Nov
20

With the $1 fee, an expected decline in fare media liability

By · Published in 2013

I have, I must confess, a problem. I can’t throw out MetroCards any longer. I receive my 30-day card through a WageWorks, and I don’t pay the $1 surcharge each month. Still, at the end of the month, I can’t bring myself to throw out the empty card; it’s like flushing a dollar down the toilet each month.

The MTA’s $1 surcharge is something of a new creation. Discussed for years, it arrived in February with some fanfare. Initial coverage indicated that the MTA had made more money than expected as New Yorkers grew accustomed to reusing their empty MetroCards, and litter around turnstiles seemed to vanish as well. By August, the MTA estimated that the total impact on its bottom line would be a net gain of a hair under $20 million as the total from fare media liability — the industry term for unused but prepaid MetroCard balances declined.

So how’s it doing? Based on the numbers available, everything seems to be on target, but that’s not, surprisingly, the gist of this post from the IBO. Doug Turetsky of the city’s Independent Budget Office offers up his take on the perception of a decline in fare media liability and the overall impact of the $1 surcharge. He writes:

Last year, the jar was pretty full since it held more than $95 million—an unusually large amount that resulted from transit riders stocking up on MetroCards prior to the December 2010 fare increase and then some of those cards expiring with funds left unused…But the jar may not be nearly as full in the future. The reason is that in March New York City Transit started to charge riders $1 every time they bought a new card rather than refill the one they already had (at least until that card expires and you can then get a free replacement). The transit agency expects fare media liability will drop to the more typical amount of about $52 million this year and, with a full year of the replacement fee in place, fall to $41 million in 2014.

…as the transit agency’s financial plan anticipates, there will still be a stash of unspent change on expired MetroCards. Some of that will come from tourists and other short-term or occasional riders who buy a card and wind up not using all of the money placed on it.

Many everyday riders also will contribute to the ongoing accumulation of fare media liability. The transit agency’s method of providing discounts ensures this…Many cards are likely to be lost or forgotten before the 5 percent bonus adds up to a ride or they will expire with an odd amount left on them. Although the transit agency gives riders two years to replace an expired card and have the funds on it transferred to a new one, many old cards are also likely to slip away with unused value.

These findings from the IBO aren’t a surprise. Since unveiling the so-called green fee in 2011, the agency has made clear that fare media liability would be likely to decline by around 20 percent while the fees and savings in MetroCard production costs would more than off-set the revenue loss. Whether it’s more honest to balance the books on a $1 surcharge or the expectation of unspent MetroCard swipes is a question I’ll leave up to you.

Meanwhile, I have 11 MetroCards accumulating all over the place. I’ve used one or two of them as pay-per-ride spares to be broken out in the event of an emergency, but otherwise, I guess I’ll sit on them until the expiration date on the back. Eventually, the MetroCard with its artificial expiration date and prickly magnetic strip will be a thing of the past, but for now, that $1 fee seems to be doing exactly what it was intended to do.



Categories : MetroCard

17 Responses to “With the $1 fee, an expected decline in fare media liability”

  1. Todd says:

    If you mailed in all 11 cards, would they send you a check for $11?

  2. Spiderpig says:

    How does it equate to throwing away a dollar unless you plan to make a dollar on each MetroCard?

    Fare media liability sounds like an odd term when applied to revenue from unused cards. After the point where they expect loaded money to not be used, maybe they should have a new term, since the MTA would no longer be liable for that amount.

    • Bolwerk says:

      A metrocard is just virtual scrip. The liability is the obligation to provide the service (a ride). Even if a card is beyond recovery, that liability persists as far as the MC balance system is concerned. Maybe I am wrong, but I don’t think they ever actually stop honoring the scrip balance if it can be proven – even old tokens can be redeemed for a metrocard.

      However, that doesn’t reflect an accounting liability. Once they have your money, they shouldn’t much care whether or not you use your ride. Your ride itself has no direct accounting cost; the liability the accountants care about are the costs of providing the service, whether used or not, balanced against the revenue.

      If I’m not mistaken, even if a card is unreadable, and the balance is lost, I think they will trade an expired MC for an unexpired one, which reduces their revenue by a dollar. This liability is accounted for by the cost of the metrocard balanced against less revenue from that card.

  3. SEAN says:

    Meanwhile, I have 11 MetroCards accumulating all over the place. I’ve used one or two of them as pay-per-ride spares to be broken out in the event of an emergency, but otherwise, I guess I’ll sit on them until the expiration date on the back.

    Ben,

    They have doctors for that sort of thing. LOL

  4. Ian MacAllen says:

    They are getting an extra $12 from me each year because the flimsy MetroCards are too easily ruined in the course of typical use, and so I look at the card fee as just part of the fuck-you-fare hike from the MTA because replacing damaged cards is far more hassle than the $12 a year getting new cards each month.

    • Spiderpig says:

      I’m pretty sure you’re doing it wrong. Even when I used a MetroCard twice most weekdays, it could survive for a whole year.

    • Bolwerk says:

      Pretty sure they’ll trade the card for you at the token booth.

      And I’m with SpiderPig. What the fuck are you doing to your cards? Mine spends most of the day in my back pocket pressed against my asscheek in ~98.6 degree heat, and I almost always use them until they get to expiration.

    • Duke says:

      I find I need a new card every 4 months or so or I start becoming way too familiar with the phrase “please swipe again”.

      I used to just buy a new card, but since the implementation of the surcharge I have instead taken to keeping my eye open for discarded cards that are not folded or banged up that I can “adopt”. One man’s trash…

      • Chris C says:

        Or just hand it in at a ticker booth and get a new one for free !

        Much more dignified than scrabbling on the floor for an old one.

        • Simon says:

          Best of both: gather up all those discarded ones and have the agent combine them for you onto a brand-new card. I can usually find $3-5 at a time.

    • ajedrez says:

      You do know that supermarkets/bodegas that sell MCs are exempt from the $1 charge right?

  5. andy padre says:

    leave any unwanted/expired cards on the metrocard bike weekdays at 42nd and 6th. i’ll put them on my bike or make them into artwork to give away

  6. Jim T. says:

    “Eventually, the MetroCard with its artificial expiration date and prickly magnetic strip will be a thing of the past…”

    Sorry if you’ve answered this elsewhere, but why do they in fact have any expiration date? Does it have something to do with the life of the magnetic strip, or is it an accounting practice or something?

  7. Ted K. says:

    Here in the S.F.Bay area we have a program called “Tiny Tickets” (see link below). It’s a way to turn BART’s Blue tickets with chump change on them into a charitable donation.

    http://www.ebcf.org/tiny-tickets-overview/

    BART tickets are similar in layout to a MetroCard but are not refillable. The refillable card is the Clipper multi-system, tap-and-go card.

    BART on “Refunds, Exchange, Donations”
    http://www.bart.gov/tickets/sales/refunds

    • Ted K. says:

      Small edit :
      s/Blue/Blue (regular), Red (disabled discount), or Green (senior discount)/

      I’m used to using just the regular tickets and the Clipper card.

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