Multimodal Fare Payment Integration (2020)

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18 Status of Payment Convergence in the United States Transit agencies have shown interest in multimodal payment convergence, and some agen- cies, although currently the exception, have already successfully achieved convergence with outside transportation providers. This synthesis report aims to document these early experi- ences, outcomes, lessons learned, and challenges, and to provide an up-to-date snapshot of the current status of payment convergence in the United States. To provide a more comprehensive overview and understanding of how agencies have arrived or plan to arrive at payment convergence, the synthesis team conducted an online survey using self-reported measures on a selected sample of transit agencies in various stages of convergence. The survey consisted of closed-ended questions to describe certain charac- teristics of the agencies and their circumstances (e.g., services provided and status of an elec- tronic fare collection system) and open-ended questions to assess the agencies’ perspectives on more complex, explanatory topics (e.g., concerns related to data management and ensuring equity and accessibility). The list of agencies to invite was developed using information from the National Transit Database and online research to identify agencies that offer one or more transit modes and that operate in a service area where shared mobility modes (ride hailing, bike/car/scooter sharing), parking and tolling services, or some combination are operated by parties other than the transit agency. The transit agencies surveyed included a range of agencies in terms of size, geographic location, modes provided, and modes available in their service area. They repre- sented local transit agencies, departments of transportation, and regional transit authorities. Table 2 presents a detailed description of the survey participants. The online survey on multimodal payment convergence was sent to 46 transit agencies; 36 of the agencies completed the survey. The survey was conducted using skip logic based on whether or not the agencies achieved payment convergence with other parties. Those agencies that have achieved or are in the process of convergence were asked about their experiences, while the rest of the agencies answered questions about their plans and expectations. This chapter discusses the general characteristics of the respondent agencies and the findings of the data analysis of the survey. The full survey questionnaire can be found in Appendix A. 3.1 Context of the Transit Agencies Participating in the Survey The survey results are from 36 agencies representing 19 states and the District of Columbia. Most of the agencies surveyed (95%) provide multimodal transportation services. Two agen- cies that responded to the survey do not directly provide transit service but are the agencies C H A P T E R 3

Long Beach Transit CA 0.8 25.3 83 19% x x x x x 4 x na General Information Transit Service Provided by the Agency Mobility Modes in the Area Status of EFPS Agency name St at e Se rv ic e ar ea po pu la ti on (M ) A nn ua l u nl in ke d tr ip s (M ) O pe ra ti ng fu nd s (M , $ ) Fa re re ve nu e sh ar e of th e op er at in g fu nd s U rb an b us Su bu rb an b us B R T U rb an ra il Su bu rb an ra il Tr am Fe rr y V an po ol /r id es ha re A D A p ar at ra ns it O th er To lli ng o r p ar ki ng # o f s ha re d m ob ili ty m od es EF P S in p la ce P ay m en t c on ve rg en ce w it h pr iv at e pa rt ie s Sonoma-Marin Area Rail Transit District CA 0.5 1.1 16 12% x x 2 x na Kansas City Streetcar Authoritya MO na 2.1 4.1 0% x x x x x x 4 na na Georgia Cobb Transit GA 0.7 2.7 22 24% x x x 4 x na North County Transit District CA 0.85 11 94 17% x x x x x na na x na Jacksonville Transportation Authority FL 1.03 12.7 98 13% x x x x x x na 1 x na Kansas City Area Transportation Authority MO 0.79 13.5 91 10% x x x x x na 4 na na Foothill Transit CA 1.5 13.6 87 19% x x x 2 x na Sacramento Regional Transit District CA 1.03 21.7 169 19% x x x x x x 4 x na Charlotte Area Transit System NC 1.78 25.0 156 19% x x x x x na 2 x na (continued on next page) Table 2. Survey respondent transit agencies—detailed information.

