MetroCard

Twenty years ago, Rudy Giuliani was our mayor, Bill Clinton the president and Mike Gallego the Yankees’ starting short stop. Twenty years ago also marked the day the MetroCard made its New York City debut. On January 6, 1994, at two stations in Lower Manhattan, the MetroCard made its debut as riders at the IRT’s City Hall stop and the BMT’s Whitehall St. station could swipe in with the blue-and-yellow pieces of plastic.

Those first cards deducted $1.25 per swipe and MTA officials spoke of the ways in which this new payment system would change the fare structure throughout the city. “It’s a new era for our customers,” then-MTA Chairman Peter E. Stangl said. “It opens up the possibility for fare structures that over time will help us increase our ridership, which is why we’re in business.”

Three years later, in 1997, every station was equipped with MetroCard-ready turnstiles, and the MTA could begin offering unlimited ride cards thus realizing Stangl’s words. Those unlimited fare cards revolutionized transit and lead to a massive increase in ridership. The costs are higher today, but the bulk discount options remain a good deal for daily riders.

Over the years, the MetroCard has had its ups, downs and “please swipe again at this turnstile” moments. It took nearly 19 years for display screens to show the expiration dates for unlimited cards, and lately, both the fronts and backs of the cards have been for sale. I’ve always loved my unlimited MetroCard though through thick and thin.

In commemorating today’s anniversary, the MTA put out a brief release on the MetroCard’s two decades. “You can’t think of New York City without thinking of the MetroCard,” Carmen Bianco, President of MTA New York City Transit, said. “After two decades, it still serves millions of bus and subway riders daily offering a great transportation value. Of course, we are well on our way to developing the next generation of fare payment, part of our effort to upgrade and modernize the City’s mass transit system.”

Echoing Bianco’s line, the MTA says the agency is “working on something even better,” but we still don’t know what that will be. The replacement project had foundered over the past six or seven years and seemed rudderless last February. But the MTA knows that the costs of maintaining the twenty-year old system are continuing to creep upward, and a replacement is on tap. (That too is the top of my March 19 Problem Solvers session.)

Today, we’ll tip our caps to that ubiquitous piece of plastic. Please, swipe again.

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.

After years of starts and stops, seemingly endless pilot programs, a clean slate and a vow to move forward with something by 2020, the MTA’s plan to replace the MetroCard with a next-generation fare payment technology may finally be moving forward. In what can best be described as baby steps, the MTA, in a document to be presented to the Board’s Capital Program Oversight Committee later this week, has unveiled some thoughts on the MetroCard’s eventual replacement. It will be an account-based system relying on open architecture and contactless technology based upon payment industry standards, and it should arrive some time around 2020.

The document presents the MTA’s strategic framework and approach to new fare payment media and is the culmination of efforts that started in January when the agency admitted that it needed a plan. Their current projections for the MetroCard system say the technology will become prohibitively expensive to maintain by the end of the decade, and their current plan for a next gen fare payment system involves systemwide use by 2020.

First, the MTA has its sights set on a contactless fare payment technology — similar to those in place the world over and even in Chicago, to mixed reviews, and in the late planning stages in Philadelphia. The MTA also notes that the technology will support multiple forms of payment media. This means that the agency is eying a system that includes mobile payment capabilities, smart chips embedded in credit and debit cards and a “transit only” tap and ride available for those who don’t have or want to use one of the other options.

Next, the agency addresses technological implementation. The goal here is to reduce reliance on vending machines, which are “relatively costly to procure, operate and maintain” while making “minimal changes to fare arrays.” In other words, turnstiles aren’t going to be replaced by entry gates any time soon, and the MTA wants to outfit existing infrastructure with new card reader technology instead. On buses — which, as part of the BusTime installations, already have the technology infrastructure to accept a mobile payment system — fare readers would likely be adjacent to, but not integrated with, the farebox.

The other two pieces to the puzzle concern back-end support rather than customer-facing technology. Ideally, the new system will be account-based in which value would be stored on an account rather than on a card. This would require a significant investment in station infrastructure, but the MTA believes it can tap into Help Point intercoms, On The Go consoles and the Transit Wireless network to assist in this area. Finally, the new fare system would integrate across the MTA’s internal agencies so that the same account can be used to buy the equivalent of a 30-day MetroCard and LIRR or Metro-North tickets as well.

As I read through the presentation, I couldn’t help but think that it doesn’t say that much. In a sense, it’s talking in circles around aspects of a plan that have been on the table for years, and it still seems like the MTA is spinning its wheels a bit. It shouldn’t have taken this long to get this point, and it’s hard to say if this latest represents significant forward progress from the May 2011 white paper on the MetroCard replacement.

This time around, the MTA hopes to award a design contract by early 2014 and seems committed to developing a solution from 2015-2020. We’ve been down this road before though, and it still seems as though the MTA is trying too hard to reinvent the wheel. Maybe they need to, but without real forward progress, the costs to maintain the current MetroCard system will simply continue to climb.

Let me tell you a little secret: Tonight, I took the G train from 7th Ave. to 15th Street. It’s not a particularly long ride, and I probably waited for a train longer than I was on it. But I just didn’t feel like walking, and I knew that it was early enough that the F or G were both still running pretty frequently. So with a flick of the MetroCard, I saved myself from walking about 6/10 of a mile. It was lazy, and it was glorious.

What made my little indulgence possible was, of course, my 30-day unlimited MetroCard. It didn’t cost me anything to swipe in at 7th Ave., and in fact, I was able to make use of what is in effect a sunk cost. Every month, I pay for a pre-tax 30-day unlimited ride card, and I have a certain number of rides to make the purchase a good investment. For those who pay full price, the break-even point is 48 rides, and after that, every swipe just makes that 30-day card a better deal.

Twenty years ago, we didn’t have that option. We loaded up on tokens and had to carry them everywhere. We had no free transfers between buses and subways, and each ride had to be planned in advance. We may have walked more or resorted to cabs as they offered better value for the ride in the early 1990s than they do now. For New Yorkers who don’t know or remember the past, it was truly a different time. The subway wasn’t nearly as integrated into everyday life as it is today.

It’s hard to understate what the unlimited MetroCard did. It wasn’t easy to see the project through, and it took combined pressure from the mayor and governor to see the change through. Rudy Giuliani pushed on the philosophy of “one fare, one city,” and George Pataki applied the necessary pressure from Albany. By the late 1990s, the MTA has moved beyond the idea that one ride should cost one fare. “The goal here,” Pataki said in 1997, “was very simply to empower the rider. Empower the person who takes the subway and the person who takes the bus by giving them the broadest possible range of options as to how they want to choose to use the mass transit system.”

It’s worked, and it’s become something we all take for granted. Tokens have become museum pieces, and nearly a third of all subway riders use some form of unlimited card. Others still are able to take advantage of the subway/bus transfer that comes with a pay-per-ride swipe. Only a small percentage of riders buy single-ride cards — the 2013 equivalent of a token — and most of those are tourists.

Meanwhile, the subways have seen nearly unprecedented ridership growth since the late 1990s, and while a reduction of crime and investment of the system deserve some credit, so too do the MetroCards. It’s easier than ever to justify a subway ride, and it’s now cheap and convenient. Just swipe that card, enjoy the fact that dollars aren’t deducted, and go. That’s how to draw people to transit.

As the MetroCard and its technology nears the end of its shelf life, I wonder about what comes next. The MTA doesn’t seem to know yet what its next-generation fare payment technology will be, but it will come equipped with the same flexibility. We won’t have that yellow and blue piece of plastic, but it’ll always be with us, a key part of New York City’s transit history.

I had to assist someone with a Metrocard purchase yesterday, and I nearly did a double-take when the vending machine alerted me to the $1 surcharge for new cards. As a WageWorks member, my new Metrocards come in the mail and without the MTA’s so-called green fee so I haven’t had a chance to go through the purchase process in a while. For many, of course, since March, the added charge for a new card has been a part of the routine process.

