For the uninitiated, the Metrocard is a thin plastic card that replaced tokens on the New York Subway and allows you to use the NYC subway system using set credits. Value can be loaded on the card at machines, or Metrocards with value on the card can be purchased from many retailers, although many retailers don’t like selling them as the don’t actually make any commission on the transaction. The MTA sells the retailer on the fact that their business will experience increased foot traffic in their store, leading to higher sales – but research shows that the demographic of the increased foot traffic doesn’t necessarily buy their product.
Why Does The Metrocard Have An Expiration Date? Subway Tokens Never Did.
For anyone who uses the New York City subway system its always been a wonder why on earth they would add an expiration date on the Metrocard. Many think its purely for financial reasons, the faster they can expire the cards, the faster they take extract any remaining credit from them. The MTA’s official line is that riders can transfer the credit from the old card to the new one – but only while the card is still active. If the card has already expired, this process can take up to 8 weeks and most people will just throw away a Metrocard that has a few bucks remaining on it. Another problem is that once a Metrocard has expired, you cannot actually find out how much credit there is left on it, leading to card holders ditching their card that may have real value on it. It is estimated that the MTA gets back over $2.5 Mil in expired cards every year, so there is an impetus for the MTA to keep the short expiration on the card. There is even further motivation for the MTA to bring the expiration date down to 6 months, from the current 12 months to increase their revenue even higher. The old subway token was phased out for two reasons; because they never had an expiration date and that the MTA could not raise the price of a fare on a given day, as millions of old price subway token were still in circulation, so it would take months, if not years before a new price would take affect. With the advent of the Metrocard the MTA is now able to raise the price of a subway credit on-the-fly and on that day every rider who uses the subway will be paying the new price.
MTA Taking Its Cues From The Gift-Card Industry
You don’t have to look very far to see the short expiration tactic in action in another industry- The gift card industry was practicing the same somewhat unethical tactic and it took a change in Federal law to bring them in to line. The Federal Credit CARD Act of 2009 mostly deals with credit card law, but parts of the Act pertains to how federal law regulates gift cards. The change in law stopped gift cards from having short expiration’s (They raised it to five years) and stopped them from charging a monthly fee after a set period of time (That, essentially dried the card up over time of any remaining value).
MTA Leverages Federal Law
Lucky for the MTA, that the federal law explicitly gives them an exclusion and allows them to practice exactly what was outlawed in mainstream credit on gift cards. The MTA has no qualms about adopting this process and they insist that the reason for the expiration is purely for proper financial management, but the reality is that the credit is still put back into the MTA’s bank account without them providing service and that creates the impression that’s a very convenient solution. Various groups, including the straphangers association have called for a change in the MTA’s approach, but their policy remains unaffected, while millions of New York subway riders feel the pinch the MTA claws back millions of dollars a year.