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The big argument against this (for public transit agencies) is likely transaction fees: it's going to be more expensive for the agency to process a bunch of ti

The big argument against this (for public transit agencies) is likely transaction fees: it's going to be more expensive for the agency to process a bunch of tiny transactions for each trip than it will be to process relatively few larger transactions when a stored-value card is refilled. The other obvious downside is more of a logistical thing: credit card transactions need connectivity. With a stored-value card system, transactions don't need a network to clear (everything's happening locally between the card and the reader); this means you don't have big backups if networks go down, you don't have a time lag waiting for transactions to clear, and you can place readers in locations where connectivity isn't guaranteed (like buses). That said, it's not unheard-of for public transit to take standard contactless credit cards. For example, Transport for London (at least theoretically) takes contactless payment systemwide.

microcolonel 8y ago
> The big argument against this (for public transit agencies) is likely transaction fees: it's going to be more expensive for the agency to process a bunch of tiny transactions for each trip than it will be to process relatively few larger transactions when a stored-value card is refilled. Yeah, though I think they could negotiate better fees given the volume (not that I think public transit authorities tend to be good at much at all without considerable public interest). I guess time will tell. Here in Canada, I think average merchant fees for the credit part are less than 1% overall, not sure if that would end up being such a big issue; especially when compared with the cost of administering a whole new system (anti-money-laundering, fraud detection, security, development, integration, support etc. etc).
diebeforei485 8y ago
They can charge higher fares to people who pay with contactless credit cards (as opposed to their own card). Many agencies already do this - for example, Caltrain and BART charge higher fares to those who aren't using a Clipper card. As long as the difference is high enough to offset the fees, this should not be an issue.
- frosted-flakes 8y ago
  But it costs TfL more to run its Oyster program than it would if everyone just used contactless. Oyster and contactless in London are equal with a few exceptions relating to how daily/weekly caps are counted.
  - diebeforei485 8y ago
    That may not be the case in the US where card transaction fees are much, much higher.
rb808 8y ago
Back to the original citylab article. They should get the fed to reduce cc fees so things like this are cheap.

microcolonel 8y ago

> The big argument against this (for public transit agencies) is likely transaction fees: it's going to be more expensive for the agency to process a bunch of tiny transactions for each trip than it will be to process relatively few larger transactions when a stored-value card is refilled. Yeah, though I think they could negotiate better fees given the volume (not that I think public transit authorities tend to be good at much at all without considerable public interest). I guess time will tell. Here in Canada, I think average merchant fees for the credit part are less than 1% overall, not sure if that would end up being such a big issue; especially when compared with the cost of administering a whole new system (anti-money-laundering, fraud detection, security, development, integration, support etc. etc).

diebeforei485 8y ago

They can charge higher fares to people who pay with contactless credit cards (as opposed to their own card). Many agencies already do this - for example, Caltrain and BART charge higher fares to those who aren't using a Clipper card. As long as the difference is high enough to offset the fees, this should not be an issue.

frosted-flakes 8y ago
But it costs TfL more to run its Oyster program than it would if everyone just used contactless. Oyster and contactless in London are equal with a few exceptions relating to how daily/weekly caps are counted.
- diebeforei485 8y ago
  That may not be the case in the US where card transaction fees are much, much higher.

rb808 8y ago

Back to the original citylab article. They should get the fed to reduce cc fees so things like this are cheap.