Now that the MTA has been collecting revenue from these purchases for a few months, the agency is in a better position to shed light on the economics behind the move, and according to a report in the Daily News today, it is paying dividends. Pete Donohue says the MTA has already collected $10 million in fees. He has more of a breakdown:

The MTA expects to print 60 million fewer MetroCards next year – so much plastic that, placed end-to-end, the cards would stretch 3,196 miles, the distance from New York City to Los Angeles and up the West Coast to San Francisco. It sold 101 million MetroCards last year, said MTA spokesman Adam Lisberg…

In its first four months, the green fee generated $10,841,000 for MTA coffers, said NYC Transit division budget director Aaron Stern. The MTA expects gross revenues to total nearly $24 million this year, and $28 million next year with a combined $3.8 million savings in production costs, said agency officials…

The green-fee windfall will be partially offset, officials said, by an estimated $11 million reduction in “fare media liability.” The MTA budget term is used to describe unused value riders leave on MetroCards: small change or trips paid for but not taken.

Initially, this is certainly good news for the MTA. Even though its fare media liability total is decreasing, it is saving significant costs by printing far fewer Metrocards, and the move has been environmentally friendly as well. I’m still a bit skeptical of the agency’s predictions of increased revenue from the fee next year though.

As I wrote in May, at a certain point, subway riders’ habits will change. Already Donohue easily found riders who have been using the same Metrocard since March, and that trend will continue. The MTA can save money on production costs, but will the revenue from the $1 fee continue to be as robust? Tourists will pay, but everyday riders will curtail their Metrocard purchases. For now, though, and until the Metrocard is finally phased out, the fee will remain.

After nearly ten years of fits and starts, the MTA’s on-again, off-again plan to replace the swipe-based Metrocard with something more modern has taken on a quixotic overtone. Numerous pilots led the MTA to issue plans for a charge card-based contactless solution, but low adoption rates by the country’s major banks led the agency to shelf this project. It’s all rather “inside baseball,” but this week, for some reason, it became a part of the ongoing drama that is the current mayoral campaign.

It takes a lot of institutional memory to remember the MTA’s first contactless pilot back in the early-to-mid 2000s, but there it was. Sponsored by Mastercard, the 2006 pilot ran for a bunch of much with limited success on the Lexington Ave. IRT, and a few years ago, a wider pilot also sponsored by Mastercard seemed promising as well. The MTA had hoped to start the gradual Metrocard phase-out by 2012, and when Jay Walder arrived, he expressed his desire to ditch the Metrocard in favor of something that moved beyond the proprietary technology of London’s Oyster card.

When Walder left, the halting effort faltered. The MTA had issued a comprehensive document in May of 2011 with its plans in place, but the technology never caught on. Earlier this year, the agency said they hope to have a plan in place within five years as, by 2019, it will become prohibitively expensive to maintain the current Metrocard technology. The MTA, I concluded, was stuck, but outside of the occasional swipe error, the vast majority of subway riders are perfectly happy with their Metrocards.

Christine Quinn is not one of them. In comments earlier this week, she urged the MTA to hurry it up already, and while it’s not exactly a mainstream campaign issue, her points are valid. Erin Durkin reported:

City Council Speaker Christine Quinn is pushing the MTA to speed up a delayed plan to let straphangers get on to subways without swiping MetroCards…“The reality is a promise was made to straphangers and that promise was not lived up to,” the mayoral hopeful said. “We in New York City have fallen behind other municipalities in providing the quickest, easiest, most cost effective transit in the country, in part because we’re still so dedicated to using the MetroCard.”

…Quinn chalked up the delay to “a combination of faulty planning, turnover in leadership, and misguided prioritization.”

MTA officials say their original plan depended on banks developing credit and debit cards with chips in them to allow contactless use, which the industry was expected to do a few years ago but never happened on a widespread basis. Now, the agency is waiting to see whether private industry ends up turning to credit cards, mobile phones, key fobs, or some other type of technology for no-swipe payments. “We don’t want to get in the business of issuing our own card and we don’t want to pick winners,” said MTA spokesman Adam Lisberg. “The idea is lets wait, rather than making a bad bet.”

