Tapping In: Leveraging Open-Loop Fare Payments to Increase Financial Inclusion

In the United States, public transit agencies are increasingly growing interested in deploying open-loop payment systems for public transit fare payments. This interest is based on the benefits these systems can offer, from faster boarding times to the potential of attracting more riders. Open-loop fare payment systems’ popularity is evidenced by the growing number of American public transit agencies who have deployed them; most of whom (63%) are located in California. The overlap between public transit riders who are both transit-dependent and financially excluded (i.e., have no or limited access to financial services) creates the opportunity for public transit agencies deploying open-loop payment systems to leverage these systems to increase financial service access for transit dependent, financially excluded riders. Individuals who are both transit-dependent and financially excluded are typically low-income, identify as part of a racial or ethnic minority group, immigrants, and/or women. As a result of these demographic characteristics, this work focuses on these populations. Additionally, financial inclusion, especially for these populations, is a critical step for economic and social mobility in the United States. This research focuses on California and explores how to leverage public transit agency deployment of open-loop payment systems to increase riders' financial service access. This research is comprised of a literature review, expert interviews (n=11), population needs mapping, and partnership proposals. In general, public transit agencies can strategically work with financial sector-based partners who focus on serving the transit agencies' priority rider groups.