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The Green Sheet Online Edition

November 08, 2010 • Issue 10:11:01

Open-loop prepaid part of CTA's new fare system

sellingprepaidThe Chicago Transit Authority, which oversees a monthly mass transit ridership of over 40 million, said it is moving forward on a new "open" electronic fare ticketing system that will utilize contactless credit, debit and prepaid cards.

Step one of the procurement process involved obtaining proposals from 12 providers of contactless fare collection systems. With that step completed, the CTA opened the process to more bids, with a Nov. 19, 2010, closing date.

With a new fare system, the CTA is looking to reduce overhead costs, provide greater convenience for mass transit riders, streamline fare payment and reload options, and expand its fare-card service to include promotions via retailers.

The CTA said its current system was installed in 1997 and has reached the end of its lifecycle. The system involves electronic fare cards marketed as the Chicago Card and Chicago Card Plus, as well as mag stripe-enabled transit tickets and passes. The fare cards are closed-loop, contactless, prepaid cards that are tapped on touch pads at rail station turnstiles and bus fareboxes to initiate payments. The cards are purchased online, by mail, over the phone and in-person at CTA locations. The cards are reloaded at rail stations and Touch-n-Go touch pads, which are available at over 50 locations across Chicago, according to the CTA.

The prepaid piece

By instituting an open-loop, network-branded contactless smart card system, the CTA will allow mass transit users to use traditional, network-branded credit and debit cards to purchase fares. But the CTA specified it also wants riders to have the ability to use cards not tied to bank accounts.

"The prepaid piece is really a supplement to this open fare payment system," said Randy Vanderhoof, Executive Director of the Smart Card Alliance. "It really addresses the unbanked or underbanked person."

A Smart Card Alliance Transportation Council white paper entitled A Guide to Prepaid Cards for Transit Agencies recommended transit agencies work with prepaid card program managers to provide transit cards for unbanked riders through retail and transit locations. The paper said prepaid cards may allow for the fastest implementation of a fare collection system if the transportation agency's chief demographic are riders who don't have access to contactless credit and debit cards.

Vanderhoof said, "In major cities where mass transit is a major part of the community, then those merchants that are currently serving those customers will find some business value in being able to load up prepaid cards by getting those customers into the store… So there's a strong value for the merchants who serve the customers who use the transit systems to participate in these types of prepaid programs."

More ties to prepaid

The SCA also suggested that government benefits and student ID cards be integrated into open fare collection systems because it is likely mass transit is important for government benefits recipients and students.

"That gives the opportunity – for the government programs or the school programs – to fund their entitlement programs through the traditional bank networks, or at least put it onto a prepaid card that would be accepted easily for transit rides," Vanderhoof said.

He added that Washington, D.C., and Toronto are at similar stages to Chicago in laying the groundwork for open fare payment systems, with pilot programs into such systems ongoing in New York and Los Angeles. Vanderhoof agrees that one day a traveler will be able to pay for mass transit rides in Toronto and New York with the same bankcard or open-loop prepaid card. end of article

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