Can employers provide transit pass benefits via debit cards?

According to IRS guidance, the value of employer-provided transit pass benefits provided via a smartcard purchased from a transit company is a qualified fringe benefit, if the card is usable only as fare media.

The value of employer-provided transit pass benefits provided via a terminal-restricted debit card purchased from a third party is also a qualified transportation fringe benefit, if the card may only be used at points of sale where nothing other than fare media for a transit system is sold.

If a terminal-restricted debit card may be used by employees to purchase items other than fare media, the value of the transit pass benefits is qualified only if the card is used in connection with a bona fide reimbursement arrangement that meets specified substantiation requirements.