In the meantime, the agency is working on designing the back end of a no-swipe system including wiring and office equipment, which they can add card readers to when a technology is chosen down the road. “It would be incorrect to say that we’re not working on it, that we’re not pushing for it, but we want to do it smart,” Lisberg said. “If we were to choose a new technology now, we’d be locked into that.”

Lisberg’s comments are the most we’ve seen from the MTA on this topic in months, and the fact that they now have a full-time Chairman and CEO who plans to stick around means that institutional turnover at the top should be eliminated for the next few years. But Quinn is right: With the Metrocard still in play, the MTA is not maximizing the revenue it draws in from fares, and even shaving a few cents per dollar off of its fare collection costs can help the MTA realize a few hundred million in added revenue.

The debate though seems to be one of approach. Swipe-less touch-based technology that works is out there. It exists in Boston and Washington, D.C., London and Hong Kong. It’s coming to Philadelphia too. Meanwhile, a bank card-based system is slowly getting rolled out in London at the behest of Transport for London. The MTA, though, has taken a more passive approach that looks more like paralysis than anything else. Waiting for the next technology and then slowly bringing it to market means we’re stuck with the Metrocard for the foreseeable future.

As with most things MTA, the next mayor’s power is limited, but their board appointees, as the Daily News notes, can push the issue. Quinn’s concern won’t win her flocks of voters, but it’s an astute issue that’s been hanging over the MTA’s collective heads for nearly eight years and counting. It’s time to move it forward.

Along with a set of higher transit fares in early March came a $1 surcharge on all new Metrocards purchased via an in-system Metrocard Vending Machine. The fee, first introduced as a concept in the early part of this decade, was years in the making, and the MTA justified the levy as part of an effort to cut down on the costs of producing Metrocards. The $1 fee is supposed to act as a deterrent against purchases of new cards while the old one is still valid, but even if Metrocard littermay be on the decline, the $1 surcharge may be having more of an impact on the MTA’s bottom line than on straphanger purchase patterns.

According to the latest from Pete Donohue, the MTA is drawing in more money than expected as straphangers continue to buy new cards even in the face of the $1 fee. Specifics from the MTA are scarce as the agency hasn’t yet released any firm revenue figures, but here’s Donohue’s take:

The MTA is raking in more dough than expected with its controversial $1 MetroCard “green” fee — and that could put more pressure on transit officials to make system improvements or restore service that was cut three years ago. The surcharge, tacked on when someone buys a new MetroCard, went into effect in March with the latest round of fare hikes. The goal, transit officials said, was to encourage riders to refill and keep using their existing MetroCards.

It’s simple enough. Recycle and save a buck. And it’s good for the environment. But old habits die hard. In the first month after the fee went into effect, more riders than transit officials predicted continued to buy new MetroCards — and paid the extra $1, a transit executive said last week. If the trend continues, the Metropolitan Transportation Authority will exceed the $20 million in new revenues and savings that it anticipated when drafting the budget, the executive said.

“I’m surprised,” Gene Russianoff of the Straphangers Campaign said. “Anecdotally, in my many subway rides, I have seen fewer MetroCards littering the ground in subway stations. But apparently many riders are not reusing.”

It’s nearly impossible and ill-advised to draw any conclusions from one month’s data and when no firm figures are available. It’s more likely, especially during March, that most customers weren’t aware of the $1 surcharge, discarded an empty card and then had to buy a new one — and pay the $1 — when next they encountered a Metrocard machine. We’ll have wait until we have a good batch of substantial data to back up the claim that New Yorkers aren’t changing their habits and that the MTA is flush with the cash from the $1 surcharge.

Still, the idea of the surcharge is still worth a closer look. The MTA claims it will enjoy added revenue — some in the form of the surcharge and some in the form of fare media production costs — of around $18-$20 million a year annually from the so-called green fee. If New Yorkers are still buying up new Metrocards more frequently than they should, the MTA will take in more in surcharge revenue, but that revenue will be offset, in part, by higher fare media production costs. The $1 more than covers the cost of a new Metrocard though so the MTA would be better off if more riders will buying more cards.

Yet, it’s too early for conclusions. We can speculate, but revenue figures are out, all we know is that the $1 fee is a work in progress, hopefully just like the plans to replace the Metrocard as well.

