Regional Transit Group Enables Cash Loading in Apps

Ohio-based NEORide consortium, a regional transit group that among other things, handles mobile-ticketing fare collection for 13 transit agencies in the U.S. states of Ohio, Kentucky and Michigan, is seeking to reduce cash from its members buses. It’s the latest agency or group to do so.

While more transit agencies are plugging into retail bill-paying networks to enable their customers to load cash value or buy tickets at retail outlets to fare cards or mobile-ticketing apps–NEORide so far is only using cash collection points at 14 transit centers or offices. That’s according to an announcement this week by UK-based Masabi, the software-as-a-service ticketing platform that NEORide is using to offer agency riders mobile ticketing through a white-label app and also through the trip-planning Transit app. The 14 cash-loading points is in addition to cash fare collection in fareboxes on board buses.

With the new cash service, NEORide agency customers can use cash through the group’s branded EZfare app and soon in the Transit app at the transit centers. While the offices also accept cards to enable customers to buy mobile tickets or add value to their mobile accounts, customers already can store their credit or debit cards in the EZfare or Transit apps to buy the tickets.

The NEORide agency transit centers use an API from Masabi. When customers hand over cash or other payment, Masabi’s technology  sends visual and bar-code tickets to customers using that white-label app.

In the aftermath of the Covid-19 pandemic, eliminating cash has taken on greater urgency for transit agencies because customers perceive notes and coins to be more at risk for harboring the coronavirus, though the scientific research is mixed on the topic.

Fare-collection system suppliers, including Masabi and such other SaaS ticketing providers as U.S.-based Bytemark, say they are seeing strong demand for cashless options, including linking account-based mobile ticketing and contactless closed-loop card products to retail networks, where customers can use cash. NEORide is installing validators to accept the account-based closed-loop cards, in addition to eventual acceptance of open-loop cards.

Cash acceptance, however, still dominates fare collection at most bus operators and some other transit agencies, especially small ones in North America.

Besides allaying fears of customers wary about catching the virus on public transit, agencies that have moved to electronic fare payments need a way to accommodate customers who don’t have smartphones or EMV payments cards or don’t want to use them to pay fares.

A number of the agencies are using cash points, networked by fintech companies such as InComm Payments and Payzone, combined with ticket machines in stations, transit agencies are seeking to accommodate their customers who are unbanked and underbanked, along with those who wish to pay cash.

Many agencies have already rid themselves of direct cash payments and fareboxes, such as those in major Asian cities, such as Tokyo, Hong Kong and Taipei, which use reloadable physical and virtual fare cards on smartphones that customers also use for retail payments with a broad network of merchant acceptance points. Customers also can reload the cards at these locations. That’s in addition to being able to reload card accounts online.

In the West, agencies only use closed-loop fare cards for transit payments, so in addition to machines and ticket agents in stations and online networks, where available, the agencies in major cities use a network of merchants that earn commissions to sell and reload fare cards. For example, there are 4,000 tickets shops, including newsagents, in London that can sell and reload Oyster cards.

Big Agencies Move against Cash
As Mobility Payments has reported, Transport for London ended all cash acceptance on buses in 2014, a high-profile move that the authority reportedly said would save £24 million (US$40.7 million) per year at the time. That included a “one more journey” feature that allowed customers to take one additional trip if they didn’t have money on their closed-loop Oyster cards. The same year, Transport for London had rolled out open-loop payments to all its modes of transport, after having started on buses in late 2012. This also reduced the need for cash, and when it ended cash acceptance on buses, cash reportedly only made up less than 1% of fares.

The Massachusetts Bay Transportation Authority, or MBTA, in Boston plans to completely do away with cash fare payments on its various transport modes when it rolls out its massive new fare collection system, scheduled to be completed by 2024. It will also grant users “overdraft” protection, if they show up to ride but don’t have enough value on their electronic-payments fare media.

In New York City, which has been rolling out a new OMNY fare collection system focused on open-loop payments since 2019, plans call for introducing a contactless closed-loop OMNY card this year. The card would give customers who don’t have open-loop credit, debit or prepaid cards–or who don’t want to use them to pay fares–an option other than the agency’s aging mag-stripe MetroCard, which will be phased out in 2023. An estimated 12% of MTA customers are unbanked.

Customers will be able to purchase the OMNY card in more than 4,000 retail outlets, mainly drugstore chains in New York City and, later, in vending machines. The latter will enable customers to purchase and reload their cards at New York City subway stations. MTA will work with prepaid payments service provider InComm to distribute and manage closed-loop OMNY as reloadable gift cards.

California Seeks Help from Fintechs
In addition, the California Department of Transportation, or Caltrans, is leading an initiative, Cal-ITP, to help the state’s 300-plus transit agencies, most of them small bus operators, to move to open-loop fare payments.

Alongside that, the state is seeking to help the agencies reduce their rate of cash acceptance by enlisting fintechs to offer products for what officials estimate to be the state’s 25% to 30% unbanked and underbanked population.

Already onboard is San Francisco-based Square Inc. with its Square Cash app, which enables users to send and receive funds and add value that they can use with a companion debit card, which is based on EMV technology. Monterey-Salinas Transit, which is trialing open-loop payments, plans to introduce Square Cash cards soon, Other agencies adopting open-loop contactless EMV cards will likely do the same.

Another example of new EMV-enabled cards that unbanked and underbanked people can use to pay fares is the Angeleno Card, which is a free prepaid debit card for low-income Los Angeles-area residents.

Demand Increases for Ridding Cash on Buses
Despite moves to eradicate cash, this is usually easier said than done, especially for smaller agencies, which usually run only bus services, including rural routes that offer few, if any, stations where consumers can reload cards at machines or at ticket counters.

As they face more pressure to offer contactless and mobile ticketing, a number of smaller agencies are signing up with the SaaS ticketing platforms, which allow the agencies to plug into the platforms to begin offering touchless ticketing with a quick time to market and low start-up costs–especially if the agencies only offer mobile ticketing with visual validation by bus drivers.

When asked before its NEORide announcement, Masabi told Mobility Payments it was seeing strong demand from transit agencies to reduce their cash handling by enabling cash reloads and ticket purchases from retail locations.

“Yes, we are seeing this as a massive trend, with nearly every RFP now including an element on how to handle cash effectively, efficiently and safely,” said James Gooch, Masabi’s head of marketing. “The new reality created by the Covid pandemic has seen transit agencies prioritize the implementation of contactless payment methods for all rider segments.”

Masabi announced in late May that it was enabling cash-based ticket purchases for customers of transit operator National Express West Midlands through more than 1,300 merchant outlets in the region supporting bill-payment network Payzone. Customers can pay cash or use other forms of payments that the shops accept and display a bar code in the white label National Express app that Masabi provides, branded mTicket.

Masabi said it enables cash-loading services for three transit agencies in the U.S., in Las Vegas; Duluth, Minnesota; and Dayton, Ohio; also working with InComm Payment’s and T-Cetra, the latter for the Dayton Regional Transit Authority.

Dayton RTA’s Brandon Policicchio recently said the agency has set up more 200 retail outlets, each within a quarter-mile of the agency’s  bus routes or stations. Customers can reload their accounts on the agency’s app or on contactless closed-loop cards the agency began issuing in April 2021.

As of January 2021, cash usage for RTA accounted for 28% of rides, down from 43% in May 2020. But the reduction in cash usage leveled off starting in October 2020, and didn’t drop much after that. And the agency had to move back the date at which it believes it can remove fareboxes from its buses to the end of 2021. It had earlier planned to hit that targeted in June 2021.

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