Multimodal Fare Payment Integration (2020)

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1 Background and Key Issues As technology advances, new directions open up for transit agencies. One of these exciting directions is multimodal payment convergence. Multimodal payment convergence is the ability to use the same payment medium or technology to pay for services on multiple modes of transportation—which provides a more seamless and convenient experience for users. Transit agencies across the United States have shown interest in multimodal payment convergence, particularly as a general increase in connectivity has led to greater rider demand for more options and convenience. Some agencies in the United States have successfully achieved convergence with outside transportation providers such as bike sharing, ride hailing, and scooter sharing systems. The road toward payment convergence will be different for each transit agency, how- ever, particularly in light of the features and functionality of each existing fare payment collection system. Many agencies are learning that account-based systems allowing for real-time communications with a back office are necessary for convergence with emerging transportation providers. The complete replacement of existing fare payment collection systems—many of which are card-based systems that were built in the 1990s and early 2000s—can be costly. Transition to new systems can also lead to disruptions that many agencies would rather avoid. Transit agencies also have to ensure accessibility for under- or unbanked users, or travelers without smartphones, when they implement new mobile technologies or payment solutions. These technological improvements challenge transit agencies to collect and manage large amounts of data including location data and personally identifiable information when new mobility service providers are also involved and operate in the public realm. Multimodal fare payment convergence projects are typically technologically complex, include many stakeholders, and necessitate a thorough understanding of and agreement on operational coordination between agencies and stakeholders. This synthesis report investi- gates transit agencies’ experience and views on dealing with the complexity and challenges of payment convergence with new mobility service providers. Summary of the Report This report is structured to help transit agencies, private transit operators, technology solution providers, transit advocates, local government leadership, and governing bodies understand what payment convergence is, what can be achieved through payment conver- gence, and the pathways to implementation. S U M M A R Y Multimodal Fare Payment Integration

2 Multimodal Fare Payment Integration The report contains (1) a review of reports, industry resource publications, self-published agency documents, and news articles about transit fare payment systems; (2) a survey of transit agencies that have electronic fare payment systems and that may have past, current, or planned experience with payment convergence; and (3) detailed case examples from six agencies or cities—two of which represent international experiences. International case examples were expressly included because the synthesis panel believes many international examples of payment convergence could be illustrative for U.S. agencies. The bench review of industry reports and research indicates that many technological options are available for transit agencies looking to design their next generation fare payment systems. The path forward for agencies is typically complicated by legacy systems currently in use. Because of digitization and increased connectivity, agencies also face new challenges related to data management and cybersecurity. The primary survey was sent to 46 agencies—representing different sizes and geographical locations—across the United States. Complete responses were received from 36 agencies. The responses show that the majority of agencies operate in a service area where one or more new mobility service providers are available. The agencies also expect benefits from pay- ment convergence with private parties. Only three of the 36 agencies, however, achieved payment convergence that included new mobility modes. Most agencies are concerned mainly about how they can ensure the same travel rights on the new mobility modes, their lack of knowledge of the payment industry, and the absence of data privacy and data management guidelines. Finally, the synthesis concludes with detailed case examples. Four of the case examples highlight U.S. agencies of various sizes that have achieved some form of payment convergence without an overhaul of their entire electronic payment systems. The Regional Transportation District (RTD) in Denver, Colorado, achieved payment convergence with a ride hailing com- pany through its relationship with RTD’s mobile ticketing vendor. The Los Angeles County Metropolitan Transportation Authority (LA Metro) decided to continue operations of its smart card system while adding on a cloud-based layer that provides the ability to achieve payment convergence. The Port Authority of Allegheny County, in Pittsburgh, Pennsylvania, has been able to use its current smart card system to achieve convergence with the local nonprofit bicycle sharing system. Bi-State Development Agency (Metro Transit) serving the St. Louis Metropolitan Area has decided it will no longer support its own mobile application and has made a private transportation app into the official real-time information and trip planning mobile app for Metro Transit. Through the app, riders can link to ridesharing. In the first of the two international case examples, Translink, the nationwide ticketing system of the Netherlands, has been offering seamless payment across multiple modes and services for more than a decade. Finally, the City of Antwerp, Belgium, has been working on implementation of Mobility as a Service (MaaS), which will offer riders a subscription service for public transportation, ridesharing, bicycle rentals, scooter rentals, and taxis. The City of Antwerp’s experience highlights how the road toward MaaS takes careful planning, coordination, and negotiation. The literature review, survey, and case examples yield many conclusions, common strategies, and lessons learned from across the United States and the globe. Some of the highlights include the following. Types of Payment Convergence Used by Transit Agencies 1. Payment convergence can be achieved in many ways. Although many forms of payment convergence, particularly with private transportation providers, are more easily achieved

Summary 3 with account-based systems, agencies have been able to find alternative ways to achieve convergence while leveraging their existing systems. 2. Some agencies have led their own development road maps while others have lever- aged private vendors. Agencies have found their own paths toward convergence, with some, such as LA Metro, actively developing their own product road maps and others, such as RTD, leveraging the development road maps and partnerships of their mobile ticketing vendors. Potential Opportunities, Benefits, Challenges, and Issues Related to Payment Convergence 3. Many agencies see payment convergence as a way to attract more riders and to pro- vide a more seamless experience. Payment convergence and the promise of more integrated trip planning, linked trips, and unified payments are attractive to many agencies—particularly as transit riders are more connected than ever and consumer expectations increase. 4. Ensuring that all communities can access the fare payment system is a challenge and concern for many agencies. Many forms of payment convergence are based on electronic payment systems or mobile applications that typically necessitate the use of credit cards or debit cards or a bank account and online access (preferably through a mobile phone). Transit agencies are committed to serving all communities; as transit ticketing becomes more electronic and online-based, agencies have found ways to continue serving the under- and unbanked and those without reliable access to smartphones. 5. Challenges with data management remain. Payment convergence necessitates sharing of information between public parties and, increasingly, private parties. Challenges relating to customer privacy, effective and efficient management of data, and cybersecurity are heightened as more information is shared and accessed. While all agencies agree that these topics are of concern, a consensus on how to address these issues has not emerged. Additionally, it is important to note that these challenges associated with data sharing and risk management go beyond the world of transit ticketing. Strategies, Actions, Initiatives, and Procurement Methods Used to Achieve Convergence 6. Wholesale changes to an electronic fare payment system are cost-prohibitive for many agencies, so many use their mobile applications as a way to converge. Changes to existing systems typically include capital investments and costly changes to central systems. In an effort to continue to add additional functionalities in a cost-effective manner, many agencies are adding mobile ticketing applications, which can more easily allow for some form of convergence. Building Consensus Around Payment Integration 7. Although many agencies focus on technological concerns, consensus building and decision making are fundamental. Many forms of payment integration require deci- sions around fare reconciliation, data management and sharing, and other issues that need consensus and that affect operations for multiple parties. Achieving consensus is difficult, as shown in the City of Antwerp case example, and can be more challenging than are technological barriers.

4 Multimodal Fare Payment Integration Offering Cross-Program Incentives 8. Payment convergence provides agencies with an opportunity to offer more cross- program incentives to specific communities such as seniors, students, low-income riders, and riders with disabilities. Many agencies see payment convergence as an avenue for extending incentives beyond transit. Multimodal cross-program incentives are expected to enable transit agencies to attract customers to specific modes (e.g., bike sharing) and eventually away from cars.