What Will a Transition to Digital Transit Payments Mean for Un- and Underbanked Transit Passengers?

The more than 350 transit agencies in California currently offer a patchwork of payment options, including cash, contactless payments, and a multitude of agency-issued cards. This inconsistency across transit operators acts as a barrier to the use of public transit. The California Integrated Travel Project (Cal-ITP) was established in 2018 to create an integrated, statewide payment system to make travel simpler and more cost-effective. Cal-ITP is pursuing open-loop payment systems, which offer a suite of digital payment options such as credit and debit cards, prepaid debit cards, app-based wallet systems, and peer- to-peer payment apps. However, questions remain about whether open-loop payment systems would accommodate all travelers, particularly those who are unbanked (i.e., do not have a bank account) or underbanked (i.e., have only a savings or checking account, but not both) and typically rely on cash. Researchers at the University of California, Davis partnered with Cal-ITP to study how transit fare payments could be modernized while remaining accessible to unbanked and underbanked riders. This policy brief summarizes the findings from that research and provides policy implications. View the NCST Project Webpage