CapMetro’s secret fight to fix a broken fare system

For months, Capital Metro passengers knew something wasn’t right.

The QR code scanners they used to pay fares with phones were unreliable, sometimes not working at all. Riders would often board without paying, flagged on by the driver to keep passengers moving.

“There’s some issues with the QR codes. It could just be because it doesn’t read it that well, or it just says it doesn’t have anything on there,” Shaye Jones told KUT News last month while waiting for the bus in South Austin. “The bus driver’s usually just like, ‘You’re fine. Go ahead.'”

“They’re a lot more forgiving about the QR code than maybe other bus passes,” she said.

But few realized the full extent of the problem, and that for more than a month in 2024, the transit agency’s entire fare system had effectively collapsed.

Now, internal documents obtained by KUT News through the Texas Public Information Act reveal just how severe the crisis was and how CapMetro was scrambling behind the scenes to fix it.

The fare system breakdown is tied to sweeping changes coming Saturday, when CapMetro will retire its existing payment system and require riders to use a new app to pay on a bus. A tap-to-pay feature, originally expected to launch with the transition, has now been delayed by at least a month due to certification delays.

How the system fell apart

CapMetro’s payment technology was installed and maintained by Siemens, a German industrial conglomerate worth more than $188 billion that builds everything from telephone systems to diesel locomotives to CT scanners. But the fare system had been unstable since an upgrade launched in August 2023, already months behind schedule.

CapMetro – and, consequently, its customers and front-line employees – were forced to deal with ongoing glitches, slow processing speeds and connectivity problems.

Then, late last March, the entire system went offline. Transactions stopped processing entirely. But CapMetro wasn’t immediately aware of the scale of the failure, documents indicate.

By the time the issue was diagnosed and fixed in late April, the damage had been done. Thousands of passengers were suddenly charged all at once for past rides, sending some account balances into the negative.

CapMetro’s customer service team was flooded with hundreds of calls and emails from angry transit users. Employees tried to notify customers and adjust accounts, but the agency never publicly disclosed just how severe the failure was.

CapMetro’s smackdown on Siemens

Behind the scenes, Austin’s transit agency was ready to bring down the hammer on Siemens. CapMetro enlisted its outside legal counsel to hit the German megacorporation with a cure notice, which is a legal warning demanding Siemens fix the breach of contract or get axed.

In May, CapMetro sent the formal warning, accusing Siemens of allowing a full systemwide failure that left more than 2 million transactions unprocessed, frustrated customers with unexpected charges and resulted in lost fare revenue. It’s still unclear exactly how much money CapMetro lost from the fiasco.

“The damages as a result of the service interruption period and ongoing nature of the issues are immeasurable,” read the blistering letter from CapMetro’s legal firm Husch Blackwell. “The ongoing issues … caused damages to CapMetro’s reputation, brand, and relationship with Siemens.”

Siemens did not respond to KUT News’ requests for comment.

In one of the more damning revelations, CapMetro’s letter claims Siemens’ own analysis admitted a major mistake: a critical piece of the system that directed fare transactions had been accidentally deleted. That single error apparently shut down the system and kept CapMetro in the dark for weeks.

The cure notice denied Siemens’ demand for an additional $194,383 for work performed on the faltering fare system, saying the effort hadn’t been authorized. CapMetro told the company it had 10 days to fix the problem or get fired.

Despite the scale of the problem, CapMetro never fully disclosed to riders just how bad things had gotten. Late last year, the transit agency finalized a legal separation with Siemens that included a non-disparagement agreement.

What about the money?

When asked about the issue, CapMetro CEO Dottie Watkins declined to discuss the cure notice directly.

“We are so focused right now on deploying our new payment systems … that are actually live on our vehicles today,” Watkins told KUT News after a press conference last week announcing new bus service in East Austin.

Watkins couldn’t say off the top of her head how much fare revenue CapMetro lost. KUT News has filed requests under the Texas Public Information Act seeking such an analysis from the agency.

Fares typically account for about 3 percent to 5 percent of CapMetro’s revenue, but they’re still a significant source of cash. Customers paid $18.1 million in fares in Fiscal Year 2024, about $500,000 less than what was forecast. It’s unknown how much of that shortfall was due to fare system problems.

An email to CapMetro board members in May said the agency expected the value of lost fare revenue to be “de minimus.”

A system overhaul

This all began in 2020, when the CapMetro board agreed to spend up to $6 million over five years to upgrade and maintain fare payment systems. KUT News has filed a formal request with CapMetro for the amount it already paid Siemens.

Shortly after the warning to Siemens, CapMetro launched an emergency search for a replacement system. By July 2024, the agency had received a pitch from Cubic, a San Diego-based company whose Umo fare collection platform is used in major cities like New York City, Chicago and San Francisco. The same month, the CapMetro board approved a contract with Cubic worth up to $6.4 million over five years.

The Umo app still uses QR codes, but promises faster scanners. Existing plastic cards like 31-day passes will need to be exchanged for a new CapMetro reloadable fare card.

Fare capping means customers will still ride for free once they spend the equivalent of a daily or monthly pass using the fare card or Umo app. When tap-to-pay rolls out, people buying fares with a credit card can take advantage of daily fare capping, but not monthly fare capping.

“We’re not storing your financial data longer than one day,” said Sam Baez, a CapMetro executive vice president who oversees rider satisfaction and outreach. “That is why the fare capping on your tap-to-pay only lasts for one day.”

About half of CapMetro customers pay with cash, which will still be accepted. The price of fares is unaffected by the change.

The old CapMetro branded app will no longer work starting Saturday.

The transition marks the final step in CapMetro’s departure from Siemens, but delays in rolling out tap-to-pay highlight the challenges to moving to a new payment system.

For riders, the next few months will require adjusting to yet another change in how they pay, one that CapMetro says will be more reliable. But after all the frustrations with QR codes and surprise charges, transit users will be the ultimate judge of whether the new system makes their commutes any smoother.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT.

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