App, a mobile banking platform. Whereas traditional bank accounts often require a minimum balance in the thousands of dollars and a social security number, Cash App only requires a state ID and low minimum balance. Cash App marketed itself at bus stops throughout the system, and offered discounts on bus fares paid through the app. About 90% of new Cash App customers in Monterey County used their account for the first time on a bus, and of those, 90% used it again later to buy other things. This project revealed both a strong underlying desire for financial services, as well as an opportunity for transit agencies as a public service to solve issues beyond mobility.

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