OC/OC Trip Payment

Young male traveler showing e-ticket on mobile phone screen to a bus driver.

Trip Payment

When trip payment is integrated across multiple organizations, it involves high levels of coordination for sharing revenue and costs.

How does payment for fixed-route transportation work?

User-side trip payment

As technology has evolved, so have fare media, moving from cash to physical tickets or cards to virtual payment systems. Online payment (or “e-fare”) allows users to pay directly by using their mobile devices, such as smartphones. E-fares can be charged through a third-party vendor (e.g., credit card company, Venmo) or through the agency’s app. Many online payments also involve contactless payment, which uses a debit, credit, or smartcard—also known as a chip card—operated through RFID technology or near-field communication technology.

It is possible for multiple agencies to support trip payment through a single centralized payment system (e.g., a regional fare payment system). Regional fare payment systems show their value when transit agency service areas are geographically adjacent to one another and where riders are often crossing these jurisdictional boundaries. Having a regional fare payment system enables users to cross jurisdictional boundaries more easily and can lead to cost savings for users when consecutive trips are priced together.

Provider-side fare collection and reconciliation

A payment system that operates across all One-Call/One-Click agencies will need to take into account costs by trip type and by agency, administrative costs for collecting fares, and the method for sharing out revenues. Costs by trip types and by agency may involve differentials based on the mode used, distance traveled, travel day and time, and discounts for certain users. 

As soon as multiple agencies unite to form a regional fare payment system, revenue and cost reconciliation enter the picture. For example, if a user’s trip originates in one service area and ends in another, the two agencies would need to determine how to share the fare for that trip. In addition, the cost of providing the trip, which often surpasses the fare, must be tracked in the accounting system and shared across multiple agencies. Areas with a regional fare payment system  across multiple agencies require complex accounting systems and robust data collection, such as transit system entry and exit data.

In addition, a cross-agency fare collection system must integrate similar or identical fare policies, such as allowing children or caregivers to ride for free. Otherwise, users would need to remember different policies for each agency, leading to confusion and challenges for both agency and user.

How does payment for sponsored demand-response transportation work?

Navigating eligibility and funding sources

The complexities of providing demand-response transportation when the cost of those trips are sponsored by an outside agency—whether the end users are people with a disability, Medicaid recipients, those with a limited income, older adults, specific populations such as veterans, or others—must be reflected in any trip payment system. Users may be eligible for multiple services, and each service can be connected to multiple funding sources. When a user’s trip is booked, details should be documented to facilitate financial reconciliation across multiple services and funding sources. To keep track of users and their characteristics, it can be helpful to give each rider a unique identifier. When all the information associated with a user is stored in the same place, both trip booking and trip payment are much more efficient.

Financial reconciliation

The goal of reconciliation is to track all trip-, user-, and funding-related data points in as close to real time as possible, so that accounting for the various entities is transparent, timely, and accurate. For example, if there is an accounting delay of two weeks in connection with a funding source, the total fund availability amount shown to the organization would be inaccurate during those two weeks. Cascading financial challenges can occur when an organization connected with a funding source does not have real-time information on the account’s status. The organization may spend more than they actually have available, or may not end up spending the total amount within an allocated period due to fear of spending too much. Such tracking systems help ease the cost reconciliation necessary for accounting when multiple funding sources are involved in a regional fare payment system for sponsored demand-response services. See the Central Florida spotlight project for an example of a One-Call/One-Click system with an integrated approach to fixed route and sponsored demand-response services payment.

Related resources from the NCMM Knowledge Center: