Open standards system will improve convenience for customers, save money

November 15, 2011– The Chicago Transit Board today approved an agreement to implement a new, open standards based fare-collection system that will benefit customers, improve operations and save money for the Chicago Transit Authority.

The Board approved a contract to convert the CTA’s current proprietary-fare system to an open fare system, using contactless cards that use both financial and information security industry “open standards” technology. CTA patrons will simply “tap” their contactless credit, debit and bank cards or CTA-branded prepaid cards on a card reader to board trains and buses. The change in technology, expected to be implemented in early 2014, will modernize and streamline CTA’s current fare-collection systems.

“This new system will put the CTA in the forefront of transit systems across the country,” said CTA President Forrest Claypool, noting that Chicago will become the largest U.S. city to switch to the new fare technology.

The new system is intended to eliminate the multiple magnetic-stripe cards and the proprietary Chicago Card/Chicago Card Plus currently used for fare payments. Those without credit cards or debit cards will be able to purchase prepaid contactless cards at over 1,000 new locations, and cash fares will still be accepted on buses.

The new system is expected to result in a savings of more than $50 million over the life of the contract, and will resolve the need to upgrade and maintain existing fare-collection equipment that is nearing the end of its useful life, officials said.

Additionally, the contactless transaction is much faster than inserting cash or magnetic-stripe cards into fare equipment, which will speed boarding and improve service.

The CTA awarded the $454 million contract to Cubic Transportation Systems. Cubic was chosen through a vigorous, two-year RFP process after submitting the lowest responsive bid for the system.

The contractor will provide all of the fare-collection equipment, maintenance and support, and CTA will pay the cost via a base fee and a per tap transaction fee from revenue on a monthly basis.

The CTA will maintain full control of fare policy, without the responsibility of day-to-day maintenance and collection activities, officials said.

In addition to the cost-savings and efficiency benefits, the new fare system will also shift the risks associated with fare collection to the contractor, including credit/debit card processing fees, increased operating expenses and security breaches.

Additionally, the prepaid cards will be more readily available to customers, starting at 1,000 retail locations when the system launches and more than 2,000 when the system is fully implemented–up from the 700 locations available today.

One of the prepaid cards is envisioned to function like a regular Visa-issued debit card, but purchasers will not be required to establish a traditional credit account. This CTA co-branded card–which could be used at any merchant that accepts Visa-branded cards–would provide users a convenient option for both retail purchases and fare payment, with no fees for using transit or buying online transit products.

The new system is expected to launch in early 2014. Implementation will include a transition period in which all current fare media will be accepted, as well as an extensive public-education campaign.

The new system standards could serve as a basis for a universal fare system among CTA, Metra and Pace. State legislation passed in 2011 mandates a universal fare system by 2015.