Fare Capping

Roadmap to a Robust Fare Capping Policy

Fare capping is emerging as a trend among transit agencies, that are looking for ways to improve fare equity and boost ridership. While fare capping may not work for all transit agencies, it is a compelling option for many, particularly those with a goal of making transit more accessible and appealing.

Having the right automated fare collection system to implement and enforce fare capping is critical to its success. Contactless payment systems make fare validation instant, and provide transparency for riders. They also provide the data needed to maintain such policies over the long term.

What is Fare Capping?

Fare capping is a policy that sets a maximum amount the rider pays for fares over a specific period. This amount is called the ‘cap’. Once this cap is reached, the rider doesn’t pay for additional trips taken during that period.

Fare Capping Benefits

Generally, the goal of a fare capping policy is to ensure that riders don’t pay more than the cost of a pass over the same period. This can make public transit more accessible and fair since riders don’t need to purchase a pass upfront. It also makes riders more likely to use transit, since they are ‘rewarded’ the more they use transit.

A good policy can improve accessibility to your public transit service. And it can also improve ridership by attracting existing riders to take more trips, and new riders to try transit.

Creating a Good Policy

Several factors should be considered when drafting a fare capping policy for it to be effective. First, communication is key. Clearly inform riders about the cap amount (or amounts) and how the cap is applied (e.g. daily, weekly, etc). Second, it needs to be accessible and easy to use without complex calculations or understanding. Finally, if your transit agency has complex fare structures and transfer rules, the policy needs to fit in accordingly, such as adjusting for peak fares, zone-based fares, and different modes of transport within a system.

Example Policies

Here is an example policy where a single trip fare is $3.00.

Let’s say we set the daily cap at $6.00. This arrangement means that from the third trip onwards, any additional trips on the same day would be free.
If we set the daily cap at $9.00, riders would have to take three paid trips within a day to qualify for free trips for the remainder of the day.

To determine the right fare cap, agencies must understand ridership trends and usage patterns, supported by solid data.

Policy Details Are Important

Let’s continue the example above to dig deeper into the nuances of the policy. Understanding the nuances is critical to creating a policy that is robust and easy to implement and enforce.

Suppose the transit agency offers a transfer policy as well (e.g. free transfer to another bus within 30 minutes). In this case, transfer validations would not count toward the daily fare cap.
Transit agencies should clearly communicate the daily fare cap, specifying whether it applies to a calendar day (e.g., midnight to 11:59pm) or covers a period of 24 hours. A transit agency that operates services from 4am to 1am (the following day) may need to clearly communicate what timeframe makes up a ‘day’. This is easier to understand by imaging a rider taking their first paid trip at 11:30pm and a second paid trip at 12:30am. If the rider takes a third trip at 1:00am, it would be a paid trip if a day was a ‘calendar day’, but free if it was a ‘service day’ or ’24 hours from first trip.

A fare capping policy is like any other policy – it needs to address corner cases so that it is easy to implement and is enforceable.

Alternative Policies to Fare Capping

A fare capping policy may not be right for all transit agencies and ridership markets. In an alternative model, after reaching the fare cap, the system offers additional rides at a discounted rate instead of for free.

This method balances affordability for passengers with revenue generation for transit agencies. By implementing reduced fares beyond the cap, transit systems encourage more frequent use while still collecting some revenue. This strategy is especially beneficial where eliminating fares entirely isn’t financially feasible but increasing ridership is a goal.

Fare Capping and Automated Fare Collection Systems

Typically, an automated fare collection system is the technology that implements a fare capping policy. However, not every fare collection system supports this feature. Generally, a contactless payment system will track each smart card tap automatically for every trip and charge the appropriate fare. After reaching the cap, subsequent taps within the capping are free for the rider.

TransitFare’s automated fare collection system has several key features to support fare capping policies.

Policy Support

TransitFare Cloud has key features to support certain types of fare capping policies. The system is able to support various fare structures, including time of day, specific routes, or promotional fares. This flexibility is important to maintain the policy and modify it as your transit agency adapts to ridership needs.

Our system has features to update fare policies and create fare products for targeted discounts and promotions. These features can address fare affordability, reducing the incentive for fare evasion indirectly.

Contactless Payments

Fare capping can be implemented with TransitFare’s system using contactless payments – enabled with NFC smart cards. Our system automatically tracks when each NFC smart card has reached the cap and logs all subsequent trips within the same day free of charge.

Bus Validator

TransitFare’s bus validator instantly calculates the correct fare to charge an NFC smart card, and when the card has reached the fare cap. Our validator’s large display makes it easy for the transit rider to instantly see whether they were charged a regular fare, or if the fare was at no charge.

Data Analytics and Reporting

TransitFare Cloud collects detailed data on every single fare validation and provides insightful reports. These insights are vital for transit agencies to set appropriate caps based on actual usage and trends. It ensures that fare capping policies are both effective in encouraging public transit use and sustainable for the transit system’s financial health.

We can Help

TransitFare’s automated fare collection system is a key tool in implementing and managing fare capping policies. Our system offers instant fare validation, flexible fare management, and insightful data analytics. These features empower transit agencies to encourage ridership while maintaining financial sustainability. Our system can take a fare capping policy, and make it a practical, effective approach to making public transit more accessible and appealing to a wider audience.