Public transportation should enable the daily lives of transit-dependent riders, not create barriers. As transit agencies build equitable mobility systems to provide a seamless transit experience for all, it’s important to pay special attention to the challenges underbanked and unbanked transit riders face.  

As of 2021, almost 5 percent of U.S. adults are unbanked, meaning they don’t have a bank account. Of the people who do have a bank account, 13 percent rely on other financial sources, such as payday loans, and are considered underbanked, according to the FDIC. The study also reports that unbanked rates are higher among lower-income households, Black households, Hispanic/Latinx households, working-age households with a disability, and single-mother households. 

To better support unbanked and underbanked riders, agencies should take into account the top reasons why they don’t have bank accounts, which include: 

  • Not having enough money to meet the minimum balance requirements. 
  • Not trusting banks and feeling like avoiding a bank gives them more privacy. 
  • Feeling like bank account fees are too high or too unpredictable. 
  • Being undocumented or not having the documentation necessary to start a bank account.

There’s also a link between those who are experiencing financial restraints and those who rely on public transportation. 

Out of all transit users, 21 percent of riders make less than $15,000 and 12 percent make between $15,000 and $24,999, according to an American Public Transportation Association report

If transit agencies remove the option to pay in cash, unbanked and underbanked riders may face even more economic hardship. Almost half of all transit riders say their primary trip purpose is getting to and from work, which proves that a lack of transportation greatly impacts people’s ability to find and maintain employment.  

All riders deserve fair access to transportation regardless of their identity, background, or socioeconomic status. A simplified transit experience gives riders the option to pay their fare with whatever payment method is most convenient to them. Over time, these systems will strengthen the connection between riders and the greater community.  

So how can agencies make the transit experience more accessible to all riders, including those who are unbanked or underbanked? Consider these three solutions: 

  • Provide the option to pay with cash. 
  • Digitize cash at on-site sale terminals and ticket vending machines.  
  • Adopt the use of reloadable open-loop card payments.  

Provide the option to pay in cash  

Decreasing cash collection has its advantages such as reduced agency operational costs and shorter dwell times. However, cash payment may be the only option for some riders, and arguably those who need it most.  

When looking at the greater landscape, about 20 percent of all payments were made in cash in 2021, according to the Federal Reserve Bank of San Francisco. Cash payments are also more common among people under the age of 25 and above 65. 

Since many transit riders still rely on cash payment methods, agencies must continue accepting cash through fareboxes to ensure those without debit and credit cards have access to transportation. This shows riders that transit agencies exist to empower their mobility, not take away their right to choose how they use their money.  

Digitize cash at on-site sale terminals and ticket vending machines  

Every time a rider searches for coins in their pockets or fumbles with faulty bills when boarding, it adds to overall costs and dwell time.  

Giving riders the option to turn their cash into electronic payments before boarding alleviates some of the challenges that come with accepting cash payments.  

Every dollar bill a rider inserts into a farebox costs a transit agency 40 to 70 cents to process. Digitizing cash before boarding helps reduce this expense and also decreases dwell time. This means transportation can run a route more frequently, benefitting agencies and riders, and also ensures that riders who prefer to pay with cash can still do so.  

Two incredible options for providing a quicker, more accessible experience are to implement on-site point-of-sale terminals and ticket vending machines. The rider pays the retailer using their preferred payment method and the retailer then pays the agency.  

Providing the option to digitize cash gives riders control over how their cash is processed and allows them to purchase tickets at places that are more accessible to them. The biggest benefit of digitizing cash for the rider is that they can take advantage of fare structures that save them money. On the other hand, agencies reduce the burden of cash collection while gathering essential data. 

Adopt the use of reloadable open-loop card payments  

Unbanked and underbanked riders who don’t want to carry cash and don’t rely on traditional banking services can benefit from reloadable open-loop card payments. Open-loop cards mitigate the concerns of the unbanked and underbanked and make the transit experience more accessible for riders.  

open payment other option

Unlike closed-loop smart cards, which prevent riders from using funds for non-transit purposes, riders can use open-loop cards wherever debit or credit card payments are accepted. This is a great option for parents or guardians who want to fund a shared account that all family members can use. 

Riders can reload open-loop cards anywhere they purchase fares with cash, such as TVMs and APOS terminals. Riders who are hesitant about trusting banks can also purchase open-loop cards without having to share too much personal information.  

Offering unbanked and underbanked riders a straightforward means of payment while eliminating the need for traditional banks ensures a more accessible and equitable transit experience. 

Learn more about how transit agencies can pave the way for equitable mobility  

Supporting unbanked and underbanked riders means providing them the same benefits as banked riders. This includes faster boarding that can simplify the transit experience, fare capping, and reloadable cards that can be used for other retail purchases.  

Learn more about equitable mobility and how your transit agency can strive to achieve it by reading our white paper Achieving Equitable Mobility 

How Genfare can help transit agencies support underbanked and unbanked riders

onboard fare collection hero All of Genfare’s solutions were created to help simplify the rider experience, empower equity, and connect communities. Here are a few ways we help agencies improve the transit experience for unbanked and underbanked riders: 

  • The all-in-one Fast Fare farebox is a great way to accept, validate, and process whatever form of payment is in a rider’s pocket when boarding.  
  • Our administrative point of sale terminal accepts multiple payment options through one device. Agencies can also expand their network by placing a retail point of sale terminal at libraries, civic buildings, convenience stores, drugstores, and newsstands and using their existing payment processing system to service riders.  
  • Our Vendstar ticket vending machines allow riders to purchase or add funds to smart fare media at a self-service kiosk before they board, using their preferred payment method.  

To learn more about how we can service you, get in touch with our team here