Transit Agencies are Cashing Out
March 18, 2021

We’re helping agencies reduce cash transactions and go contactless.

Public transit was cruising along at a steady and comfortable pace, riding a modest uptick in YOY revenue, with Americans boarding public transportation 34 million times each weekday. But then the coronavirus gained traction and the trip suddenly got bumpy. Amid periodic lockdowns, the rise in telecommuting, and of course, health and safety concerns, many riders simply put the brakes on taking buses and trains. According to the American Public Transit Association, transit ridership across the country dropped 9.9 percent in the first quarter of 2020, compared to 2019.

Not sitting idly by, many transit agencies are taking action to bring back their beloved riders. They’re committed to making the ride experience safer and are actually accelerating one important initiative that was started several years ago: implementing contactless or tap & go payments.

The World Health Organization recommends using contactless payments where possible to help control the coronavirus. And this directive makes a trainload of sense for transit agencies given the number of riders they transport each day. Contactless systems enable riders to tap and pay their fare with their smartphone or transit card instead of purchasing a ticket at a ticket window or machine. “Paying via tap & go helps agencies to move people through lines quicker which is especially important during the pandemic as it enhances social distancing,” said Melissa Lavery, Senior Product Marketing Manager in Financial Services at InComm Payments. Tap & go relies on Near Field Communication (NFC) technology, used by mobile wallets like Apple Pay or Google Pay to authorize payments. Transit cards, as well as smartphones, have an embedded tag or microchip, enabling them to securely store a payment application and the rider’s account information.

“Over the past several years, pre-COVID-19, transit agencies were moving toward eliminating cash transactions purely as a cost-saving measure,” explained Michael Herold, Vice President of Business Development for Tolling & Transit at InComm Payments. “When riders use cash to pay their fare, it costs the agencies fifteen cents on average to collect one dollar,” he noted. “COVID-19 threw that tap & go initiative into hyper speed; agencies are now working quickly to eliminate transactions involving riders and their employees to minimize the spread.”

Herold pointed out that agencies in big cities and small towns, alike, are making the move to tap & go. “Major metro areas like Chicago got their tap & go system up and running several years ago, while New York will be launching in Q2, 2021. Smaller markets like Eugene, Oregon, and Portland, Maine, are ramping up their operations now.” Herold added that agencies need to upgrade their validators to facilitate tap & go payments. (A validator is the pad on which riders tap their card or device for entry at a bus or transit station turnstile.) “In many cases the systems have to be upgraded with real-time Wi-Fi, too, because all of the transactions have to be processed in real-time,” he said.


In the transit world, the customer is more cash-preferred.

Melissa Lavery, Senior Product Marketing Manager, Financial Services, InComm Payments


While eliminating cash-based transactions is critical for agencies to keep their riders and employees safe, as well as their businesses profitable, they have to be mindful that many of their riders don’t always have credit cards or mobile wallets to make a contactless payment. “There’s a much higher percent of transit riders that want and need to pay in cash to get around,” said Lavery. According to Mobile Payments Today, a noted trade industry website, 40 percent of public transit users earn below $40,000. Many of these riders are using cash to pay for everyday items like groceries and rent, not to mention bus fare. They are the unbanked or underbanked consumers, comprising nine percent and 23 percent of the U.S. population, respectively. Unbanked consumers pay 81 percent of their bills with cash or prepaid cards. And while underbanked consumers have a bank account, they still pay their bills with cash twice as often as fully banked consumers.*

InComm Payments is uniquely positioned to help transit agencies transition to contactless payments. The FinTech company’s innovative point of sale technology is the catalyst. Its innovative VanillaDirect platform enables transit riders to digitize their cash at retailers across a vast retail network, allowing them to easily add funds to their transit cards or mobile wallets. “We’re providing the technology that allows the agencies to move cash-preferred customers out of their system and into our retailer partners’ stores,” Herold said. “The retailer largely provides a safer environment for consumers to conduct a transaction than on the bus or at a transit station. Herold noted that once the VanillaDirect platform is loaded into a retailer’s system, they won’t have to do anything further; simply continue processing transactions safely and easily. “By adding just a single UPC to the retailers’ books, we give them the ability to process transactions from hundreds of transit agencies, nationwide,” Herold added. “They also won’t have to carry any inventory which frees up valuable shelf space in their store.”



Transit agencies have a need. We have the technology.

Michael Herold, Vice President of Business Development, Tolling & Transit, InComm Payments



Retailers have a tremendous opportunity to benefit from public transit’s shift to tap & go payments. The shift effectively turns their store into the go-to place for cash-preferred customers to fund their transit accounts – and VanillaDirect’s cash digitization capabilities can help retailers draw additional foot traffic. “Say a customer comes to their store to load cash onto a transit account on their way to work,” Herold explained. “In many cases the customer will buy a cup of coffee, bottled water or a snack, as well. It’s a great opportunity to capture that public transportation rider and their spending potential,” he said. Consumers are also searching for ways to limit their exposure to others during the pandemic, so they’re making concerted efforts to consolidate their trips around town. Retailers that can make their stores a one-stop-shop will have an advantage – and offering customers the ability to fund transit accounts with cash will definitely help riders avoid taking additional trips to transit stations.

InComm Payments has integrated its retail network into the platforms of every major back-office provider for transit and tolling agencies in the country. In particular, InComm Payments partnered with Cubic Corporation, makers of an electronic fare collection solution for transit agencies. Through this partnership, all transit agencies utilizing Cubic’s solution will be able to leverage InComm’s retail network – 55,000 retail locations across the U.S. – effectively giving their riders thousands of safe and convenient places to fund their accounts with cash, as well as other forms of payment. “With VanillaDirect, we are providing the opportunity for cash-preferred customers to participate in the use of digital fare media,” Herold noted. “If you’re a cash-preferred customer, you can’t participate otherwise; you wouldn’t have a way to load value on to your card or mobile wallet.” He added that “most people who ride public transit need our payment technology to participate in the digital world – and we provide them with that opportunity.”

The term “public transportation” no longer refers to just buses and trains these days. It can be broadened to include bikes and scooters, too. Over the last few years multimodal transportation has become a hit in urban centers especially, offering consumers another way to get around town that is inexpensive and eco-friendly. In 2019, U.S consumers took 136 million trips on shared bikes, e-bikes and scooters, an incredible year-over-year increase of 60 percent. In some markets, consumers can even use their transit account app to pay for bike shares, e-bike shares and scooter shares. Herold explained that public transit and multimodal partnerships are happening in Austin, Texas, and Los Angeles, California, where riders can use their transit card to tap and ride a wide range of vehicles. “The bus or train doesn’t always take the rider to their exact destination, so having the option of hopping on a bike for the last mile is really helpful and a time-saver,” Herold added. Such rides are totally reliant on contactless payments, which means cash-preferred customers will be visiting nearby retailers to digitize their coins and dollar bills. “That mobile app that customers use to load money at retailers is going to be used for more and more types of public transportation,” Herold pointed out. “All this does is drive more transactions, driving higher value loads which results in more foot traffic and more revenue for the retailers.”

Bringing millions of riders back onto buses and trains will be a challenge in the months ahead. Proactive measures are definitely needed to help riders feel safer and restore their trust in transit. Contactless payments, along with InComm Payments’ innovative technology, is a big step toward achieving that goal. 


 To learn more about InComm Payments Tolling & Transit, contact Michael Herold at  


*Federal Reserve Bank of Atlanta, Research Data Reports, 2020