The Chicago Transit Authority may be getting closer to implementing an open-network fare-collection system that would accept contactless card and mobile payments.
The authority said last week that it was still analyzing proposals for the actual implementation of a new fare-collection system, which has drawn interest from a dozen bank and credit card companies, according to transit officials.
Chicago will hold a second round of bidding later this year, and it hopes a private company would replace a system that reportedly needs about $10 billion worth of upgrades.
Roughly 1.6 million commuters use the authority's bus and trains daily.
In June, the Chicago mobile payments company mPayy Inc. said it was in the running as an option for the new system. MPayy, however, is proposing a closed-loop program that uses a contactless sticker commuters would attach to mobile phones.
Users who purchase the sticker could link it to their checking account and schedule account top ups.
Chicago's proposed system also could spark interest from the wireless carriers AT&T Inc., Verizon Wireless and T-Mobile USA. The trio are said to be working together on a mobile payments model, along with Discover Financial Services and Barclays PLC.
Aaron McPherson, a research manager for payments at IDC Financial Insights in Framingham, Mass., said in an online presentation about mobile payments Aug. 26 that the wireless carrier model should first focus on niche areas such as transit and parking meters.
"Mobile payments has worked well in transit" in Hong Kong and Singapore, McPherson said.