General Information Transit Service Provided by the Agency Mobility Modes in the Area Status of EFPS Agency name St at e Se rv ic e ar ea po pu la ti on (M ) A nn ua l u nl in ke d tr ip s (M ) O pe ra ti ng fu nd s (M , $ ) Fa re re ve nu e sh ar e of th e op er at in g fu nd s U rb an b us Su bu rb an b us B R T U rb an ra il Su bu rb an ra il Tr am Fe rr y V an po ol /r id es ha re A D A p ar at ra ns it O th er To lli ng o r p ar ki ng # o f s ha re d m ob ili ty m od es EF P S in p la ce P ay m en t co nv er ge nc e w it h pr iv at e pa rt ie s Bi-State Development Agency MO 1.6 41.0 276 16% x x x x x x x 4 x na Orange County Transportation Authority CA 2.85 42.9 275 10% x x x x x na 1 na na Utah Transit Authority UT 1.88 45.1 375 14% x x x x x x x x 3 x na Central Puget Sound Regional Transit Authority/Sound Transita WA 3 50.0 2,270 4% x x x na 3 x na Port Authority of Allegheny County PA 1.4 63.2 405 25% x x x x x x x 3 x x Regional Transportation Commission of Southern Nevada NV 2 65.5 210 33% x x x x 1 x na Metro Transit MN 1.8 82 378 25% x x x x x x x x 4 x na San Diego Metropolitan Transit System CA 2.46 88.2 256 36% x x x x x x x x 4 x na Capital Metropolitan Transportation Authority TX 1.23 29.8 236 10% x x x x x x 4 na na Milwaukee County Transit System WI 0.95 35.0 147 23% x x x na 3 x na VIA Metropolitan Transit TX 1.93 37.0 221 11% x x x x x x 3 x na Santa Clara Valley Transportation Authority CA 1.94 39.1 437 8% x x x x x na 4 x na Greater Cleveland Regional Transit Authority OH 1.4 39.6 261 18% x x x x x x 3 x na Table 2. (Continued).

Miami-Dade County Department of Transportation FL 2.49 89.5 584 16% x x x x x x x na 4 x na Regional Transportation District CO 2.9 98.1 662 21% x x x x x x x x 4 x X Tri-County Metropolitan Transportation District of Oregon OR 1.54 99.0 496 25% x x x x x x 4 x na Maryland Transit Administration MD 7.8 103.6 753 20% x x x x x x x 4 x na Metropolitan Atlanta Rapid Transit Authority GA 2 126.0 557 24% x x x x x x 4 na na Bay Area Rapid Transit CA 0.8 132.0 776 62% x x x x 4 x na San Francisco Municipal Transportation Authority CA 0.9 226.2 847 23% x x x 4 x na Southeastern Pennsylvania Transportation Authority PA 3.8 324.0 1,326 34% x x x x x x 2 x na Washington Metropolitan Area Transit Authority DC 3.72 353.0 1,769 37% x x x x x x x 4 x na Massachusetts Bay Transportation Authority MA 3.1 382.7 1,880 35% x x x x x x x x x 4 x na Los Angeles County Metropolitan Transportation Authority CA 8.36 407.0 1,908 18% x x x x x x x x 4 x X Metropolitan Transportation Commissiona/b CA 7.4 547.0 na na x 4 x na Regional Transportation Authority of Northeastern Illinoisa/c IL na 613.5 2,076 40% x 3 na na Source: FTA 2018. Note: BRT = bus rapid transit; EFPS = electronic fare payment system; M = millions; na = not applicable. aData source is agency website (not FTA). bThe transportation planning, financing, and coordinating agency for the nine-county San Francisco Bay Area; numbers reflect counties cThe RTA is charged with financial oversight, funding, and regional transit planning for the region’s transit operators, numbers reflect six counties.

22 Multimodal Fare Payment Integration responsible for procuring and administering the regional fare payment system in their area and are therefore included in the synthesis. Twenty-seven agencies (75%) reported that park- ing or tolling services are available within their service area. More than half of the respondents stated that all shared mobility services (ride hailing and car/bike/scooter sharing) are available in their service area. Shared mobility services are dominated by a few service providers within each category. For example, the most commonly mentioned providers by shared mobility category are the following: • Car sharing: car2go and Zipcar • Ride hailing: Lyft and Uber • Bike sharing: JUMP and Lime • Scooter sharing: Lime and Bird The dominance of a few service providers for shared mobility nationwide contrasts with tolling and parking, where most services are provided by local companies that differ by region or city. Among the respondents, 30 agencies (83%) reported that their services are part of an electronic fare payment system. Of those 30 agencies, 18 have a card-based system, five have an account-based system, and seven have a hybrid system that is both card- and account-based. As can be seen in Chart 1, most of those 30 agencies (90%) have not yet achieved payment convergence with other mobility providers. Of the 30 agencies, four agencies reported that payment convergence is in progress but that they are in an early phase and still exploring opportunities. Three agencies of 30 demonstrated experience: Los Angeles County Metro- politan Transportation Authority (LA Metro), Port Authority of Allegheny County (Port Authority), and Regional Transportation District (RTD) of Denver have launched a payment solution including other mobility modes. 3.2 Forms of Payment Convergence Payment convergence can take many forms. It often involves using the same payment medium or technology to pay for services on multiple modes of transportation, such as using a toll tag to pay for parking at an Amtrak station or using a transit account to pay for parking, 77% 13% 10% Yes No In progress Chart 1. Agencies that have achieved payment convergence with other mobility providers.

