Considering the Unbanked in Cashless Fare Payment at Point of Service for Bus/Demand-Response Services (2022)

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4 C H A P T E R 1 Introduction This chapter outlines the structure of this synthesis. First, important background informa- tion is provided. Next, the objectives are set forth. The following section describes the technical approach used to carry out the study, and the last part summarizes the structure of the report. Background In recent years, the transit industry has been moving toward greater use of prepayment for fare collection using contactless cards, mobile phones, and other new forms of fare media. To date, nearly all bus systems in the United States have retained the ability to accept cash at the point of service, but many transit systems are considering the benefits and challenges of moving to completely cashless fare payments. Removing cash fare collection from transit vehicles— particularly buses—and requiring prepayment has the potential to increase efficiency by decreasing operating costs, reducing boarding times, and improving safety and security. But cash- less prepayment practices can pose challenges to riders who prefer to use cash or are unbanked or underbanked. Unbanked is defined by the Federal Deposit Insurance Corporation (FDIC) as households in which “no one in the household had a checking or savings account.” Underbanked is defined as households “that have a checking or savings account and used one of the following products or services from an alternative financial services (AFS) provider in the past 12 months: money orders, check cashing, international remittances, payday loans, refund anticipation loans, rent-to-own services, pawn shop loans, or auto title loans” (Apaam et al. 2018). Objectives The objective of this study is to inform transit agencies of the potential impacts of going cash- less. This study focuses primarily on bus operators; fare collection on buses presents unique challenges due to the sheer number of bus stops distributed throughout large metropolitan areas, most or all of which do not allow for easy installation or maintenance of fare collection infrastructure.

Introduction 5   Various topics pertaining to cashless fare collection systems were considered: • Operational aspects, such as fare technology, fare collection methods, and fare policy • Advantages and drawbacks of removing onboard cash fare collection • Policy and regulatory aspects • Considerations for special populations, particularly the unbanked Technical Approach It should be noted that this TCRP synthesis study initially began in fall 2019, and the original intention was to conduct a survey of transit operators throughout the country to identify which agencies (if any) were considering cashless fare systems and understand why many agencies were not. A survey instrument was designed in early 2020. However, the COVID-19 pandemic began just before the survey was scheduled for distribution to transit agency staff in March 2020. For public health reasons, transit agencies throughout the country swiftly implemented many policy and operational changes—including various changes to fare collection practices and policies. In light of this, the originally planned transit agency survey was postponed and the TCRP synthesis study method was reassessed in fall 2020. During the early days of the COVID-19 pandemic (early to mid-2020), many transit agencies stopped collecting fares altogether, and “free fare” policies were temporarily introduced by many transit agencies throughout the country for public health reasons. A separate ongoing TCRP research project is focused on understanding free fare policies, so they are not considered in this synthesis. During a similar timeframe in the spring and summer of 2020, a smaller number of transit agencies continued to collect fares but focused on contactless fare media. Their goal was to limit or eliminate interaction between transit customers and bus fareboxes, which are typically in close proximity to vehicle operators. Some of these transit agencies temporarily suspended cash fare collection on board vehicles, which presented an opportunity to study cashless fare policies. Other transit agencies used the pandemic to reassess their fare payment technologies and policies, which included consideration of cashless fare systems. Given these changes in the transit industry, the primary study method was altered in fall 2020. The originally planned transit agency survey was never distributed; instead, detailed case examples were conducted to focus on a smaller number of transit agencies that were considering, planning for, or implementing cashless fare systems. In the end, the technical approach used for this study had two parts. First, a review of prior literature about cashless fare systems was conducted. Second, detailed case examples were com- piled based on telephone interviews with representatives from nine transit agencies. The agencies selected for the case examples met the following three criteria: 1. Agencies operated bus and/or paratransit services. Cable cars were also included. 2. Agencies had publicly stated they were considering or had already implemented cashless on part or all of their bus, paratransit, and/or cable car services. 3. Agency staff were willing to participate in an interview to provide information. Report Organization This synthesis is organized into five chapters. Chapter 1: Introduction provides background information, delineates the study objectives, and describes the technical approach of this study.

6 Considering the Unbanked in Cashless Fare Payment at Point of Service for Bus/Demand-Response Services Chapter 2: Literature Review presents a summary of relevant literature and references on fare policy and technology, the unbanked, and relevant policies and regulations. Chapter 3: Case Examples provides detailed summaries of nine transit agencies at different stages of considering, planning for, or implementing cashless fare systems. The nine case examples can be broadly classified into three groups, shown in Figure 1: those who have conducted small- scale pilot programs of cashless fare collection on one or a small number of routes; those who temporarily suspended cash fares due to the COVID-19 pandemic; and those who are currently considering, planning for, or implementing cashless fare collection systemwide. Chapter 4: Comparison and Emerging Trends presents a comparison of the case examples across multiple parameters and identifies ten key findings and emerging trends. Chapter 5: Conclusions and Future Research summarizes the key findings from this study and identifies important areas for future research. •Case Example 1: Muni (San Francisco, CA) - pilot program moving toward cashless cable cars •Case Example 2: WMATA (Washington, DC) - cash-free pilot program on a single bus route Small-scale pilot program of cashless fare collection •Case Example 3: TriMet (Portland, OR) - temporary suspension of cash fare collection on buses due to COVID-19 •Case Example 4: NJ TRANSIT (New Jersey) - temporary suspension of bus and commuter rail onboard cash fare collection due to COVID-19 •Case Example 5: Port Authority of Allegheny County (Pittsburgh, PA) - temporary suspension of cash fare collection on buses due to COVID-19 Temporarily suspended cash fare collection due to COVID-19 •Case Example 6: COTA (Columbus, OH) - currently considering cashless fare collection •Case Example 7: RTA (Dayton, OH) - eliminated cash payments on buses in fall 2021 and plans to eliminate cash on paratransit vehicles in the future as part of its new account-based fare collection system •Case Example 8: MBTA (Boston, MA) - planning to eliminate cash payments on buses as part of its new unified fare collection system •Case Example 9: Big Blue Bus (Santa Monica, CA) - currently conducting a systemwide 6-month pilot program of cashless fare collection on buses Considering, planning for, or implementing cashless fare collection systemwide Figure 1. Three types of case examples.