That's some funny math... If I put $5 in a bus farebox for an all-day, TriMet gets $5. If I spend $5 through GlobalSherpa to buy an all-day, Visa takes a cut and GlobalSherpa takes a cut, and TriMet gets less than $5. The more people buy fares with this instead of at the farebox, the less money TriMet gets. Which has it's own appeal, come to think of it...
Trimess
Tuesday, September 3, 2013
TRIMET SAYS IT 'SAVES' MONEY WHEN PEOPLE USE THE CELL PHONE APP?
That's some funny math... If I put $5 in a bus farebox for an all-day, TriMet gets $5. If I spend $5 through GlobalSherpa to buy an all-day, Visa takes a cut and GlobalSherpa takes a cut, and TriMet gets less than $5. The more people buy fares with this instead of at the farebox, the less money TriMet gets. Which has it's own appeal, come to think of it...
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13 comments:
That's only true when considering gross amounts. Read the white paper TriMet created and gave to Portland Transport.
However fares are paid, it costs TriMet money to collect money. For fare boxes and ticket machines, there's the cost of maintenance, collecting and counting the money, etc (as well as time spent waiting for riders to pay and get a transfer). For fares purchased from businesses, TriMet pays a commission. For tickets bought online or at Pioneer Square, there's the cost of running the store.
Plus, every one of those methods require that physical media be created and distributed.
If TriMet is able to reduce those costs (maybe TVMs wouldn't need to be filled/emptied so often), they can come out ahead.
Lastly, I think the Visa cut comes from GlobalSherpa's cut.
Using a credit or debit card on a small transaction almost always loses out for the vendor/seller because the fixed transaction cost takes a huge chunk of the sales price out. The larger the sale, the lower the percentage of the overall transaction.
However in TriMet's case, the real savings is hardly in using telephone fares - they have to pay both the credit/debit card fees, plus Globe Sherpa gets a cut.
With the TVMs, TriMet not only pays for the cost of the credit/debit card transactions (and it's possible to buy a single fare with a credit card at a TVM), but TriMet also has to pay for armored car service to empty out every TVM, and an army of technicians who do nothing but fix TVMs.
With buses, there's no TVM maintenance (there is farebox maintenance, but the fareboxes are far simpler than the TVMs and require fewer mechanics), and no armored car service - the buses empty their fareboxes when pulling into the garage. Money counting is largely an automated task in the cash rooms, and one or two cashiers can process well over a hundred buses a day. The "money collecting cost" for cash fares on a bus is very likely lower than the cost for single fares by any other means.
The real savings is in monthly and annual passes. TriMet only has to collect money one time, but it gets a monthly or annual revenue stream. Further, when it sells through vendors like Fred Meyer, it only has to collect money one time. (And from what I'm told, TriMet does not pay a commission on sales by vendors, so Fred Meyer is selling passes out of the goodness of their hearts.) Just yesterday, TriMet got nearly $1,000 in one lump sum out of me (through my employer). And that's money that TriMet gets, even if I don't ever set foot on a bus or train.
Erik:
You don't need to guess about these topics, you can just read the white paper trimet already wrote on this topic. It clearly spells out the costs and issues involved with each fare payment method.
... and you were told wrong, TriMet does pay a commission to fare outlets (ex: fred meyer) -- 1 to 5% depending on sales volume. That's on page 32.
In a nutshell (page 19-20), the overhead is:
Cash: 10.4%
TVM: 27.7%
Outlets (ex: Fred Meyer, ticket office): 5.7%
U-Pass: 1.4%
For tickets purchased via the sherpa app, the total overhead was somewhere around 5% -- which is why TriMet really would rather you use your phone than pay cash.
Turns out the app is 11% all costs. On the blog somewhere
Yes, you are correct for year 1. Joe Rose:
"GlobeSherpa will be paid 7 percent per transaction in the first year of the contract; an estimated 5 percent in years two and three. In addition to GlobeSherpa's commission, TriMet will pay a service fee of 4 percent for payment processing. "
TVM 27%? Where did u get that figure?
"In a nutshell , the overhead is:"
Let's try this again....
"In a nutshell (page 19-20), the overhead is:"
Page 19-20 of what ? The Trimet paper? Trimet actually installed a collection system that Required them to hand over 20% of revenue?
Let me tell you something max, I have heard various rumors of the corruption involved with those TVM's. And if they were paying 20% of gross Revenue to the TVM company Then there was Some kind of corruption involved
This is the white paper Max is referring to:
http://portlandtransport.com/documents/Fare%20System%20Migration%20white%20paper_V10%20FNL_11%2017%202011.pdf
In it on print page 16 (PDF page 17), it says that collecting and counting money "is a labor intensive costly process". (BTW, the second half of the second paragraph under Money Room is a repeat from the first.)
And two pages later, it says that the 28% includes both the capital and operating costs.
Lastly, on page 20 (21), footnotes 5 and 6 are reversed, and the marker for 3 is not found.
The question is WHO IS GONNA GET THE CASH? The rich or the working man!
The drive to automate everything will bring in Armageddon
Only if the savings aren't plowed back into something that enhances the economy (such as more transit service or creating and installing a card system).
The savings are NEVER Realized back to the citizens
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