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MTA Moves Toward a 'Smart' Way to Pay Fares


At around 8 on a hot July night, deep inside the Columbus Circle subway station, frustration was on full display. A small group gathered around a bank of MetroCard vending machines, toes tapping, eyebrows raised and arms across chests. While trains rumbled in and out of the station, three young women chatted as they struggled to insert cash into one of the machines. In front of another machine, obviously flabbergasted by what he saw, a thin bearded man exclaimed, "Can't you see it doesn't take bills!"

He continued, "Only one of these damn things does, this one here, I'm waiting for it."

Indeed the messages ticking across the tops of two of the three machines informed MetroCard buyers, this machine "does not accept bills at this time." One of the three also advised, no single ride tickets. All three card dispensers did welcome plastic.

New York's time consuming and often inconvenient fare collection lags far behind that of many other large cities, according to experts. Some might say the dysfunctional MetroCard vending machines reflect deeper systemic problems at the Metropolitan Transportation Authority, one of the world's largest public transit agencies.

Change, though, might be on the way. Within the next few years, transit riders might be able to simply tap their cards and go, rather than having to swipe -- and sometimes swipe again and again. In addition, rather than purchasing a ticket from the transit authority, they could have their fares automatically debited from their bank accounts or charged to their credit cards.

The switchover, though, promises to be lengthy and cumbersome and could present straphangers -- and the authority -- with a new host of challenges.

Ticket Sales

As it stands now, fare collection and the processing of billions of dollars takes a significant financial toll on the transit budget. In 2010, the MTA said that, for every dollar it takes in from MetroCard sales, it spends 15 cents managing and administering the fare collection system. Shaving just one penny off that 15 cents could save around $55 million a year, according to the transit authority.

A team of 124 employees work around the clock to maintain the system's 1,650 MetroCard vending machines.

"We had 28,456 service calls" for machines in July alone, said Antonio Suarez, chief officer of fare collection equipment maintenance at New York City Transit. The machines, manufactured by Cubic Transportation Systems, a unit of the Cubic Corp. have been in operation since 1994.

Meanwhile, a separate revenue office picks up the cash that all the machines hold. The revenue collectors go into the system at various times of day, equipped with gun toting special officers. But the MTA says that budget constraints have "impacted" the frequency of those cash pickups as well as the actual restocking of new MetroCards.

Even though many machines only accept credit or debit card payment, cash accounts for 64 percent of all MTA transactions -- at machine and at ticket booths. The cash transactions are smaller, though, so account for only a third of the fare revenue.

Changing the System

MTA's current fare collection is "a generation behind places like Chicago, Atlanta and London," said Randy Vanderhoof, executive director for the Smart Card Alliance, a multi-industry association.

As riders know, New York City Transit has been slow to embrace many technological advances that could enhance the efficiency and speed of the system . "The MTA has expertise at building and maintaining, they have a poor record at implementing technology,” Said Neysa Pranger of the Regional Plan Association.

The current executive director of the transportation authority hopes to change that.

Jay Walder previously served as managing director for finance and planning at Transport For London. While there, he was widely credited for spearheading that system's wildly popular fare collection system known as the Oyster Card.

The Oyster Card The smart chip uses a secure micro controller, or equivalent device with internal memory, and a small antenna to communicate with an electronic reader through a contactless radio frequency. In London, as well as a bevy of other cities including Chicago, a rider simply taps a pre-paid, agency-issued card or key fob with a smart chip on a specially equipped terminal, like those seen in New York City cabs or at drug stores and fast food restaurants. The cost of the ride then is automatically deducted, as it is from a MetroCard today

Getting 'Smart' in New York

In June, New York's MTA, in partnership with the , New Jersey Transit and credit card issuer Mastercard, re-launched an earlier tap and go smart card pilot program. Plans are to phase in pay systems, first in on city buses and then subways.

In addition to making it easier to pay and collect fares, the plan also would make fare payment between agencies in the tristate area more seamless, helping customers who, for example, take the PATH into the city and then hop on a subway.

