DC: Banking and Bikesharing

The transition of fare payment on public transit systems away from cash and towards digital payment methods always brings up issues of access for individuals who don’t have access to bank accounts, the internet or both. The typical solution to this problem, excluding some developing countries and the most developed countries,  is to work with private companies like grocery stores and corner stores to create locations in which fare media can be purchased or recharged using cash. While this works for transit, it doesn’t work for bike sharing which require collateral to ensure that bikes are returned.

DC is trying solve this problem in an interesting way, that if it works could both increase use of Capital Bikeshare, bring “unbanked” people into the system, and provided an extremely low cost means of transportation to those that likely need it the most. Atlantic cities reports, after the jump.

Just about every bike-share program in existence requires, before you undock a bike from a station anywhere in town, that you first insert some plastic. A credit or a debit card, generally either one will do. This transaction is crucial to the entire model of bike-sharing. The ride may only cost a dollar, but if you inserted one in paper form, as if into a vending machine, what would prevent people from swiping bikes instead of sharing them?

“It’s sort of our insurance policy,” says Josh Moskowitz, the program manager for the Capital Bikeshare system in Washington, D.C.

Bike-share programs have to run on credit cards, or the whole thing would never work. This system, though, comes with a giant hitch: What about all the people who don’t have credit or debit cards? Not just young people, but low-income residents as well. In Washington, about 12.5 percent of all households are “unbanked.”

This problem has nagged at the Capital Bikeshare folks from the very beginning, since before the system was introduced in September of 2010. It’s also emblematic of a challenge cities face on a number of fronts: As public services – from transit fee collection, to online permit registration, to digital DMVs – become more innovative and high-tech, they threaten to leave behind residents who don’t have the most basic tools of access: a bank account and credit card.

Washington’s bike-share program appears to be the first to try to come up with a solution. After months of working out the details with several partner organizations, CaBi announced this month a program to finally bring the “unbanked” into the bike system. The city couldn’t very well invite other forms of collateral – leave your pay stub for a bike ride? – and so instead it has opted to try to bring more residents into the banking world.

Capital Bikeshare partnered with United Bank, the District Government Employees Federal Credit Union, and Bank on DC, a collaborative between the city, local financial institutions and non-profits working to provide greater access to financial products in the District. Residents can open a Bank on DC account with none of the minimum balances or monthly fees that frequently serve as an obstacle.

Through Bank on DC, Capital Bikeshare will offer a discounted $50 annual membership to residents who don’t currently use a bank but sign up for a debit or credit account through either the District employees credit union or United Bank.

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Read the full story here.