Advance transit fare technology practice by supporting the full transition of monterey-salinas transit district to accept payments using open-loop bank cards and by leveraging the HR benefits industry…

The Federal Transit Administration awarded Monterey-Salinas Transit District a cooperative agreement totaling $568,553 on January 27, 2026, under the Public Transportation Innovation program (CFDA 20.530) to advance transit fare technology by enabling open-loop bank card payments with automatic discount eligibility verification.

The project establishes the ability for transit riders to receive automatically applied discounted fares when paying with contactless bank cards, eliminating the current requirement to validate eligibility separately and obtain monthly passes. The pilot focuses on students and faculty/staff of Rancho Cielo in Salinas, California, who qualify for discounted or complementary fares based on active enrollment or employment status and school session dates. The system verifies temporary discount eligibility—such as full or part-time enrollment, employment status, and active discount periods—through criteria jointly defined between the transit agency and the educational institution. This innovation removes barriers to transit ridership by making bus fare purchase as straightforward as purchasing everyday items.

The cooperative agreement funds three phases of the pilot program, including software development and live testing. Performance runs through March 31, 2028, with work conducted in California. The project addresses a primary obstacle to full bank card payment adoption across U.S. transit agencies: the inability to verify and apply group-based discounts (senior, veteran, student) at the point of payment without proprietary fare cards.

Purpose

The purpose of this award is to advance transit fare technology practice by supporting the full transition of monterey-salinas transit district to accept payments using open-loop bank cards and by leveraging the HR benefits industry to introduce an innovative method for supporting temporary discount eligibility. Msts proposed pilot project will enable students and faculty/staff of rancho cielo in salinas california to receive discounted or complementary public transit fares for which they are eligible on-board MST vehicles when paying with open-loop contactless bank cards. These riders are discount-eligible based on their active enrollment or employment status and whether the high school is currently in session. Currently they are required to validate their status with the school and obtain monthly bus passes. This innovation increases transit ridership by reducing barriers to riding making IT as easy to buy a public transit ride as IT is to purchase coffee groceries and other daily items.

Activities

This project will establish the ability for transit riders to automatically receive discounted fares for which they are eligible when paying with their bank card. Currently most US transit agencies only accept either cash fares or payment using a proprietary fare card (e.g. TAP clipper or orca). One of the primary obstacles to a full transition to bank card payments is the need to permit riders to receive discounts based on group characteristics (e.g. senior veteran student). This project would introduce the ability to verify a temporary discount eligibility based on qualifying student and employment criteria; such as full or part-time enrollment full or part-time status whether an active discount period is in effect or other conditions as defined by terms set between the public transportation agency and the educational institution. Federal grant funds will support three phases of the pilot program including software development live testing and the pilot period.

Expected outcomes

Key benefits of this project to develop the methodology and software-based solution to advance transit fare technology practice by supporting the full transition of public transit agencies to accepting payments using open-loop bank cards are as follows:EMI work plan and statement of workreduced friction: by eliminating the need to have a special payment form to ride public transit the population of potential transit riders is greatly expanded and the rider experience is improved.faster boarding: replacing closed-loop fare media or cash payments with open-loop payment reduces the time that IT takes for public transit riders to board resulting in faster service and improved rider satisfaction.parity with other transactions: payment innovations have led to an evolution in consumer expectations; riders expect paying a public transit fare to be as seamless as other consumer transactions.affordable operations: open-loop payments improve efficiency and eliminate the need for expensive infrastructure needed for bespoke fare media.operator safety: open-loop payments remove the operator from the fare payment process eliminating a source of operator assaults.stabilizing system ridership by building habits among regular riders like employees of local businesses organizations etc.

Intended beneficiaries

Key partners: rancho cielo vocational high school partner compiler transit technology partner jawnt transit technology partner and littlepay transit payment processor partner.