In London the transit agency issues a hard plastic prepaid smart card. But signs indicate that New York's MTA would like to get out of the fare card selling business and farm out most of those duties perhaps to the credit card or banking industry. This would happen under what gets referred to as an "open loop" system.

The MTA pilot project is testing whether bank and credit cards embedded with smart chips can be used to make direct payments into the transit system.

Essentially, a rider would no longer have to buy a MetroCard but would simply tap a debit or credit card at the turnstile. The MTA has said it will provide alternatives for cash paying customers but has not devised exactly what they will be.

If New York adopts an open loop system such as that, it "will leap frog other cities" that still issue all tickets themselves," said Vanderhoof.

The "open loop" appeals to public transit agencies, he said, because selling tickets is expensive. "Transit industries across the country are finding it costs them a lot of money, in machines and service, and collecting cash out of them, to be able to operate the transit ticketing and fare payment services they offer," Vanderhoof noted.

No Tickets Please

"Anything transit agencies can do to reduce the number of tickets they have to sell, and the number of machines they have to supply in the stations, will allow them to save money," he said, adding that after all, "people have the ability to pay already in their wallets."

Both London and Chicago are looking at potential open payment options.

The idea has obvious appeal for credit card companies as well. In a case study of the original MTA 2006 pilot program, Mastercard, which had partnered with Citibank, said "Citibank wanted to expand cardholder usage to a desirable everyday category like mass transit, part of the daily routines of million of people."

Columbia University Professor of Law Ronald J. Mann said the incentives for banks and issuers of credit cards to become involved in transit are even greater today.

"They will earn revenues of some sort from transactions on the cards," he said, "and in New York City, there would be a powerful incentive for individual consumers to obtain cards of the type that give them MTA access without having to buy a fare card."

Mann explained that the credit card "market is saturated, the overwhelming majority of people in this country that have any income or assets who want a credit card, have a credit card," so the card companies are looking for new places they can use those cards -- such as transit.

In New York City alone, around 7 million people ride the subway daily, and that could translate into a lot of transaction volume.

Customer Convenience

Vanderhoof of the Smart Card Association said the open loop system could offer added convenience for customers, even those from other cities. For example, he said, someone from San Francisco would be able jump on an New York City subway or bus by just tapping a card she already has in her purse -- "without having to deal with a MTA vending machine."

Mann predicted that "every large credit and debit card issuer will want to be allowed to issue smart cards in New York City.

"Because of the convenience that the ability to use smart debit or credit cards will offer MTA commuters," Mann added, "no one in New York City is going to want to be using plastic that they can't use on the subway. ... You're going to have to figure out which of the banks will give you a smart card, and you are going to go and get it."

Customer Inconvenience

But what about those customers who do not have debit or credit cards? According to the New York City Department of Consumer Affairs, 13 percent of all city households do not have bank accounts -- the largest percentage of adults in any community in the United States.

Mann wondered how people without bank accounts would obtain cards to give them convenient access to MTA services. Will the cards have higher fees than the cards more well-heeled consumers already have in their wallets? And, if MTA completely migrates to the open loop system "will the transit agency move to make it less and less convenient to use cash or buy MTA fare cards?" he asked.

MTA figures for 2009 indicate the average cash purchase was $6.87 per transaction while credit and debit transactions averaged $19.71. That could indicate that some less affluent New Yorkers -- many of whom do not have bank accounts -- simply cannot afford to buy subway or bus rides in bulk.

Amy Linden, senior director of the MTA's New Payment Systems said that eventually, customers without bank accounts might be able to purchase and use pre-paid cards, as many do now for phones, although, she said the authority is not yet testing any of those methods. She said the authority would continue to accept cash on buses.

At some point, riders also many be able to use phones with Near Field Communication, or NFC, technology which might b able to connect to a pre paid account. With that, a transit rider could simply tap the phone on the reader and enter the system. This might help some people without credit cards because, according to Linden, more individuals own mobile phones than have bank accounts.