Status of Payment Convergence in the United States 23 shared bikes, or scooters. Payment convergence also involves linking payment accounts for multiple modes, such as transit and tolling or transit and bike sharing accounts. In addition, payment convergence involves providing a portal, such as a mobile application, to pay for a trip involving more than one mode of transportation, and payment reciprocity. In the survey, three agencies demonstrated experience in payment convergence with shared mobility modes: LA Metro, Port Authority, and RTD. All three agencies applied a different approach to deal with the complexity of payment convergence (Figure 4). For more details on the three agencies, please see their respective case examples in Chapter 4. 3.3 Transit Agencies’ Expectations Related to Payment Convergence Most of the survey respondents (27 agencies) have no experience in payment convergence with private parties; therefore, those agencies were asked a series of survey questions on what they expect from payment convergence. The survey explored their perceived opportunities and challenges for payment convergence, as well as their views on the implementation pro- cess including procurement, standards, cross-program incentives, and data management. This section summarizes the responses from agencies that indicated they have an electronic fare payment system but no experience yet with payment convergence with private parties. 3.3.1 Desired Outcomes of Payment Convergence The agencies were asked to indicate the desired level of integration from the customer per- spective. The survey respondents also described what business functions they would share with the other parties and what results they anticipate from payment convergence. Around half of the respondents mentioned that their agency would be the party initiating payment convergence. The other agencies either named their current mobile ticketing provider Los Angeles County Metropolitan Transportation Authority Fare payment system: Well- functioning card-based electronic fare collection system Convergence: Adding an account-based layer to the card-based system and using smart cards to identify the customer's account Additional modes included: Parking and bike sharing; inclusion of other modes is under discussion Status: Rolled out Port Authority of Allegheny County Fare payment system: Card- based system and development of mobile app provided by Masabi is in progress Convergence: Existing transit smart cards used as identifier for the bike sharing account (registration of the smart card with the bike sharing service provider is necessary) Additional modes included: Bike sharing Status: Rolled out Regional Transportation District Fare payment system: Card- based system and mobile app provided by Masabi Convergence: Leveraging a third-party's (Masabi) existing agreement with a mobility provider (Uber); as a result transit mobile tickets are sold in the Uber app Additional modes included: Ride hailing (Uber); RTD is also looking for ways to integrate with other mobility apps Status: Rolled out Figure 4. Forms of payment convergence identified in the survey.

24 Multimodal Fare Payment Integration or the regional transit agency, or said they are not sure (the initiator could be either the agency or the private party). Most agencies stated that they are unsure about the desired level of customer service inte- gration with other parties. The service integration levels mentioned most by agencies were integrated pricing for multimodal journeys (e.g., transfer discounts) and integrated journey planning for multimodal journeys. “Segregated pricing for multimodal journeys using a single customer account and fare media (including mobile app)” and “Segregated pricing for multi- modal journeys using multiple customer accounts and a single fare media (including mobile app)” were less desirable options for the agencies (see the questionnaire in Appendix A). The survey also explored the desired level of payment convergence. Using common fare media and having a common customer account were more desirable than common customer portals such as a website and common payment methods with other parties. Note that more than half the agencies are unsure about the desired level of payment convergence—even if they named a desired level. Agencies mentioning common fare media as the desired level of payment convergence were asked to identify which solution they would use. Table 3 shows how many times a certain type of fare medium was mentioned. The transit agencies mentioned mobile phone solutions more often than physical media. Near-field communication (NFC) can be considered as popular as QR codes, but interest in the open-loop bank card solution lags. The agencies also shared their views on the business functions they would integrate with other parties. The most commonly mentioned functions were transaction data processing and reconciliation and settlement. Media issuance, product sales, system monitoring, and data analytics were occasionally also named. Fifteen agencies indicated that they are not sure which service they would integrate with third parties. The survey investigated what transit agencies expect to be the result of payment convergence with private parties. Chart 2 summarizes the expected results. Note that agencies could select more than one option. The most expected results from payment convergence are increased transit ridership and enabling the implementation of cross-program incentives across customer groups such as seniors, students, and customers with disabilities. Ten of 27 agencies stated that they are unsure about the expected benefits. 3.3.2 Procurement Strategy When the agencies were asked to determine what procurement strategies they would find the most attractive if a private party were involved, 10 of 27 agencies indicated that they are unsure On Mobile Phone Physical Media Will Not Be Available Proprietary NFC 12 8 1 Open-loop bank cards 7 5 4 QR codes 12 5 2 Table 3. Fare media and instruments planned to be used after payment convergence.

