Kyle Gerstner headshotIf you’ve been following Genfare’s blog or newsletters, you’ve heard my colleagues talk about empowering equitable mobility – and with this message our core belief that transit agencies should continue to accept cash and coin across the fleet. But you’ve probably also seen our articles extolling the benefits of reducing the amount of cash collected with electronic payments and open payment.

This may seem contradictory, but it’s not. There’s a way to bridge this disconnect to benefit the agency while still making it easy – and equitable – for riders to pay their fares: Creating opportunities for unbanked and underbanked riders to digitize cash.

Why reduce cash collection

The general cost of cash collection is high, even if you don’t collect a lot of it. I’ve seen estimates ranging from 6 cents on a dollar to 40. Costs associated with cash collection include:

  • Wear and tear on components such as coin and bill validators
  • Garage staff to move cash from fareboxes to vaults
  • Additional bus operator time spent on slower boarding and daily vaulting
  • Slower routes due to increased dwell time
  • Armored car services such as Brinks (for some agencies)
  • Space, supplies, and staffing for counting rooms
  • Shrink including theft and accidental loss
  • Lag in access to revenue while cash gets counted, transported, and banked

Why electronic fare payments alone aren’t the answer

At some of the transit agencies I work with, particularly smaller ones, it’s always been cash or coin, so introducing electronic payments is a new concept. It’s a mindset shift for the riders. It’s not necessarily feasible (or desirable) to just turn it off.

In contrast, many agencies already have closed loop smart cards, reloadable magnetic fare media, or dedicated mobile fare payment apps in their payment mix. Electronic payment is quick and easy and allows for fare structures such as transfers, fare capping, and period passes, along with partnerships with organizations such as social service agencies and universities.

But if riders only have the option to reload closed-loop cards or mobile ticketing accounts with their credit cards, this option shuts out unbanked or underbanked riders. Plus, the agency usually bears the cost of the credit card processing fees.

If you make it convenient for riders to digitize cash, you get the best of both worlds. The agency and riders alike can enjoy the benefits of electronic payment without losing ridership.

How to digitize cash

Genfare offers multiple manned and unmanned retail solutions for digitizing cash. The best solution is a combination of them, strategically placed to reach the riders who need the option the most.

Genfare point of sale terminals

Administrative point of sale terminal (APOS): Every agency that has an electronic payment option should have at least one administrative point of sale terminal at each of its public-facing facilities so people can digitize cash. APOS is an inexpensive solution comprised of a computer plus peripherals such as a cash box, printer, and card reader that works with card-based and account-based fare media to provide full access to all rider service functions.

Retail point of service terminal (RPOS): The RPOS is a lighter version of the APOS and is also inexpensive – it’s basically a tablet, a printer, and peripherals. It casts a wider net and is meant to be used at locations that already take payments such as retail stores, libraries, community centers, senior housing, and municipal service centers. When placed in a cooperative agreement with governmental or social service locations, there is often no transaction cost associated with an RPOS cash digitization transaction. Retail locations are likely to charge the agency a portion of each transaction.

Vendstar ticket vending machine (TVM): Ticket vending machines are more expensive from a capital and maintenance perspective, but they are available 24/7 and don’t require staffing. They may be a good option on bus rapid transit routes or in key downtown or bus terminal locations.

Retail networks: There are a couple existing retail networks transit agencies can join. They require minimal or no equipment and are in place in popular drugstores, gas stations, convenience stores, and grocers for a wide reach. The biggest deterrent to retail networks is that they charge a hefty fee to the agency. It becomes a balancing act as how much they charge for a fee vs how much you save for not taking as much cash or having an equipment outlay. That’s going to be dependent on your area.

Why every cent (and every rider) counts

At public transit agencies, less than 20 percent of operating budgets typically come from fares collected. However, even at the smallest percentages, fares can make the difference between an agency thriving or surviving. (During the pandemic, agencies that went fare free experienced this firsthand.) Agencies know all too well that even small efficiencies in collecting these fares can have a big impact on already tight (and shrinking) budgets and margins.

To make the shift to electronic payments easier, you need to know your riders. Consider which fare payment and cash digitization options your demographics support. For example, an agency may consider an open payment system first, then layer in smart cards for unbanked or reduced fare riders and riders connected with partner organizations, and mobile apps for students and commuters.

We’re here to help

At Genfare, we are passionate about helping our agency partners provide riders with options that support equitable mobility. We understand the continuously evolving needs of transit and the marketplace and can deliver comprehensive solutions.

Contact your Business Development Director to learn more about how upgrading your fare collection technology can help you better understand your community.