The technology we use to pay for goods and services has changed a lot in the last decade. Swiping cards gave way to inserting, which gave way to tapping, which is now giving way to tapping with your phone. All this change leaves transit agencies playing catchup, as they try to ensure riders have fast and convenient ways to pay their fares.

While these challenges may seem distinctly modern, the problem isn’t new. Transit providers have been adapting their fare collection technology as long as they’ve been running trains, trolleys, and buses. 

Cash fares and the first “commuters”

The first innovation in transit fare collection were the discounted rates given to regular riders of the nation’s early commuter rail lines. In the mid-19^th century, the businesspeople who took these trains into the city every day were rewarded for their regular ridership by having their fares commuted to a lower rate. This practice gave rise to the term “commuter” as we know it today.

Through the early 20th century, fares were usually paid in cash, either at the fare window in exchange for a paper ticket, or, later, directly into a coin-operated fare box. These fare boxes were designed to accept a single coin, so fares were generally set at a nickel or dime.

Golden age of tokens

Eventually, cash fares were replaced by the transit token. While some transit providers had been minting tokens since the 19^th century, they didn’t become ubiquitous until the second half of the 20^th century. This was due in part to the limitations of coin-operated fare boxes. As the cost of providing a ride exceeded a dime, tokens allowed agencies to raise fares easily without having to adapt the fare boxes.

Additionally, as the early private transit operators in a given city consolidated into our current publicly-funded agencies throughout the 1950s and 1960s, tokens allowed the new agencies to offer a unified, city-wide fare system. In Philadelphia, SEPTA began issuing tokens in 1968, the year it took over the Philadelphia Transportation Company. These tokens were initially only sold to students as a way to provide discounted fares for getting to and from school, but they became available to all riders in 1977.

Rise of modern fare cards

Starting in the 1990s, modern fare cards began replacing tokens in cities across the U.S. These fare cards enabled some of the features we know and love today, like the free transfer and discounted monthly passes.

SEPTA, the last large transit agency to use tokens, swapped them out for fare cards beginning in 2016. While they are no longer accepted as fares, the SEPTA token is still an enduring icon of a bygone era in transit history. The agency initially planned to sell the tokens for scrap metal, but after multiple requests, SEPTA made them available for bulk purchase for artists—including a few homeowners who wanted to tile a countertop or floor with tokens. SEPTA also sells token memorabilia in its gift shop.

Current move toward open loop payments

Today, transit agencies are prioritizing fare payment systems that are flexible and adaptable. For example, the new OMNY system that New York’s MTA is currently rolling out can accept tap payments from fare cards, credit cards, smartphones, and even smart watches. In Philadelphia, SEPTA recently announced its SEPTA Key 2.0 initiative. The agency is looking for a new vendor to operate its fare collection system, and SEPTA emphasized that it wants to implement a solution that can be easily adapted to new technologies in the future.

These systems enable open loop payments, where the credit card or mobile device replaces the fare card. This technology allows for more flexibility in fare payments—riders can be charged when their trip begins, when it ends, or even at the end of the day so the fare can be adjusted based on total transit use.

While it’s important for agencies to maintain modern fare payment systems, they have to be thoughtful about how it’s done. Transit equity advocates have pointed out the necessity of maintaining cash fare options for riders without bank accounts or smartphones. Additionally, for smaller agencies, whose fare revenues cover only a fraction of their operating costs, it may be cheaper to eliminate fares altogether than to continually modernize their fare payment systems.

If history is any indication, the technology we use to pay for goods and services will continue to evolve in the coming decades, and transit agencies will continue to adapt fare payments accordingly. It’s hard to imagine what future generations might use to pay their fares—the early commuters of the 19th century certainly would not have foreseen a world in which a wristwatch could pay for a train ride.