Bike-Sharing for the Unbanked
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.
“They essentially accept everyone and anyone who expresses an interest in signing up for an account,” Moskowitz says. Bank on DC will promote the bike-share program at the same time, and Capital Bikeshare will do outreach as well about the new banking alternative. “It kills two birds with one stone,” Moskowitz says. “We’re able to preach financial literacy, financial security, along with the benefits of promoting a healthy, environmental form of transportation.”
The annual membership amounts to about 14 cents a day. And Capital Bikeshare members don’t have to pay a separate trip fee for rides shorter than 30 minutes. This means that if you can get everywhere you need to go on two wheels in under half an hour – and Washington is a particularly compact city – you can basically get around town for free, after paying the membership fee. A ride on the bus or metro costs about 2-3 dollars each way. Moskowitz adds that about 99 percent of the system’s annual and monthly member trips take less than half an hour and never incur a usage fee (a lot of the system’s revenue comes instead from membership fees and one-time users).
In essence, Capital Bikeshare had created the most cost-effective transportation system in town – aside from walking, that is – even as the city’s residents most in need of low-cost transportation had no access to it, until now.
This catch-22 similarly plagues non-profit car shares that have tried to expand the idea’s demographic from eco-conscious young professions to low-income drivers in need. Car-sharing could be an ideal transportation solution for many of these people, especially in cities with little transit infrastructure. But car-sharing has the same credit-card collateral problem. Some programs, such as the Ithaca Carshare and San Francisco’s City CarShare have tried to experiment with partnerships with local credit unions and flexible membership models.
Other citywide innovations will require solutions for the unbanked on a much broader scale. Earlier this month, our own John Lorinc wrote about “open payment” transit systems that would allow you to use your credit card, instead of a fare card, to ride the bus or train. This is great news for harried professionals who don’t have time to reload fare cards during a rush-hour commute. But what will it mean for people who don’t have credit cards when a public service like this one evolves to better serve those who do?
Back in Washington, Moskowitz has already heard from officials in New York City and Los Angeles who want to learn about the bank partnership the city is testing, and how it plans to get out the word. One of the city’s challenges now will be re-introducing Capital Bikeshare to residents who have assumed for the past year that the program couldn’t accommodate them (and this will mean expanding bike stations in their communities as well).
“In any urban environment, you are going to have individuals who are unbanked,” Moskowitz says. “We see this as a significant alleviation in trying to get people not only on our bikes and riding, but also being able to become educated about the benefits of financial security.”