TO: AC Transit Board of Directors
FROM: Salvador Llamas, General Manager/Chief Executive Officer
SUBJECT: Token Transit Fare-Media Discontinuation - Board Policy Waivers
ACTION ITEM
AGENDA PLANNING REQUEST: ☐
RECOMMENDED ACTION(S):
Title
Consider adopting Resolution No. 26-032 approving the discontinuation of Token Transit as a fare media, waiving the public-hearing requirement under Board Policy 110 and waiving the fare equity analysis requirement under Board Policy 518.
Staff Contact:
Paul Kincaid, Interim Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - Strong Public and Policymaker Support
Initiative - Service Quality
Discontinuing Token Transit will reduce duplication among fare-payment options and transition riders to Clipper 2 and other existing payment methods. Staff will provide targeted information and assistance to Token Transit customers during the transition.
BUDGETARY/FISCAL IMPACT:
The discontinued use of Token Transit will have no direct impact on the budget. It will likely increase fares collected by the District, due to eliminating concerns with fraudulent Token Transit usage. However, that amount cannot be reliably measured or predicted.
The Token Transit (Contract 2019-1483) contract expires on October 31, 2026. Assuming the Board approves staff’s recommendation, the agreement will not be renewed. Retirement of the platform is expected to increase efficiency of fare collection by the District. The District will also eliminate duplicate vendor, support, training, and fare-administration costs after contract closeout. The $20,000 paid to Token Transit in commissions and integrations in FY 2025-26 would be eliminated once the contract expires. Finance and Procurement will reconcile final contractual obligations, transaction activity, and any customer refund or redemption costs.
Waiving the public-hearing requirement would avoid direct costs normally associated with a hearing, including legal notice publication, translation and interpretation, printed materials, public posting, and meeting logistics. Prior internal estimates placed these costs at approximately $5,000.
BACKGROUND/RATIONALE:
Token Transit provides a smartphone-based, contactless fare-payment application for District riders. It was procured through Request for Proposals 2019-1483 and awarded on January 29, 2020, under the General Manager’s authority. The District launched the service in October 2020 to support mobile fare payment and new fare-media functionality that legacy Clipper could not provide.
Clipper has since gained that flexibility, as well as other features. The District obtained Metropolitan Transportation Commission (MTC) approval to use Token Transit as a separate mobile payment pilot program. The approval of that pilot program was given with the understanding that it would be phased out once the next generation of Clipper became available.
The next generation of Clipper launched on December 10, 2025, and now provides contactless payment, fare maximums, local and regional transfer benefits, mobile-wallet support, open payment, and broader regional program integration. The original contract with Token Transit limited any extension to six months beyond MTC’s implementation of Clipper 2.0, therefore the recommended action was contemplated from award.
One reason for eliminating Token Transit as a fare medium is reported and confirmed counterfeits that resulted in missed fare payments to the District. In District use, the Token Transit app screen is shown to the bus operator as proof of fare payment. The counterfeits provided an image representing a Token Transit pass or fare, which was actually an independently created image. Because the counterfeit and the legitimate Token Transit screens, which include a QR code, were so comparable, the differences were extremely difficult for the operator to discern. The fraudulent use did not impact any District systems or allow any access to the information of any Token Transit user, resulting in no exposure other than an unknown loss of fare payments to the District.
Between 2020 and August 20, 2026, 528,728 passes have been sold through Token Transit, resulting in approximately $2.37 million in gross sales and 34,625 unique paying users. There are approximately 1,500 Token Transit riders on a peak weekday, representing approximately one percent of average weekday ridership. These figures demonstrate minimal usage of Token Transit as a fare medium. However, the District also recognizes the importance of providing an orderly customer transition.
Most Token Transit products have a direct or functional Clipper equivalent. The principal differences include the transition from activated visual tickets to tap validation and, for seven-day products, from a pass good for seven calendar days to a Sunday-through-Saturday weekly “capped fare”. Clipper 2 now also provides transfer and discount program benefits not available through Token Transit. Furthermore, Clipper 2 allows riders to pay using eligible contactless bank cards and mobile wallets directly onboard Clipper readers, providing an additional transition option for many Token Transit users.
Other than transitioning from one mobile app to another, there will be no impact to riders. Both Token Transit and Clipper provide mobile apps with similar payment structures. Since Clipper is also available to all District customers the elimination of Token Transit as a fare media will not have any impact on any rider who currently uses Token Transit.
If the current contract with Token Transit is not renewed, pursuant to the terms of the current contract, Token Transit will stop selling District passes on November 1, 2026, and both parties must honor passes purchased on or before October 31, 2026 for 120 days (through February 28, 2027).
Board Policy 110 - Public Hearing Requirement
Board Policy 110 - Public Hearing Process for the Board of Directors, provides that a public hearing is required when the District discontinues a fare media (Section IV (A)(2)). The purpose of setting a public hearing is to allow for the Board of Directors and the District to solicit and receive public comments prior to decisions that affect residents and riders (Section I). “Fare media” refers to any method used by passengers to pay their fare (Section II).
Staff recommends that the Board waive this requirement. As discussed above, Token Transit is used by a small group of riders. Clipper and other existing payment options are readily available for all users of Token Transit. The impact to those who use Token Transit, if any, is minimal.
