Tuesday, December 05, 2006

Finance of Beijing's gigantic public transit system

Beijing has issued over 5 million public transportation payment cards (RFID technology-based) in eight months since April this year. The city's public transportation carrier charges 20 yuan for purchase of each card. This has generated a total revenue of over 100 million yuan. The card is virtually a debit card. Assuming a commuter deposits 70 yuan (I guess this is a conservative estimate) in his/her card once a month, the public transit carrier could receive a total of 350 million yuan (in advance) a month. This would greatly increase the carrier's cash liquidity and thus allows it to charge the transport fare at a discount of 20% because it can benefit from the increase in holdings of cash assets. At the same time, the change gives the carrier more financial resources to upgrade its bus/train fleet.
In addition, the speculation about cancelation of monthly pass (card-based as well) was reignited yesterday. Souces said the cancelation may result in a further discount on the bus fare paid with regular card.

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