For VTA, only monthly passes and e-cash for one way fares will be offered on Clipper. Day passes and annual passes will not be available for now. The only realistic solution for day passes on Clipper is the implementation of a daily fare cap. Otherwise all other alternatives are inconvenient (either putting cash at the farebox to activate day pass on Clipper, which is a process already implemented on LA's bus system, or use Clipper e-cash to buy a paper day pass).
The current transfer policies with Santa Cruz Metro and MST, which are outside MTC's jurisdiction, present a problem with the mandatory Clipper transition for Caltrain and VTA. On Highway 17 Express, the cost of a day pass is $4.00 with a VTA day pass or a Caltrain monthly pass. Also, riders with a VTA express monthly pass or a Caltrain monthly pass with 3 zones or more can ride MST free. Highway 17 Express and the MST 55 line are partially funded by VTA.
Currently the other agencies cannot read Clipper cards for valid passes and honor the transfer discounts. Until something's changed, a transition to Clipper only tickets would mean a de facto fare increase (and a substantial one) for people who rely on these inter-agency transfers.
Is it feasible to stop the mandatory transition? At this point MTC does not have a plan to transition all bus agencies to Clipper within its jurisdiction. There's no Clipper version of BART Plus ticket (which can be used as a bus pass with a number of local transit agencies, except AC Transit) available, even through BART and Muni fully accept Clipper. On one hand, it is possible that sales of paper passes be continued on a limited basis for those who intend to transfer to H17 or MST. On the other hand, people who bought passes on Clipper but suddenly want to ride H17 or MST would find themselves having to pay more.
Besides H17 and MST, VTA also has transfer policies with AC Transit and SamTrans. Under the existing policies, VTA and AC Transit honor each others monthly passes at shared transfer points (including DB bus for local credit). Between SamTrans and VTA, either passes (also include VTA's day pass) are valid anywhere in Menlo Park and Palo Alto. With Clipper, transfers to VTA will be free within 2 hours after boarding another agency's bus with Clipper (no e-cash deducted).