if the driver is having to manually input where you're going, then what's the point in a smart card?
That is, unfortunately, how it works on Dublin Bus! There is an option to deduct the maximum fare without driver interaction, but for other fares you need to ask the driver where you are going. So it really is only useful as a kind of debit card, and in Dublin you have the additional benefit of not needing to have exact change.
Touch in and touch out is the most sensible way of implementing smartcards in areas without flat fares, but an alternative that is used in Gothenburg where a zonal system is used is to require the passenger to press a button on the card reader before touching in to tell it if you are going out of zone. For staying in the same zone, you just touch in.
Topping up the card by giving money to the driver is barmy.
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