If the Board does not waive the public hearing requirement, staff will comply with the public hearing requirements as set out in Board Policy 110. Holding a public hearing will require an amendment to the contract to ensure the fare media continues to be offered until after the conclusion of the public hearing.
Board Policy 518 - Fare Equity Analysis
Board Policy 518 - Title VI and Environmental Justice Service Review and Compliance Report Policy, establishes the District policy to comply with the requirements of Title VI of the Civil Rights Act of 1964, and therefore the District’s obligations as a recipient of federal funds. A fare equity analysis is required whenever there is a change in fare that could impact people of color or low-income communities. More specifically, “AC Transit must describe major changes relating to hours or days of operation, headways or fares, etc., and provide an analysis of the effect that any such changes may have on people of color and low-income communities” (Section IV(C)(1).
According to the June 11, 2026 United States Department of Transportation (DOT) update to CFR 49, agencies are still required to conduct equity analyses, but are no longer liable if there is a disparate impact finding. The waiver of this requirement is not without risk given as there is still potential liability under California anti-discrimination laws. However, this risk is likely minimal, given the small number of Token Transit users combined with the ability of users to use other, similar platforms as fare media. The requirements of Token Transit and the requirements to use Clipper are identical.
Available Token Transit data does not contain customer demographic information sufficient to conduct a fare equity analysis based on statistically meaningful data. The most recent Rider Survey identified only 28 Token Transit users among approximately 13,000 respondents. That sample is too small to support reliable comparisons by people of color or low-income populations. Additionally, this change in fare media will not be constrained by geographic location.
For these reasons, staff recommend that the Board waive the Board Policy 518 fare-equity-analysis requirement and instead rely on targeted customer outreach to former Token Transit users, available usage data, fare-product mapping, and information regarding access to alternative payment methods.
Public Education and Awareness Outreach
Public education and awareness outreach will begin immediately following approval of this item by the Board and will continue through the transition. AC Transit does not have a direct email or contact list for individual Token Transit users; however, staff can communicate directly with users through targeted in-app messages using the Token Transit administrative portal. Outreach will include the proposed end date, Clipper transition information, fare-payment guidance, and information regarding Clipper fare benefits and discount programs.
Retirement of Token Transit will not eliminate cash payment or change any Board-adopted fare schedule. The technology required by a given rider to replace Token Transit is, by nature of the Token Transit product, already possessed by all current users. Staff will continue to provide information regarding Clipper cash-loading locations, in-person assistance, accessible fare-payment options, and discount programs. Communications will follow the District's language-access and accessibility practices. Staff will maintain the records and system access necessary to assist customers through contract close-out.
Staff therefore recommend that the Board waive the public hearing requirements of Board Policy 110, waive the equity analysis under Board Policy 518, and eliminate Token Transit as a fare media.
ADVANTAGES/DISADVANTAGES:
Advantages: Approval of the recommended action will allow the District to proceed with the planned retirement of Token Transit while avoiding the time and costs associated with conducting a public hearing and fare equity analysis, and allow staff to focus resources on targeted customer outreach and transition support. It would also likely lead to increased fare revenue.
Disadvantages: Approval of the recommended action might result in less formal public input and demographic analysis before Token Transit is discontinued.
ALTERNATIVES ANALYSIS:
1. Conduct a public hearing instead of waiving Board Policy 110
Staff does not recommend this alternative because the affected ridership is limited and targeted outreach provides a more direct method of reaching Token Transit users. If the Board does not approve the waiver, staff will confirm the required notice period and hearing process and proceed accordingly. Because the contract expires on October 31, 2026, and contains no District extension right, this alternative would require an amendment to the contract.
2. Complete a full-fare equity analysis rather than waive Board Policy 518
Staff does not recommend this alternative because existing Token Transit data and Rider Survey results are insufficient for a statistically meaningful analysis. If the Board does not approve the waiver, staff will begin collecting demographic data and other rider statistics for an equity analysis, which could significantly delay transition from Token Transit. This also requires an amendment to the Token Transit contract.
PRIOR RELEVANT BOARD ACTION/POLICIES:
Board Policy 110 - Public Hearing Process for the Board of Directors
Board Policy 518 - Title VI and Environmental Justice Policy
Board Policy 333 - Fare Policy Goals and Methodology
Staff Report 22-010 - Update on Contactless Payments
Staff Report 22-187b - Update on Free Transfers on Mobile App
Staff Report 22-543 - Fare Policy Review
Staff Report 25-527 - Update on Next Generation Clipper Implementation
ATTACHMENTS:
None
Prepared by:
Dr. Manjit Kaur Sooch, Director of Innovation and Technology
Michael Paine, Innovation and Technology Supervisor
David Wilkins, Director - Regulatory Programs
In Collaboration with:
Nichele Laynes, Director of Marketing, Communication and Customer Services
Approved/Reviewed by:
Michael Silk, Acting Director of Procurement & Materials
Claudia Burgos, Executive Director of External Affairs & Customer Experience
Paul Kincaid, Assistant General Manager/Chief Executive Officer
Aimee L. Steele, General Counsel/Chief Legal Officer
Salvador Llamas, General Manager/Chief Executive Officer
Ahsan Baig, Chief Information Officer