If the card doesn't scan there is a trivial way for the driver to know that it is valid: just look at the front of it. They all have a standard form with a photo of the user and an expiry date. As these cards never scan on London buses the drivers there always have to look at the pass, if they can be bothered. So in my view there is no circumstance in which a valid pass fails to be valid just because some poorly-maintained scanner on a bus happens to not work properly.
Doesn't prove it is valid, just proves it was when issued. There are a lot of ways for a card to look right externally but not be valid and you may be surprised how good some of the fraudsters can be these days with producing fully fake passes generally though some of the security things like holograms may still mean that concessionary passes are difficult to do properly. If a pass is reported lost or used fraudulently then it can be cancelled through the system which will add it to a list of blocked cards (called hot listing) and so it won't read on machines. Also if you move areas you are supposed to get a new card from your new local authority and return the old one, another case where if caught/reported a card may get hot listed. I have come across incidences where someone lost their old one, got a new one then found the old one and tried to use both cards so it can happen and we have had numerous incidences of concessionary passes being "loaned" to family members which were often caught as there was an issue with the card that caught the drivers attention. With a non-local card it is more likely to be a programming issue than the hot list has updated a non-local operator so most drivers will accept but technically if it won't scan you cannot be sure it is actually valid.
It is also rarely a "poorly-maintained scanner" that is the issue as if that is the case nothing will scan and the driver will know about it and the operator will quickly notice as well. The issue with non-local cards is often that the programming of the issuing council does not match that the system is set up to read due to some change made by the council, local operators will have been on the list to be updated and so they read locally but non-local operators only find out if enough people from that area both use their buses to experience the problem and then report it to the operator for them to start trying to find the reason. In most cases neither of those bits ever happen so the operator never knows what the issue is. There are programming short cuts that are supposed to deal with this issue, our programmer uses these but we still occasionally get reported issues of some non-local card reading which show that even if the operator does everything they can there can still be issues.
Do ETMs such as Ticketer have the ability to manually record an ENCTS pass? I’d not, and the pass doesn’t scan, the operator would not receive payment for the journey.
Depends on the operator as that is just a setting in their programming but even if it does there are councils out there who will only reimburse on scans as anything else is open to fraud from the operator or drivers though I think most include manual entries but start investigating if the reporting system starts showing a lot of manual passes being recorded.
There often will be no loss of revenue as in many cases the councils pay the bus operator a lump sum. London buses are franchises so the operator doesn't lose anything as all fare revenue, I believe, goes to TfL.
It isn't the most common way, the fixed pot system (where operators get an agreed lump sum) was pretty universally employed around COVID to avoid operators losing too much income but most councils now have gone back to a calculated reimbursement based on usage. A few councils, particularly small ones who didn't have the resources or funding for more complicated or open schemes, used it before COVID and there are still a few using it after.
The most common option these days are that Operators will receive a specified sum of money per passenger, the calculation most commonly used is for a percentage of average adult fare (you add up all single, return & day - in some cases also weekly - tickets and divide it by usage with a divider for multi use tickets such as 2 for return, 3 or 4 for days & somewhere around 6-8 for weeks to give the average income per adult ticket) which is then divided by a generation factor (a number based on the assumption that free travel generates extra passengers though generation factors above 30% are usual and 50% or more not rare even though I don't know of any operator who reported more than 20% growth on concessionary passengers after the free scheme was introduced) to give the amount per ticket. This is based on the "shadow fare", this is what would be paid if the £3 fare cap did not exist so the fare cap doesn't changed what the council pays.
Paying the equivalent of the actual journey taken, minus an agreed generation factor, was common early on in the scheme but very rare nowadays but some operators/authorities still like to record the journey so they can compare what is being paid to what is being travelled and I'm sure there are all sorts of variations on the various standard ways of working out the reimbursement.
In London the issue is the underlying local authorities pass the money assigned for concessionary travel to TfL and since for most of the routes within Greater London that involves a TfL service the recording of the passes doesn't affect the reimbursement and since TfL operators are paid the same amount regardless of the number of passengers there is not really any great incentive on the operator to ensure everything is recorded and the drivers know how the system works and so also don't feel particularly engaged in that side of it so recording is not prioritised.
For the operators, is this a negotiation or a take it or leave it option? And is the current fare cap likely to have simplified things or saved money for councils?
Whilst councils may discuss the reimbursement rate if there is an issue at the end of the day it is a "take it" option (there is no "leave it" option as, if you are running a service included in the scheme, you must accept concessionary passes and accept the rate agreed) if the council insist. There is an appeals process if an operator really feels like it is unfair but the underlying recommended reimbursement calculation mechanism is so skewed in the favour of government that most operators won't (& the headlines and relationship damage of doing so against your council is unlikely to be worth it for the extra income you gain).