Status of Payment Convergence in the United States 25 about which procurement strategy they would use. Turnkey solutions and public–private part- nerships were mentioned by multiple agencies. Agencies also stated that they would include a pilot demonstration stage in the implementation process. 3.3.3 Standards The survey also asked the agencies whether more regulations or standards for private parties would assist with payment convergence. The agencies did not form a unified view on the question, but more agencies indicated that regulations and standards would be beneficial than indicated that they would not. About 30% of the respondents expressed that they are unsure about regulations. When agencies were asked to specify what kind of regulations would assist with payment convergence, they mentioned privacy policies and policies on what data would need to be shared to ensure a seamless experience for customers. Additionally, one agency expressed concern about the effect of enforcing regulations on the relationship between agencies and private parties. 3.3.4 Equity, Accessibility, and Cross-Program Incentives All the agencies that responded to the survey reported that they have special fare programs for seniors and individuals with disabilities. Most agencies (88%) offer student fare programs. Some agencies have low-income fare programs, employer incentives, veterans’ programs, and volume discounts. More than half of the respondent agencies expect to replicate the student fare, the senior fare, or the individuals with disabilities program. One-third of the respondents are unsure or stated that none of the fare programs would be replicated on nontransit services. The main concern related to equity and accessibility was ensuring access for the unbanked and for transit users without smartphones. Agencies also mentioned concerns around ensur- ing that customers with disabilities were offered the same level of services, particularly when shared mobility services are offered as part of transit service. Finally, agencies cited the challenges of finding funding for these services and partners willing to cooperate. 20 17 15 15 11 10 10 Customers/riders increase in transit Enable the ability to implement cross-program incentives across customer groups such as seniors, students, and customers with disabilities Decrease transit boarding time Decrease waiting time for purchasing and topping-up fare media Cost savings Customers/riders increase in non- transit Unsure in this stage Number of agencies Chart 2. Expected results of payment convergence with private parties.

26 Multimodal Fare Payment Integration 3.3.5 Data Management Related to data management, agencies were asked to share the types of PII they expect to share or receive (or both) from private parties if payment convergence is implemented. Table 4 summarizes how many times the agencies named certain types of PII. The survey respondents had the opportunity to mention information that they expect to receive or share but that was not included by name in the survey questionnaire. When agencies selected “other” as an option, they were prompted to write in their own answer. In those instances, the agencies named demographics, pass/media type, service used (routes and mode), and time of the day/week as additional information to receive or share. Eight agencies mentioned being unsure about the type of PII they would receive or share. The agencies were also asked to indicate intended uses for data collected. The most common purpose of data collection was customer support. Multiple agencies mentioned marketing, journey planning, or reconciliation and settlement as the purpose of data collection. The agencies again had the option to write in their own answer. A few agencies indicated that they are unsure about the specific purposes for data collection, while other agencies named customer communications (i.e., general announcement support), service planning, and gain- ing customer insights as the purpose of data collection. 3.3.6 Mobility as a Service Payment convergence is one factor that leads to the ability to offer MaaS to customers. Given this potential development in the transit industry, the synthesis team asked all agencies surveyed about MaaS which entity they believe is best positioned to offer MaaS. While some agencies indicated that they are not sure which entity is best positioned in their service area to provide MaaS, the rest of the agencies named a great variety of entities. The agencies’ answers included transit planning and ticketing integrator apps; the public sector, because it is the best positioned to ensure access to facilities and services for all users; mobile phone payment systems such as Apple Pay, Google Pay, or Samsung Pay, because of high smartphone penetration and the existing customer payment information and technology to interface with other systems; and large technology companies such as Apple and Google, because of their wealth of data and resources. Type of Information Expect to Share with Private Parties Expect to Receive from Private Parties Full name 9 12 Photograph 2 2 Home address 0 4 Email address 8 13 Personal identification numbers 1 3 Billing information 4 5 Date of birth 2 2 Place of birth 0 2 Telephone number 7 10 Token ID 15 14 None 5 5 Unsure 7 5 Table 4. Personally identifiable information expected be exchanged with private parties.