Even people with bank accounts could face increased risk of stiff customer fees from their banks or card issuer under a smart cart system. For example, customers who overdraw their bank accounts and have overdraft coverage, could be charged a stiff fee when they tap their bank cards to enter the subway.

Further, the plan raises questions about the MTA's fare structure and how the this new payment system might affect unlimited ride plans or volume discounts. For now, the MTA says packages will continue to be available.

Linden said the MTA will deal with all this but first needs to go first to an open payment system since the authority must reduce costs and make travel in the region more seamless.

Making the Change

Whether it can make that vision a reality remain in question. The man who would oversee it all, Executive Director Walder, has an extensive urban planning public sector resume and, as someone who worked for the MTA from 1985 through 1993, knows its complex culture . But, as the Regional Plan Association's Hope Cohen has written, Walder still will confront "interagency rivalries and contradictory union contracts and work rules."

How those pressures, along with public concerns and strained budgets will affect the move to a smart card -- and what the system might look like in the end, is still anyone's guess.

Already, though, the agency's plans appear to be encountering delays. Last year, news reports said a smart card plan would be in place by 2014, but now the agency is not sure when that might happen.

This month MTA spokesman Aaron Donovan would say only that "the new smart card program will see full subway and train implementation in the coming years." He did not provide any more specific information.

Wishing New York the best of luck in its new endeavor, Peter MacLennon of Transport For London said that city's of "tap and go" fare payment system, "has transformed the way passengers pay for journeys on London's transit network."

New Yorkers will have to wait and see if any similar transformations take place here.

New York Looks to Board High Speed Rail

high speed train
Will fast trains such as Spain's Velaro, be coming to New York?

Imagine making the trip from New York City to Albany by train in under an hour. For politicians, lobbyists, reporters and business people, it would be a godsend. Currently the trip takes two-and-a-half hours.

And there are grander reasons to hope cities across the state will soon be connected by high speed rail according to Sen. Malcolm Smith. First, he said, it will create jobs, some 200,000 of them by Smith's estimate, "from construction to finance and other things." Second he said, it will improve the environment. And lastly, he said, "This will bring the state together. It will make the concept that we have been talking about of one New York a reality. This will be one New York, for real."

To jump start this process Smith plans to introduce legislation as early as Friday to create a committee under the state Department of Transportation to recommend ways to fund high speed rail in New York. The committee would also determine the proper kind of entity to oversee high speed rail and possibly issue bonds to fund it.

Gov. David Paterson has his own bill that would accomplish the same thing.

Picking Up Speed

Smith's idea is not entirely new. Creating a high speed rail system across New York has been on the agenda for decades without getting anywhere. What’s put the project back on the agenda in Albany is the Obama administration’s offer of an incentive to kick start the development of speedier train service throughout the country. Earlier this year, the administration offered $8 billion in grants to states that want to update their rail systems.

When the grants were handed out, however, New York wound up getting only $151 million of the $4 billion it had applied for. California, a state with a well-crafted high speed rail plan, received over $2 billion; Florida and Illinois will receive around $1 billion, Wisconsin $822 million, Washington $590 million.

Although New York lacks the sort of comprehensive plan California has developed, officials here say New York is taking incremental steps toward initiating its plan. Legislators including Smith and U.S. Rep. Louise Slaughter say they expect the state to apply for more federal money. They will have a chance to do that, as $2.5 billion in federal rail funding will be up for grabs this summer during another round of funding. Applications are due this summer.

Faster and Costlier

If $151 million doesn’t sound that paltry, a lot more is needed to move Smith’s vision toward reality: $90 million of the funds New York has been awarded will go just to build a second track from Rensselaer to Schenectady. The state is expected to spend $58 million to build an 11-mile high speed test strip in upstate New York.

Why was New York shorted during the first round of federal funding? Many rail experts say New York did not present a plan that met the terms of the available grants, didn't have a single agency taking charge of the project and lacked an agreement with CSX, the company that owns the rails along which the state would like to build its high speed system.

