Your local transit department wants to get out of the card-issuing business. They also prefer to get out of the cash-fare business altogether, which means that you may start using your regular credit or debit card to ride the local bus or rail system.
The main objection to accepting cash payments for your ride is that the cost of processing cash revenue runs, on average, from 10 to 13 cents per dollar collected. This reflects the costs of depositing, armored car expenses, etc. Cash is also vulnerable to theft. With an open-fare payment system, the expense runs only 5 to 8 cents per dollar collected, even with the costs of interchange (the fees charged by the issuing bank).
The general-purpose, open-fare cards are also generally cheaper to process than the closed-loop cards now in use. Closed-loop refers to the cards that riders buy that can only be used on the given transit system. Open-fare cards refer to your regular debit, credit, or pre-paid stored-value card issued by a bank or other financial service.
The closed-loop cards incur capital expenses to issue cards and install/maintain the fare gates or readers. In many cities, those systems were installed in the 1990s, with an expected life expectancy of 20 years. So those systems are nearing the end of their lifespan very soon.
Some of the cities that have plans to convert to an open-fare system, or have tested such a system, are: Chicago Transit Authority (CTA), New York's Metropolitan Transportation Authority-New Jersey Transit-Port Authority of New York and New Jersey, Philadelphia's Southeastern Pennsylvania Transportation Authority, Philadelphia and Southern New Jersey Port Authority Transit Commission, Toronto Transit Commission, and the national capitol's Washington Metropolitan Area Transit Authority.
New York's pilot program on one subway line ended November 30. No word yet on their decision to rollout the program system-wide. Chicago is entering the second phase of their installation of the new system, with bids from 12 vendors in the first phase. The CTA plans to still accept cash as a payment option.
Salt Lake City has installed a brand-new transit payment system that accepts credit/debit cards. But because they did not solicit bids before the program began, their costs are much higher than projected. Right now, officials state that expenses are 16 to 22 cents per dollar collected. They plan to bid out the payments program in the future.
With such a potential cost savings, the question arises as to why the transit companies ever got into issuing their own cards in the first place. At the time when these systems were installed, the closed-loop cards were much faster than the typical debit or credit card.
The debit/credit card typically took 2 seconds to process, which is not really noticed in a store setting. But when lined up to board a bus or metro rail station, it is excruciatingly slow. By contrast, a closed-loop card took less than a third of a second.
Credit and Debit Card Payment of Transit Fares Rolls Forward, by Tom Zind, NFC Times, Oct. 6, 2010, www.nfctimes.com/news/open-loop-payment-transit-fares-rolling-forward
CTA moves step closer to credit/debit card use as smart card for fares by Kevin O-Neil, CTA Tattler, Sept. 29, 2010, www.chicagonow.com/blogs/cta-tattler/2010/09/cta-moves-step-closer-to-creditdebit-card-use-as-smart-card-for-fares.html
Metro To Consider Sweet-Ass Credit Card System for Metro by Kriston Capps, Dcist, May 10, 2009, dcist.com/2009/05/metro_to_consider_creditdebit_smart.php
Open-payment system cheaper than Presto: TTC chair, CBC News, Aug. 9, 2010, www.cbc.ca/canada/toronto/story/2010/08/09/presto-open-payment-ttc649.html
PATCO may test open-payment fare collection by Paul Nussbaum, Philly.com, Sept. 21, 2010, www.philly.com/inquirer/local/nj/20100921_PATCO_may_test_open-payment_fare_collection.html
Transit Systems Move to Mobile Tech by Jesse Emspak, IB Times, Dec. 4, 2010, www.ibtimes.com/articles/88771/20101204/transit-systems-move-to-new-payment-technology.htm
UTA Wins APTA Innovation Award, Transit In Utah blogspot, Oct. 7, 2009, transitinutah.blogspot.com/2009/10/uta-wins-apta-innovation-award.html