Status of Payment Convergence in the United States 27 The agencies also expressed concerns related to private sector MaaS providers’ ability and willingness to offer services that benefit all, not just the commercially viable group of users. 3.3.7 Challenges and Concerns of Transit Agencies The survey respondents were asked to share what they expect to be the biggest challenges to building consensus with private parties and what topics need broad agreement for implemen- tation of multimodal fare payment convergence with a private party. The answers from the open-ended questions were analyzed, and five underlying topics were identified. 1. Sustainability of agencies’ role in the payment ecosystem. The agencies are concerned that (1) their lack of knowledge of the payment industry, (2) the fast emergence of new payment technologies, and (3) the reliability of private vendors may negatively affect the sustain- ability of their investments in new payment solutions. 2. Working with private companies. Because of fundamental differences between public transit agencies and for-profit companies, transit agencies expressed concerns about working with private companies to provide mobility and payments services. Transit agencies expressed concerns about overall reliability of some of the companies that provide mobility or pay- ments services because the companies are new, relatively untested, and profit driven. This concern is amplified in relation to ensuring equity and accessibility for communities that are low income, disabled, unbanked, and without reliable access to the Internet through devices such as smartphones. 3. Challenges for smaller agencies. Smaller agencies tend to lack the necessary staff and tech- nical capabilities to invest in multimodal fare convergence projects. Furthermore, it is even more difficult for smaller agencies to justify the high investment costs in relation to their overall budgets and ridership figures. Additionally, private companies tend to focus on larger agencies when considering payment convergence projects because costs associated with entering into agreements with transit agencies are high and relatively fixed. 4. The lack of consensus on a standard business model between transit agencies and private parties. The main topics that require a mutual understanding between agencies and private parties are the overall business model, revenue model, roles, funding, customer ownership, and data sharing. One of the main concerns pertains to which entity is best suited to take on a certain role. For example, which entity will act as a clearinghouse and which will have direct relationships with customers? The broad spectrum of business models currently being explored by agencies and private parties increases transaction costs because the lack of con- sensus on a standard business model for private party roles and engagement requires most agencies to invest in creating a bespoke model that works for them. 5. Concerns about understanding and agreeing to a fee structure associated with expand- ing technology and access, particularly when the expected increases in ridership or rev- enues do not materialize. Transit agencies are tasked with managing tight budgets and find that fees associated with implementing new transit ticketing technologies or convergence can be costly. Agencies face the risk that ridership or revenue may not increase even if the agencies commit to a fee structure and work toward introducing more access to payment technologies or convergence. 3.4 Summary of the Survey Findings Most agencies surveyed offer multimodal transit options and note that at least one other transit mode is available and operated by another agency within their service area. The most- mentioned nontransit service available in the agencies’ service area provided by other parties is ride hailing, followed by bike sharing and parking. Most agencies reported more than one

28 Multimodal Fare Payment Integration nontransit service in their region, and half of the agencies reported that all shared mobility service modes (bike sharing, car sharing, scooter sharing, and ride hailing) are available. The new mobility service modes are dominated by a small group of providers across the country, whereas a diverse group of local entities provides tolling and parking services. Twenty-seven agencies stated that their services are part of at least one electronic fare payment system available within their service area. Some agencies have their own system and some agencies use a larger regional system such as the Transit Access Pass (TAP) system admin- istered by LA Metro. The systems are largely card-based; however, a few hybrid systems that feature both cards and accounts have been implemented. Some agencies are transitioning from card-based to account-based systems. In the survey, three agencies demonstrated experience in payment convergence with other parties. Three agencies chose different paths to achieve payment convergence. LA Metro built an account-based layer on top of its card-based system, which enables the TAP system to offer bike sharing and parking services. After Uber announced its partnership with RTD’s current mobile ticketing solution provider, RTD was able to offer transit tickets for its customers directly through the Uber app. The Port Authority used its card-based system to connect with a bike sharing service. Many agencies are unsure which party would initiate payment convergence, but they anticipate that it will be their agency, a regional authority, or a third party. Agencies anticipate using QR codes and NFC mobile technologies rather than NFC or open-loop bank cards on physical media. Agencies expect to converge their media issuance, product sales, transaction data processing, and reconciliation and settlement tasks with private parties. Most agencies, however, are unsure how they will procure a new fare collection system or are considering multiple options. The agencies did not overwhelmingly call for regula- tions or standards, but a few agencies noted that data sharing regulations may be beneficial. Most agencies expect that payment convergence will lead to an increase in transit ridership, reduce transit boarding time, and provide the ability to offer cross-program incentives across customer groups such as seniors, students, and customers with disabili- ties. Almost all agencies are concerned about serving the unbanked and travelers without smartphones and about ensuring the same level of services for customers with disabilities when private parties are involved. In general, agencies expect to receive more PII from the private parties than they anticipate sharing. Many agencies noted that guidelines on privacy policies would be useful and support more guidelines on the data sharing necessary for payment convergence. Agencies had divergent views as to which entity is best positioned to offer mobility as a service. They noted, however, that the public sector plays an important role in ensuring equity and accessibility for all customers.