In a pamphlet or on a website, the concept of TransitChek seems great:

NY commuters get a tax-free break on their commutation costs by having some of their wages deducted specifically for their communtation, up to an allowed amount. The employee has greater take-home pay as the deduction isn’t taxed, and the employer saves by having to pay less tax on the employee’s behalf.

Awesome, right?

But the costs of administering TransitChek are not trivial. For example:

The employer must track everyone who wants TransitCheks in the variety of forms (MetroCard, Voucher, or Visa Card). Depending on turnover and people moving around, this effort can add up.

The employer orders the TransitChek Visa Cards, Vouchers and MetroCards and pays a 4.5% processing fee on the whole amount (so much for the state tax savings) and a $12.50 shipping fee. Often, to reduce processing, several months may be ordered at a time, which ties up the company’s cash with an inventory of TransitChek vouchers, (which are about as safe as cash) and MetroCards and Visa Cards that eventually expire.

The TransitChek order usually takes more than two weeks to show up and the order must be checked in as mistakes in fulfillment occur. An employee logs into the TransitChek site and activates each of the Visa cards. Then off to the safe with the shipment.

The payroll records must be reconciled with the TransitCheks when they are issued since we don’t want employees being shorted or overpaid, do we? Also, the inventory must be reconciled to make sure nobody made off with some on a quiet afternoon.

Then the fun really begins.

Say you have an employee who doesn’t want an Unlimited MetroCard and has varying needs (train in the morning, flat rate bus at night). Since the subway doesn’t accept the paper vouchers anymore, the employee is forced to use the Visa card. But if the tickets are $55, and she has a $50 card and $5 in cash, that would be fine, right? Nope. Token booths can only accept ONE form of payment. She’ll have to move money from other Visa cards to that one and she can only do that up to five times. And she’ll have to call an 800 number or go online to do it.

Another example: an employee buys his ticket by mail from NJ Transit and his company, in the quest to simplify TransitChek inventory, only gets Visa cards. Since the monthly commute is a standard amount, the employee likes to have it processed online and have the pass mailed to him. The NJ transit site stores a credit card number and it is automatic. But can the Visa card TransitChek amount be transferred to their personal credit card? Nope. Only to another Visa TransitChek card and only five times. So the employee would have to login and change credit card numbers at least once a quarter.

Still a great deal?

If you quantify and add up the hard administrative costs, soft costs and employee frustration, the tax benefits are reduced (and in some cases negated) and the only ones who truly benefit are the members of the TransitChek bureaucracy.