California Partners for Advanced Transportation Technology

Smart cards are gaining momentum as transit agencies across the country have been implementing them as a fare medium. Smart cards hold the promise of revolutionizing the way riders use transit, and how transit systems operate. But in order to adopt smart cards, transit agencies must purchase new equipment and upgrade their entire fare collection system – a very expensive process. In addition, many of the oft-touted benefits of smart cards are vague, and it is not at all certain if they are worth the high cost of implementation.

This study examines how transportation agencies in three metropolitan areas evaluated smart card systems – the only three major transit smart card cost/benefit analysis studies that we found in the U.S. by the date of data collection. In addition to these three studies, we also reviewed other less extensive analyses that only partially address issues associated with the implementation of smart card technologies as transit fare media. In reviewing documents from these analyses, combined with information collected in the previous steps of the research, we found that the analyses are neither consistent with one another nor definitive to provide any systematic evaluation of costs and benefits of smart card deployment. These shortcomings are mainly due to: (1) difficulty of estimating many of the qualitative benefits, such as convenience for transfers and comprehensive regional travel data, (2) a significant variation in quantitative cost estimates among the analyses for unclear reasons, and (3) difficulty in generalizing costs and benefits among cases with the unique organizational structures and particular political issues in different regions.

Given a lack of solid information available in the literature, we drew on the relevant studies available to identify the cost and benefit items of smart card media and systems and examine the level of reliability and certainty of information for these items. Then we developed a framework on how a proper transit smart card cost/benefit analysis ought to be conducted. With this proposed framework, we found that individual transit operators and multiple agencies bear the majority of the deployment costs, while transit users and individual operators enjoy most of the smart card benefits. The proposed framework sheds light for more comprehensive cost/benefit analysis to evaluate smart card transit fare systems in the current status of knowledge.