This paper examines the transit capacity problem of bus-based systems. First, it defines the problem of transit operations along a route. This raises the importance of stops on transit capacity and why the analysis and design of stops should be considered in bus traffic schemes. Next, the paper explains the concept of transfer capacity and reviews the work to date on modelling the capacity of stops. Current as well as novel approaches are considered and their advantages and limitations are discussed. Special attention is devoted to a new simulation model of transfer operations at stops. From that approach, the paper concludes with some examples of capacities of various transit systems and design recommendations for bus transit stations.