"There were a couple of conflicting factors," said Yoav Hagler, an associate planner with the Regional Plan Association. "They didn't have an environmental impact statement and the timelines didn't work."

A few weeks ago, New York and CSX came a notch closer to removing one of those impediments, as they agreed to allow the state to do an environmental impact study on running another line along the CSX routes. CSX has said in the past that adding a passenger line would be unsafe.

High speed rail would initially run somewhere around 110 mph. Eventually as the system improved, the speeds would increase. The goal would be to create a high speed corridor running from Buffalo to New York City. The fast trains would eventually run through the northeast corridor, making train travel between major northeastern cities much faster, cutting the trips from New York to Boston and Washington by hours.

How to Get Federal Funds

On Monday, over 200 people gathered in Albany for a high speed rail summit to discuss ways to fund the project and how it will help business in the state.

After the summit, Smith said mimicking California could help get the state more federal funding. That state has a complete plan as well as a separate entity that controls its high speed rail project. "I would like to follow the California model very closely," said Smith, adding, "At the summit we were talking to representatives from the Obama administration about what we need, if we are on track. There was no 'yes' or 'no,' but if we are doing the right things ... we do need a separate entity to take on this massive endeavor."

Bruce Becker of the Empire State Passenger Association agrees. "We support an independent board to oversee high speed rail. Nothing against the Department of Transportation, but they have other interests, and thruways are their main concern," he said.

Dennis Mullen, chairman of the Empire State Development Corp., said he thought a single entity overseeing the project could only help a massive undertaking such as creating a high speed rail system in New York.

Other funding ideas are also on the table. Smith said that a delegate from China who was visiting the Capitol this week told him that his country is interested in funding New York's high speed rail projects. He also thinks the possible authority which could be created by his bill could issue bonds to fund the trains.

Certainly, the project would require large amounts of additional funding. As of now, Paterson's budget contains only about $50 million in funding for all rail projects –- not just high speed -- to be stretched over the next two years.

The Economic Effects

At Monday’s summit, Mullen talked about how the Empire State Development Corp. could help businesses tap into the excitement high speed rail will generate. He noted that a number of employers around the state manufacture rail equipment. One company with a New York presence, Bombardier, has shrunk from 1,000 to 200 employees over the last decade. Mullen said he thinks that workforce could grow again if New York and the rest of the country get on the high speed bandwagon.

"I'm very optimistic," said Hagler about the prospects of developing high speed rail in New York and the Northeast Corridor. "We are certainly in a better place than we were two years ago. States are working together now."

If New York and surrounding states can establish a high speed corridor Hagler thinks the New York economy would benefit, as would the crowded transit system. "The New York region is the bottleneck in the system. Any plan that improves the rail system or installs high speed rail is going to benefit New York. Being able to reach Washington in an hour and a half is certainly going to benefit New York's downtown business district," he said.

A recent study by the U.S. Conference of Mayors backs Hagler up. The report states that high speed rail throughout the country could create 150,000 new jobs and $19 billion in new businesses by 2035. The report details how upstate regions could be sucked into New York's economic sphere thanks to fast travel times, with commerce spreading at faster rates.

The Long Road Ahead

While the northeast holds the greatest potential for high speed rail in the U.S., Oliver Hauck, CEO of Siemans AG, told the New York Times that the Northeast Corridor is the high speed route furthest from actually being built.

Politicians repeat their mantra that the progress toward high speed rail in New York is incremental. Existing rail lines need to be improved, studies need to be conducted, and the project needs funding. "Coming from the private sector into the public sector, I think we do a bad job of managing expectations," said Mullen. But, he added, "It's good that we have to follow the processes required by constituents. We have these processes for a reason."

Becker agrees, "We support incremental steps. Perhaps in scope we have to start small, but we can't wait for the first groundbreaking in the projects to signal to New Yorkers that the process has begun after decades of study and inaction."

