Gillian Gillett, program manager for the California Integrated Mobility Program at Caltrans, spread out a dozen cards on the conference room floor to make a point.
“Poor people end up with a Pokemon deck in their wallet because we won’t give them the one thing they really need, which is a debit card,” she said.
In a workshop at CoMotion LA’s annual technology and mobility conference, panelists discussed how to make paying for public transit both fairer and more intuitive.
Various forms of “closed system” charge cards for California transit agencies.
Photo by Maylin Tu
Currently, the majority of California transit agencies offer their own “closed-loop” payment method, such as a TAP card. You cannot pay for the bus or train directly with a credit or debit card when you board. You also cannot pay with a TAP card in San Francisco or a Clipper card in Los Angeles, as each transit agency operates its own payment system. Multiply that by about 797 separate transportation agencies in California (including paratransit) and a lack of interoperability translates to a lack of fairness.
“Trying to give people money as a government entity right now is incredibly difficult,” said Hunter Owens, benefits and delivery data manager at Caltrans. “The technological choices we made are screwed up.”
In Los Angeles, 38% of bus riders, the majority of whom are low-income people and people of color, pay for their bus tickets in cash. But with new financial products like Venmo and Cash App, customers don’t need to open a traditional bank account.
Caltrans is working with Square’s Cash app to bring unbanked and underbanked passengers into a cashless future with a debit card they can use to pay for public transit.
During its pilot project with Monterey–Salinas Transit, 30% of new Cash App card customers in the region joined the program. And at the end of August last year, 93% of transactions were for food, not transportation.
“We literally use public transit to bring them into the financial ecosystem,” Gillett said.
It’s expensive to be unbanked or underbanked — when American families received stimulus checks during the COVID-19 pandemic, an estimated $66.6 million went to check tellers, who take a portion funds. A family of five cashing a check for $3,900 would have paid about $195 in fees.
The problem goes beyond fairness. With so many different products and so few options to pay for them, it becomes a fundamental issue of access.
When people from all over the world travel to the World Cup in 2026 or the Olympics in 2028 (which the city touts as “car-free”), how will they know which pass to choose?
LA Metro alone offers 750 fare products, ranging from the student GoPass to the regional EZ Pass. In addition, Metro is piloting a new program, the Sports and Entertainment Integrated Ticketing Program, which will bundle a transit pass with tickets to concerts or sporting events.
LA Metro’s current payment system contract ends in two years, and the agency is exploring new possibilities, including the mobility wallet being tested as part of the Universal Basic Mobility Pilot in South LA Participants will be able to pay for a range of mobility options with their TAP card, including carpooling and scooter sharing (although this is still a closed-loop system).
The transition of Metro’s payment system to an open-loop system will require an extensive procurement process. Even though passengers can pay for several forms of mobility with TAP, they will still need a TAP card to ride.
Ultimately, the future of transit payment lies in an account-based system of systems, said Mark Lulic, senior industry consultant for Endava. When the payment is linked to an individual account, this account can be integrated with several payment systems. Cities like New York and San Francisco have already started implementing an account-based system.
“When you start talking about this, it’s an entirely different infrastructure issue. Now you are talking about telecommunications, not only telecommunications in physical places, but also remotely in buses,” he said.
Eli Lipmen, executive director of the nonprofit Move LA, questioned the efficiency of spending money on payment systems when fares are only expected to bring in $107 million to offset a budget $8.8 billion annually.
Between the payment system of the future and the current reality of coordinating with 26 different agencies, Manish Chaudhari, chief executive of TAP, said this week’s panel was just the first step in a long journey.
“We can’t launch a whole new system overnight and create something wonderful,” he said.
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