Summary of benefit-cost analyses of smart cards by Los Angeles Metro, San Francisco's Metropolitan Transportation Commission (MTC), and Southeastern Pennsylvania Transportation Authority (SEPTA)
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 benefits of smart cards are difficult to quantify, allocated unevenly among stakeholders, making it difficult to determine if they are worth the cost of implementation.
This study examines how transportation agencies in three metropolitan areas evaluated smart card systems: the Metropolitan Transportation Commission (MTC) in the San Francisco Bay Area, the Los Angeles Country Metropolitan Transportation Authority (LA Metro) in Los Angeles, and the Southeastern Pennsylvania Transportation Authority (SEPTA) in the greater Philadelphia area. These three cases represent two regional interoperable systems and one stand alone system.
In reviewing these three cases, the authors found that while these public transportation agencies have made their best efforts to estimate smart card costs and benefits, these studies are neither consistent with one another nor definitive due to a lack of consensus regarding the costs and benefits of applications of smart card systems. They identified the cost and benefit items of smart card media and systems and examined the level of reliability and certainty of information for these items. They then developed a framework for conducting a transit smart card cost/benefit analysis.
In summary, the authors conclude that smart card systems provide substantial benefits to users, and at little cost to the average users. Individual transit operators also have much to gain in terms of operational efficiency. But transit agencies must make significant financial investments to garner these gains, and while these numerical costs are clear, many benefits are difficult to quantify. Furthermore, multiple operators and regional agencies as a whole do not stand to gain very much except for new ridership and travel behavior information. There is little doubt that the smart card systems provide certain benefits, but all participating stakeholders do not enjoy these benefits evenly. In addition, by adopting smart card systems, individual operators and transit agencies as a whole must assume a certain amount of risk, and it is uncertain if the benefits are worth their costs.