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Key Takeaway:

While Houston Metro, a large public bus agency in the U.S., plans to introduce open-loop payments as part of an account-based ticketing system now being built for it, the agency has no plans to phase out cash acceptance on board its more than 1,200 buses, a spokeswoman confirmed to Mobility Payments.

Key Data:

At a board Administration Committee meeting March 16, a Metro staffer said the estimated costs for the fareboxes and TVMs had increased by 30% in the two years since the original contract with INIT was approved. “Like a lot of others, they’ve got supply-chain issues. So this is a pretty sizable increase,” she said.

Organizations Mentioned:

• Houston Metro
• INIT

While Houston Metro, a large public bus agency in the U.S., plans to introduce open-loop payments as part of an account-based ticketing system now being built for it, the agency has no plans to phase out cash acceptance on board its more than 1,200 buses, a spokeswoman confirmed to Mobility Payments.

Underscoring the determination to keep cash was the approval by the agency’s board late last week of a $48.3 million contract option for Germany-based fare-collection system vendor INIT. The money will go to replace aging fareboxes on board the buses and install new ticket-vending machines, or TVMs. The fact that costs for the equipment have ballooned over the past two years did not deter the agency.

The contact option adds to a $37 million base contract for INIT that the agency board approved in February 2020. This base contract included implementation of an account-based ticketing back office and validators for the approximately 1,300 bus fleet and on light rail platforms. The agency is installing two validators on each of its buses, at the front and back doors. All will be able to accept EMV payments and also will carry scanners for barcodes and QR codes for mobile ticketing.

At a board Administration Committee meeting March 16, a Metro staffer said the estimated costs for the fareboxes and TVMs had increased by 30% in the two years since the original contract with INIT was approved. “Like a lot of others, they’ve got supply-chain issues. So this is a pretty sizable increase,” she said.

The staffer said the fareboxes and TVMs will together cost more than $36 million. There are other costs and contingency funds that bring the total of the additional spending to $48.3 million.

The Metro spokeswoman told Mobility Payments that this additional procurement did not require a new bidding process because the option was included in the base contract with INIT when it was approved in 2020. That original contract amount was $28.8 million, which the board increased to $37 million later in 2020.

“Options only require board approval,” said the spokeswoman. She added that the fareboxes are 27 years old, so needed to be replaced.

With the new $48.3 million, it brings the total cost of Metro’s fare-collection system overhaul to $85.3 million. The new system is scheduled to launch in early 2024.

INIT, which has projects in other U.S. cities, spotlighted the Houston Metro contract in its annual report and press material around release of its year-end 2021 financial statements late last week. The company noted that its Metro contract helped it hit a record €179.2 million (US$198.8 million) in orders in 2021.

“Long-term customer relationships, such as that with Metro Houston, secure a stable business base for INIT, as they generally lead to follow-up orders, as well as maintenance and operating contracts, which alone resulted in incoming orders of more than €60 million in 2021, said INIT in a statement. A spokesman for the company confirmed to Mobility Payments that the $48.3 million contract option approved last week by the Metro board was not part of the €60 million (US$66.4 million) in orders in 2021 the company had received from Metro and presumably other agencies. 

Paying with Cash for a ‘Long Time’
Metro had reportedly considered doing away with cash acceptance on  board its buses, but decided against it. Cash, at present makes up a reported 30% of trip payments, the agency said.

The decision to go ahead with the farebox replacements got the support of Metro board member Jim Robinson, who, speaking at the March 16 committee meeting, said he was “really glad” that the agency was keeping the cash option.

“I know that at times there’s been a desire to try to get away from cash on buses, but because of the diversity of the population that we have here, I think there’s gonna be a demand for the ability of people pay cash for a long time,” he said.

The agency staffer responded to Robinson by saying: “We came to the same conclusion.”

Unlike a number of transit agencies in Europe and Asia, few agencies in the U.S. have eliminated cash acceptance on their vehicles or plan to do so, as Mobility Payments has reported. The Greater Dayton RTA is one that eliminated cash last fall. And a larger agency, the Massachusetts Bay Transportation Authority, or MBTA, said it will do so as part of its ongoing fare-collection system overhaul.

Houston Metro has hired InComm Payments to greatly expand its network of retail reload points to enable customers to buy and reload the agency’s closed-loop Metro Q cards. These outlets accept both cash and credit and debit cards for the reloads.

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