How Metro’s switch to paperless may shake up its revenue stream

Recently, WMATA announced that they are going to switch to a paperless fare system by phasing out paper tickets by Jun 2016. Most Metro riders are already using the plastic SmarTrip cards. But for those who are still using paper tickets (mostly tourists and weekend riders from the suburbs), the prices are about to jump significantly. I’m not sure whether this is going to raise more revenue, cut costs, or just simply a moral move to save paper.

The agency says that it will spend $9 million to retrofit fare machines in stations to accommodate the increase in SmarTrip use. With that said, I would hope that the switch would be able to make up that cost and some. Right now paper ticket users pay a $1 surcharge for every trip. I like to think of this as a tourist tax. Washington has hoards of tourists year round trying to catch a glimpse of the nation’s capital. While on vacation, they see transportation as a sunk cost and are indifferent to the $1 charge, so it seems like a fairly rational and smart policy decision on WMATA’s part. The agency can raise more revenue without losing local riders. Using paper tickets is also slower to use – in a city like DC where transit riders can’t even handle standing on an escalator, that five milliseconds of paper ticket reading is makes a huge difference.

But what happens now? What will those tourists do when they have to ride the metro? Well, the new plan requires everyone who rides the metro to buy a SmarTrip card. The catch is, unlock Boston’s T, these cards cost $2, regardless of how much money is on them. When you buy a SmarTrip, it’s $2 and you get nowhere. You then need to add value onto the card in order to actually ride the train. This means that every tourist will be buying a SmarTrip card, using it once or twice at a reduced rate (remember, now there is no more $1 surcharge), and then being on their way back to Georgia or Nebraska.

I don’t quite know the answer right now, but I do have a few questions: Will the switch from recurring $1 surcharges to a single $2 surcharge break even? Does it bring in more or less revenue? Is it negligible? If so, is the $9 million used on retrofitting fare machines worth it? These aren’t light questions, especially in a time when Metro ridership is already declining fast and the system is in desperate need of repairs and safety improvements. For now, I’ll be sticking with BikeShare.

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