In a groundbreaking effort to improve financial inclusion, Monterey-Salinas Transit (MST) has teamed up with Bank On, an initiative by the nonprofit organization Cities for Financial Empowerment Fund (CFEF), to provide contactless bank cards for individuals without bank accounts. This innovative collaboration aims to simplify the payment process for bus fares and give low-income and historically underrepresented communities access to essential financial tools such as debit cards and direct deposit. As a significant step towards bridging financial accessibility gaps, this partnership shows promising potential to transform the transit experience for many.
Contactless Payment System
Improving Convenience for Riders
Around three and a half years ago, MST introduced a contactless payment system, allowing passengers to pay for bus fares with just a tap using their credit or debit cards. However, this convenience was not extended to individuals who did not possess such cards, leaving them to scramble for change. The new partnership between MST and Bank On aims to rectify this issue by providing contactless bank cards to those unbanked individuals. By fostering the use of low-fee bank accounts that come equipped with these cards, MST can eliminate the inconvenience for these riders and simultaneously reduce overall costs for the transit system.
Bank On’s initiative is designed to offer people safe and affordable bank accounts with monthly fees of $5 or less, without overdraft or insufficient funds fees, ensuring cost-effectiveness. These accounts can be opened through participating local banks and credit unions or online via the Bank On website, providing easy access for those who need them. By bringing financial tools to underserved communities, MST and Bank On aim to make public transit more accessible and user-friendly.
Increasing Cost Efficiency for MST
From MST’s standpoint, promoting cashless tools is financially beneficial as processing cash is costly, consuming 18 cents of every dollar collected compared to just 5 cents for processing tap-to-pay transactions. Carl Sedoryk, MST’s general manager and CEO, acknowledged that a future goal is to go completely cashless to lower these costs, although he admits it is a long-term objective. Currently, about 10 percent of MST riders use tap-to-pay, a number that has more than doubled since 2022, showing significant potential for future growth. Aligning with global trends toward cashless transactions, MST seeks to equip its riders with tools that negate the need to carry coins and cash.
One noteworthy aspect of MST’s strategy is its discount program for tap-to-pay users. By implementing caps on fares—$6 per day, $20 per week, and $70 per month—MST encourages more passengers to adopt cashless payments. Presently, about 40 percent of users benefit from these discounts, highlighting the effectiveness of the initiative in making public transit affordable and efficient for regular riders.
Financial Inclusion and Impact on Communities
Addressing the Unbanked and Underbanked Population
A significant portion of the U.S. population remains either unbanked or underbanked, often relegating them to a world of financial insecurity. According to Bank On, about 4.5 percent of U.S. households are unbanked, while another 14 percent are underbanked. This issue is especially prevalent among Hispanic households, with over 33 percent being unbanked or underbanked, compared to less than 12 percent of white households. By launching the partnership with MST, the goal is to provide these underserved communities with better access to reliable banking services and financial tools.
Carl Sedoryk emphasizes that the existing banking system is often less accessible to low-income individuals and those who rely on public transit. By collaborating with CFEF and Bank On, MST endeavors to not only enhance transportation accessibility but also improve the financial well-being of its users. This partnership could significantly reduce the challenges faced by many riders in managing their finances, providing a more equitable system for all.
Long-term Goals and Vision
Monterey-Salinas Transit (MST) has embarked on a pioneering initiative to enhance financial inclusion by partnering with Bank On, a program developed by the nonprofit organization Cities for Financial Empowerment Fund (CFEF). This joint effort aims to provide contactless bank cards to individuals who do not have bank accounts. By simplifying the payment process for bus fares, this initiative also seeks to offer low-income and historically marginalized communities access to crucial financial services, such as debit cards and direct deposits.
This innovative collaboration not only aims to streamline the transit fare system but also serves as a substantial advancement in closing the financial accessibility gaps that many face. The provision of these financial tools is poised to empower users with greater financial autonomy and security. In essence, this partnership holds the potential to significantly transform the public transit experience, making it more accessible and financially inclusive for numerous individuals who were previously disadvantaged.