It’s been six weeks since the MTA raised fares and instituted a $1 fee for all new MetroCard purchases made at a vending machine, and already, straphangers may be starting to change their purchasing patterns. The MTA won’t release official numbers on fare media liability for a few months, but if our eyes are to be believed, the fee is having its intended impact.

Take a glance down around the fare control area during your next subway rider, and you will likely see the floor. By itself, this isn’t so strange, but just a few months ago that floor would often be littered with discarded MetroCards. New Yorkers in a hurry often didn’t take the time to toss their empty cards and would rather drop them than refill them. Today, the situation seems different, and my mom — a very long-time SAS reader — offered up this observation:

There is a noticeable lack on MetroCards being tossed on the ground as a result of the $1 charge. The other day Dad needed to a monthly MetroCard, and he had tossed his old one forgetting about the $1 charge. He scoured the 96th St. station and stairs and couldn’t find one. We looked when we got out of the subway and same thing — none on the ground.

I’ve noticed the same around the Grand Army Plaza and 7th Ave. B/Q stations in Brooklyn. MetroCard litter has all but disappeared lately. I’m still awaiting word from the MTA on their own numbers, but the fee may just be working. A $1 surcharge doesn’t sound like much, but for New Yorkers who refuse to give up any extra money to the MTA if they can help, it may be enough of a deterrent to refill and reuse. What have you seen?

Could tokens be making a comeback? One plan calls for their reintroduction by 2019.

As the MTA tries to get plans to replace the MetroCard back on track, the agency is considering reintroducing tokens as a last-ditch effort, according to multiple MTA sources. If the MetroCard reaches the end of its life, as is expected to happen by 2019, with no successor technology in place, the MTA may resort to tokens to save on fare payment system maintenance costs.

Previously, tokens had been in use since the mid-1950s when the fare jumped from a dime to 15 cents. Along with the increase came a move to offer up straphangers just one coin, but after nearly five decades, the MTA did away with tokens as calls from rider advocates for unlimited ride options and free transfers grew louder. Tokens were last accepted by the MTA on April 13, 2003.

Recently, though, as costs of maintaining the MetroCard system have increased and the early 1990s technology has aged, the MTA has tried to find a suitable next-generation replacement. An extensive pilot program throughout the mid-2000s and early 2010s involved a credit and debit card-based touch system, but recent revelations that the banking industry has not been quick to adopt the technology led the MTA to scrap these plans. It seems likely that the MTA will instead develop a proprietary payment card — if it can do so before 2019. If they cannot, we get tokens.

Initial reactions from both subway riders and those fighting for the rights of passengers have been mixed. Some are looking forward to the return of a beloved New York icon while others are worrying about the impact tokens will have on ridership. There’s no such thing, after all, as an unlimited ride token.

“Let’s not be too happy,” Gene Russianoff of the Straphangers Campaign said. “We fought long and hard for unlimited ride cards, and the return of the token could drastically impact transit ridership.”

For the MTA, the token could bring about an uptick in revenue as well. With the introduction of pay-per-ride discounts and unlimited ride cards, the real cost of a subway ride dropped well below inflation-adjusted fare levels from the years before the introduction of the MetroCard. The token, without such discounts, will help the MTA beef up its finances.

On the other hand, New Yorkers long accustomed to monthly discounts and frequent rider incentives may find such a marked increase in fares and a corresponding decrease in convenience too much to handle. Additionally, no one wants to carry around bags of tokens either. They are, after all, significantly heavier than a flimsy piece of plastic.

“Our move to reexamine tokens would come only as a last-ditch effort if our technological initiatives are unsuccessful,” Tom Prendergast, the MTA’s interim executive director, said. “It’s premature to discuss these long-term plans, but we cannot close the fare gate to any option currently on the table.”

Losing the MetroCard, ultimately, would be a blow to an agency that has long struggled with technological innovation. Costs are costs, though, and if it’s better for the MTA to resort to an older fare payment system rather than burn money on maintaining what will then be a 30-year-old technology, we may have to make some sacrifices.

Still, 2019 is a long way off, and perhaps the MTA can find a technological solution before the next six years elapse.