BandA wrote:From the Globe:
The new system will work with Apple Pay, Samsung Pay and other smartphone payment systems that rely on near-field communication technology to identify and verify a user Payment systems require payment of a transaction fee. If that fee is more than a fraction of 1¢ then it is a bad deal for the MBTA, as the "T" will have to still maintain a system for their own "charlie II" cards & refilling them at vending machines and/or online. People seem shocked by the high cost of the system - how does that compare with their present system? How much do "Charlie I" cards cost the T?
I'm going to assume that Charlie cards cost 7 to 15 cents each based on the cost of bulk RFID cards (which is what Charlie Cards are). I'm assuming that the cost is probably closer to the 15 cents end because the MBTA does not seem to like to spend a lot of money to keep Charlie Cards in stock (I work at a business that is a fare vendor; the MBTA was out of Charlie Cards for about a month, from the last week of October until just before Thanksgiving. We ran out of cards, and the MBTA did not have any to send us, so we lost a lot of monthly pass sales) The merchant rate for electronic payment processing is about 2-3%. Assuming a $3 fare (because fares will have increased by then), the cost of processing the transaction for that fare is somewhere between 6 to 9 cents, less if it's a PIN-entry debit card (which would cost them a fraction of a penny). The MBTA might be able to negotiate a lower rate for payment processing because of volume.
Now we have to take into account on how much the charlie card costs in its life span. Some people reload their cards with cash, some with credit or debit. With cash, the MBTA incurs no additional cost. With credit, the MBTA pays the 2-3% every time the charlie card is reloaded. With debit, the MBTA's cost is probably about a penny. With a retail vendor, the cost is 1.75% (that's the retailer commission. In hindsight, this is actually a better arrangement for the MBTA as the retailer (assuming a large retailer like a supermarket) eats the processing costs. This is why 7 Elevens, Tedeschis, and convenience stores that sell MBTA fares have signs saying cash only). Some people load one ride onto the card, use it, then discard it. Some people load a pass onto the card, and then discard it. Working at a retail vendor, people simply aren't reusing the cards, regardless of how many times we tell them that the card is reloadable and can be reused. The MBTA doesn't help things by making the cards free. Since they're free, people don't care enough to keep them.
By going to the contactless payment system that allows credit cards, they can eliminate the cost of the charlie cards, eliminate the cost of equipment, fare media, and support for retail vendors, eliminate a significant portion of the current cash handling/FVM operation, and (presumably) have some sort of (time if not monetary) cost savings by allowing passengers to board at the rear doors. The London Tube is a prime example of a system that works. UTA Frontrunner is another. The MTA in NYC is looking to convert to a system like this as well.