CTA Plan Would Let Riders Pay Fares With Credit Cards

by Mercator Advisory Group 0

Chicago’s public transit system will likely join the ranks of systems accepting open-loop payment cards for transit fares. In a vote scheduled for today, it is likely that a new agreement with system provider Cubic will be approved, and that open credit, debit, and prepaid cards will be accepted for fares. As other transit systems are discovering, in addition to consumer convenience, open-loop cards help systems reduce their operating expenses.

Equally important as the anticipated customer conveniences, the shift to new technology would finally get the CTA out of the fare-collection and banking businesses, helping the transit agency save an estimated $5 million annually and focus on its core mission to improve the quality of bus and train service, officials said.

The CTA would no longer assume the challenges involved with collecting fares, handling credit and debit card processing fees, incurring operating expenses or dealing with security breaches and equipment failures, officials said.

“For decades, CTA has been essentially creating its own money, from tokens to magnetic-strip cards to smart cards like the Chicago Cards,” a senior CTA source said. “The new system will put the CTA on the cutting edge of payment technologies.”

Cubic would provide and maintain all equipment, and the CTA would own the equipment. The CTA would pay Cubic $2.5 million per month, strictly using fare revenue and no capital-improvement funds, officials said. The agency currently spends about $57 million annually for fare media, management, maintenance and construction, officials said.

The plan also sets up opportunities for mobile payments in the future.

The credit/debit cards and prepaid cards, and later cellphones, would be tapped on electronic readers to pay CTA fares. The prepaid cards would be available starting at more than 1,000 retail and station locations, doubling when the system is running, up from about 700 sites today, officials said.

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