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Reduced fare programs help ensure transit remains accessible to all. As payment technology evolves, understanding how these programs work is key to building a more equitable system for riders.
For most Americans, the term “concessions” might conjure up an image of hot dogs and soda at a ball game. In the banking world, concessions refer to something else altogether. Read on to learn what kind of concessions transit agencies serve up to their riders.
When you go to your favorite coffee shop and tap your card to pay, even the most advanced point of sale terminal might know where you are (Three Little Figs Cafe), what you’re buying (espresso), and how much it costs ($3.50), but it doesn’t know anything about you as a person. The barista might check your student ID and give you a discount, but nothing about your wallet, your bank card, or the terminal is designed to react to personally identifying information.
The global banking system is expected to generally treat every cardholder the same. In the rare case that the transaction amount is reduced mid-transaction, this is called a “concession” in the banking system.
In the transit world, concessions are more common than you might think.
Unlike cafes, transit agencies are publicly funded operations, and are expected to deliver a social benefit. To ensure that the people with the greatest need can access this benefit, transit agencies offer discounted fares to people that meet certain criteria. As many as a third of transit riders receive discounts on their fares.
Any transit agency receiving federal funds is required to offer discounted fares to seniors, persons with disabilities, and Medicare recipients. Many transit agencies have decided to extend discounts to other groups, including veterans, young riders, low-income riders, active duty emergency personnel, riders on their way to jury duty, first time riders, and even members of the National Association of Railroad Passengers.
These discounts all have one thing common: a transit agency can only give a discount for something they can verify. A bus driver can visually inspect an ID and charge a reduced fare, allowing a senior to board for $1 instead of $2. When agencies deduct fares from pre-loaded cards, they centralize that human-powered eligibility verification upfront. Seniors, veterans, and others typically apply online or in-person for a reduced fare card, then fare gates recognize these cards and charge only a reduced fare for each trip. Each agency decides for itself how to reduce fraud with card expirations and eligibility recertification.
As long as the transit agency controls everything between the card tap and the fare calculation, they can reduce the fare before the transaction goes through and avoid needing to ask the fare processor to make a concession. But controlling that upstream process comes with a cost, and agencies are always looking to reduce cost.
The way we pay for fares in the United States is changing. In the 2000s, new technology allowed transit agencies to switch from tokens to smart cards, which saved agencies money and improved the rider experience. Over the past five years, new technology has started allowing US agencies to switch from issuing smart cards to accepting the bank cards already in our wallets.
When agencies accept bank cards for payment, riders no longer have to wait in line at the fare machine to reload their cards. Riders can also take advantage of the features already available from their banks, including Apple Pay and Google Wallet. This is great news for transit agencies that want to stop running their own card printing services, fare machines, and support teams. But it’s complicated news for all these riders that have been getting discounted fares.
Go to any city with the new tap-to-pay system: New York City, Chicago, Boston, Miami, Las Vegas, or one of dozens of others. Board a bus, and tap your bank card on the fare validator. The validator, like a register at the cafe, wants to charge every rider the same amount. So in practice, agencies might be adopting new and exciting fare payment technology, but only riders that pay full fare (able-bodied adults above a certain income) get the benefit. These agencies still operate their old smart card systems, on a smaller but still costly scale, to continue distributing reduced fare cards.
These reduced fare programs were designed to prevent riders with greater need from falling behind, but with regards to fare concessions, that’s exactly what’s happening.
Over the past few years, California and New York have launched inspiring examples of how transit agencies can overcome the fare concession barrier.
Since 2022, Monterey-Salinas Transit riders have been able to link their bank cards to their discount eligibility and receive their fare concession when they tap to ride. The program started with seniors, and later expanded to veterans and Medicare cardholders. Eligible riders only need to take a few extra steps upfront to register, and then get the same experience and advantages as any other rider paying for their journey.
This experience is only possible because the transit agency, the payment processors, and the financial institutions that support these interactions came together to prioritize solutions for vulnerable transit riders. Onboarding, communication, and eligibility verification remains challenging for transit riders and agencies alike, but momentum is building. As more organizations explore new technologies and collaborative models, fare concessions are becoming easier to deliver, making it possible for every rider to benefit from a fairer system.
To learn more about fare concessions and the evolving technology and policy of transit payments, we recommend the following resources:
