Chicago, Philadelphia sign up for next-gen transit payment systems

Transit authorities in Chicago and Philadelphia signed major contracts this week for next-generation fare payment systems that would allow commuters to use bank cards to pay for rides.

Two great American cities are working to bring their public transit systems into the 21st century.

Chicago's Transit Authority on Thursday awarded a 12-year, $454 million contract to Cubic Transportation Systems for an open standards fare system that would allow passengers to use their bank cards and mobile phones to pay for a ride, doing away with proprietary passes and tickets. (Customers without bank accounts will be issued reloadable prepaid cards.)

It's the largest deal for automated fare collection in North America.

Meanwhile, Philadelphia's transit authority, SEPTA, on Thursday awarded Cubic rival ACS Transport Solutions a $129.5 million contract to deploy an open standards system that allows for bank cards as well as contact-less "smart cards" in its bus, subway, trolley and regional rail systems, doing away with the tokens, passes, tickets and cash used today.

Chicago has the third-largest transit system in the U.S. by ridership, behind New York and Los Angeles; Philadelphia comes in at seventh, behind Washington, San Francisco and Boston.

In Chicago, Cubic will operate and maintain the entire system, suggesting that the contract signed by the CTA includes a revenue-sharing agreement for which Cubic pays the up-front cost in exchange for a percentage of revenue over the life of the contract.

Philadelphia's deal is similar in structure.

The point of both deals is to remove the intermediary media that straphangers must use to ride a system. With most commuters already using a bank card of some kind, why force them to deposit money on a proprietary card? Why not just pay with the cards they already carry?

The "open" aspect of the technology also allows for easier transfer between systems. For example, ACS is running a similar "smart card" pilot on nearby New Jersey Transit; a commute from downtown Philadelphia to New York City would require only a bank card, and not a series of proprietary cards.

Despite the competing contractors, the systems also work together. You could just as easily take a flight from New York to Chicago and use your bank card to pay for a ride there, too.

Aside from smoothing out the process, the removal of proprietary media saves transit authorities money and time -- after all, those cards, passes, tokens and tickets cost money to print and even more money to manage daily by human operators.

It also brings Chicago and Philadelphia in line with Washington, San Francisco, Atlanta, New York, Los Angeles, Houston, Cleveland and Charlotte, all of whom use fare systems run by one of the two vendors. (Germany's Scheidt & Bachmann is the third major player in the U.S.) Not to mention Europe and Asia, which have already broadly adopted the technology.

One potential hiccup? To use the new systems (expected in late 2013 for both cities), straphangers will have to remember to "tag out" at the end of their trip to close the loop on their fare. A minor thing, but a mental hurdle for those who have spent their lives swiping into a system and scurrying out of it.

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