Others, though, are concerned that New York is more concerned with getting federal money to maintain its existing rail structure than actually planning for high speed rail.

"We should be deliberate," said Hagler. "But I disagree with some folks who want there to be incremental steps but say we can't move ahead with high speed rail plans simultaneously. If we want to meet the demands of 2040 and 2050 we need to start planning now."

Council Cracks Down on Taxi Overcharges

Photo (cc) 2008 Bert Boerma

The City Council wants to turn the light on taxis.

Weighing in on the cab overcharging scandal first revealed three months ago, the City Council approved several bills on Wednesday to bring more transparency to the Taxi and Limousine Commission by requiring the commission report the number of complaints it receives every month and mandating taxis store rate data.

Some taxi advocates, however, are skeptical of the legislation, saying it could unfairly portray cabbies as scammers.

In addition to the taxi legislation, the council approved a bill to require the Department of Parks and Recreation permanently mark concession areas in public parks to prevent vendors from taking up public space.

Mayor Michael Bloomberg is expected to sign all of the legislation, according to a mayoral spokesperson.

Cab Reporting of Complaints

In March, the city's Taxi and Limousine Commission reported thousands of drivers had routinely overcharged taxi passengers for fares by using out-of-town rates for some rides that were completely within the five boroughs.

Just weeks after the revelation, however, the commission revealed the taxi scam was not as prevalent as initially thought. In May, the commission announced that more than 600 drivers had routinely overcharged riders -- and many of them could now lose their license.

While the scope of the taxi scam has shrunk, council members said they want to make sure the meter isn’t switched on riders ever again.

"If there was just one driver out there overcharging New Yorkers and tourists in taxis that would be a big problem," said Council Speaker Christine Quinn. "It was clearly much more than one. It was a level that was unacceptable."

In response, the council, in a vote of 50 to 0, approved legislation ( Intro 235-A) that requires every cab have equipment to store fare and rate data, which could be submitted to the Taxi and Limousine Commission upon request. While cabs already have equipment that collects trip data, they do not always collect information regarding certain trip rates.

Another bill, unanimously approved by the council, ( Intro 233) would require the commission submit an annual report to the council detailing all taxi complaints, including those on overcharging, and any subsequent violations. This information will also have to be posted on the commission's Web site every month.

Bhairavi Desai of the New York Taxi Workers Alliance fears the new rush of taxi data could be taken out of context. She said the new numbers should show the number of complaints versus the number of taxi rides on a daily basis.

"We have no problem with the transparency," said Desai. "Our concern is the context in which the numbers will be interpreted."

The council also revised its passenger bill of rights ( Intro 232) for taxis to include a provision notifying passengers of their right to E-ZPass in the cab. During the taxi scandal, it was also uncovered some cabbies used long toll lines instead of the quick E-ZPass to up their total fare.

The measure was approved by a vote of 49 to zero with one abstention from Councilmember Gale Brewer.

The commissioner of the Taxi and Limousine Commission, David Yassky, said yesterday he supported the bills.

Park Concessions

In response to complaints about the privatization of parks, the council approved legislation requiring the Department of Parks and Recreation to identify concession areas by marking them in parks and on park maps.

The bill ( Intro 21-A) was approved by a vote of 50 to 0.

Seasonal concessions, those operating less than 45 days, those occupying less than 200 feet, concessioners on greater than two acres and those operating in three or more boroughs will be exempt from the requirement.

Violators will face fines of between $200 and $1,000.

By clearly identifying concession areas, supporters said the city and public can make sure vendors do not overflow into the open spaces of public parks.

Bus Cameras

The council also approved legislation that would give Albany the go-ahead to approve the installation of up to 50 miles of bus lane camerasin New York City. The bill must be approved at the council before the State Legislature can give the final OK. Quinn said it has not been determined whether the cameras, which will allow the city to better use bus rapid transit, will be installed on actual buses, on the street or both.

Additional reporting by Alana Horowitz.

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