The time required for on-board fare collection can slow bus operations significantly. The more successful the service is, the greater the problem, as additional passengers create delays at every stop. Some fare collection policies put a greater burden on customers, such as the requirement to have exact change, whereas others make transit use easy. A BRT system design should consider fare collection policy in terms of its impact on both bus dwell time and passenger convenience.

Reducing On-Board Fare Collection Time

Permitting the driver to make change is convenient for the customer, but slows down operations. North American transit operators have almost completely converted to exact change policies, largely out of concern for operator security against the threat of robbery. However, exact change policies can be inconvenient to customers, particularly when many coins are needed for the base fare.

Many transit agencies offer prepaid fare media, such as a season pass, stored value card, or ticket. If a driver is required to inspect passes, boarding can be longer than with payment in change. An electronic fare box with a card reader can reduce boarding time for pass holders.

Fare cards with a microchip, or smart cards, can allow transit agencies to offer a more sophisticated fare policy. Contactless smart cards need only be waved at a marked spot, and therefore can reduce payment time.

Incentives to pre-pay

The use of prepaid fare media can be encouraged by fare policy. The cash fare can be higher with sharp discounts offered for purchasing multi-trip tickets or cards. This strategy has the potential to reduce dwell time. In addition, it is a form of price differentiation which has been successfully used to increase both revenue and ridership.

Pay on exit

The pay-as-you-board policy typically used for North American bus operations has its greatest limitations when boarding demand is very heavy, such as during the evening rush hour in Central Business Districts or other major employment concentrations. The long dwell times not only delay passengers but can use up scarce downtown bus berths, greatly reducing the potential passenger throughput.

One solution is to use a pay-on-exit policy for outbound trips. Passengers can board using all doors. Speedy bus boardings frees up bus berths. Since passengers exit in small batches, the delay per stop is much less. This policy can also be combined with a free-fare zone (see below) and distance-based fares.

Eliminating On-Board Payment

Moving all fare collection off the bus offers the greatest potential for reducing dwell time. Not only is fare payment time reduced to zero, but all doors of the bus can be used for both loading and unloading.

Free-Fare Zone

A limited way of introducing this idea is the free-fare zone. These are typically used in downtown areas with a high concentration of riders in a small area. Because the free-fare area is small, the trips served are inherently short, and tend to be off-peak (such as lunch trips and tourist trips). Since these trips do not contribute much to peak-hour demand, they usually cost little or nothing to serve. A free-fare policy in these small areas means that these trips do not increase dwell time much.

Loading Platforms

[Passengers exiting from Curitiba loading platform.] Another way to remove the fare collection process from the vehicle is to create passenger loading platforms. The bus tubes in Curitiba, Brazil are the most famous example of this strategy. Passengers  [Level boarding between Curitiba bus and loading platform.] enter the loading area by paying a fare in a turnstile. The tubes are staffed. The tubes not only serve a fare collection function but also provide platforms for level boarding (that is, no steps between the boarding area and the vehicle). El Trolé, a trolleybus system in Quito, Ecuador, also uses boarding platforms. Free-fare areas are used in Portland, OR and Seattle, WA. Several other operators offer free downtown circulators (such as Denver's Mall shuttle and Orlando's Lymmo). Unless the loading platforms are staffed, as they are in Curitiba, achieving an acceptably low fare evasion rate may be difficult.

Terminals

Paid zones which permit off-vehicle fare payment are more common for bus and rail transfer stations, or, in some cases bus only transfer terminals. Passengers arriving at the station by transit are already in the paid zone. All other passengers must pay the fare before entering the station area. Typically a fine is payable for those entering illegally (such as through bus ramps).

In Toronto these types of stations are used to provide barrier-free transfers between bus and rail. Passengers arriving by subway wait inside the station for their bus. The bus route number is illuminated at the appropriate berth when a bus arrives. Boarding and alighting passengers are separated by a divider on the platform. All alighting passengers exit from the rear door, and all boarding passengers use the front door.

Similar arrangements can be used for bus to bus transfers. Curitiba, Brazil has constructed transfer terminals at the end of each of the main radial routes. Neighborhood and circumferential routes converge on these terminals. Using a timed-transfer system, buses are scheduled to arrive at the same time, facilitating transfers from any route to any other. The entire station is a paid area, meaning that transfers are barrier-free.

Proof of Payment

Another option which provides the same benefits is proof-of-payment fare collection. Under this system, passengers must board with either a pass or a validated ticket, and can be asked to show proof of payment at any time. Inspectors randomly board buses and give fines to passengers who cannot show the required pass or ticket.

This system has often been called an honor system, but it operates on the honor system in the same way that parking meters do. Fines must be high enough and enforcement frequent enough to produce a fare evasion level which is acceptable. The mechanism for paying the fine, or in some cases, a super-fare, must be administratively simple. The public must believe that inspections are random, and not prejudicially directed at certain types of people.

In Europe, ticket vending machines are often provided wayside, and ticket validation boxes are located near all doors. San Francisco Muni has proposed a modified proof of payment system which it intends to test on two of its heaviest-use lines. Passengers paying cash must board at the front door. Their paper transfer then becomes their proof of payment. Passengers with a pass may board at any door.

A major disadvantage of proof of payment is the need for additional staff to perform the inspections. However, the advantage of reduced dwell time may outweigh this additional cost, particularly for high-demand routes. Although proof of payment presents public relations and financial challenges, the potential benefits are high. For this reason, all new light rail systems in North America which have opened in the 1980s and 1990s use proof of payment. Therefore there already is considerable experience with the policy.