Nov 28, 2016

Capping the way to Fairer Fares

The deBlasio administration and transit and community advocates are currently debating lower-cost fares for New Yorkers living paycheck-to-paycheck. A fare policy innovation in London could help, but it would require replacing the dated MetroCard with a more advanced fare payment system. Transport for London’s approach puts an end to New York’s problem of the poor paying more for transit than the rich. This happens because the better-off can afford the up-front cost of weekly and monthly MetroCards, while lower-income New Yorkers are less likely to buy these significantly discounted fares.
img_2231

Capping is a feature of TfLs “pay as you go” technology that allows debit and credit cards to tap onto buses and trains. Transit riders can make any number of daily journeys while limiting the cumulative cost of those rides. The system’s technology keeps a running total of the number of taps, and when the total cost of journeys reaches the price threshold of a 7-day Tube pass, the price is capped at that level. At the end of every week, the system checks to see whether a rider is eligible for a credit, and if so, refunds the bank or credit account used for fare payment. The system is designed for flexibility and to eliminate a customer’s anxiety around travel decisions. No longer are riders forced to make advance estimates about how many trips they may take in a week, and can feel confident they are always getting the best value fare.

NYC’s MTA will begin replacing the MetroCard in 2018 with a “contactless” payment method similar to the “Oyster Card” that London introduced in 2003. Could this change provide a golden opportunity for the agency to embrace fare capping? Transport for London originally designed the fare capping system for use with the Oyster Card, but ultimately decided that delivering it through their widely-used “pay as you go” bank card payment method provided more flexibility. As TFL’s Business Development Manager Matthew Hudson explains, capping with debit cards is much faster. “With card centric technology like Oyster, every time a card taps a reader a calculation is being made at the reader and a date is written to the card. Moving to a bank card payment system allowed us to instead calculate fares in the back office. This decreases transaction time when customers are passing through the gateline and allows us to perform a host of analytics in order to charge the customer the right amount.”

Transport for London’s experience demonstrates that it is certainly possible to use the system on both “tap and go” cards as well as bank cards and cap the price of rider’s weekly rides at a fixed amount. Based on London’s experience, it would be paramount for the MTA to build in the ability to do back end processing for their new “tap and go” card. The adoption of capping would certainly require the MTA to restructure its fare system, but this could ignite conversations at the agency about the fundamental utility of persuading people to purchase advance travel, or about whether they want to stay in the business of selling tickets at all. Furthermore, London’s system is a geographic zone-based system, which charges different fares on different modes and requires a fair amount of back-end analytics. The relative simplicity of New York’s transit system would increase the feasibility of adopting a capping model here.

Transport for London – an agency as large and essential as the MTA – has demonstrated how to successfully deliver a customer-oriented experience that promotes equity while also maintaining a bottom line. During the Future Fares Panel Discussion at TransitCenter last week, TfL’s Hudson succinctly summarized their approach – “Why should people who have the most money always get the best value? There are much more equitable fare payment structures [than bulk discounts].”

Back to the Connection