NFC TimesThe premier source for news, analysis and commentary on
Near Field Communication and all contactless technology

Chicago transit officials unveiled their planned open-loop fare-collection system, called Ventra, with plans to enable riders to tap to pay fares with contactless credit and debit cards, as well as reloadable MasterCard-branded prepaid cards.

The system, to be implemented and operated by U.S.-based Cubic Transportation Systems, is scheduled to launch next summer, and transit officials said it would eventually include payment from NFC phones.

“Chicago will become the first major U.S. city to adopt an open-fare system for transit,” noted Forrest Claypool, president of the Chicago Transit Authority, in a statement.

The open-loop system would replace contactless closed-loop cards riders have used for several years to pay fares for Chicago-area trains and buses. The new system will include fares for Chicago Transit Authority trains and buses and a separate suburban bus system, called Pace.

The Ventra Card will be a contactless card that users can load with value to pay for individual rides for 30-day, 7-day and 1-day passes. Users could also activate an optional “prepaid debit” account on the card, which they could use for in-store or online retail purchases, anywhere MasterCard is accepted, and to get cash from ATM machines. Small prepaid card issuer MetaBank will actually issue the card.

Cardholders will be able to load the transit account automatically from their bank accounts or credit cards when the balance drops under a certain amount. There will be other ways to load both the transit and prepaid accounts.

The Los Angeles Metropolitan Transit Authority has tried out a similar card, with separate transit and prepaid accounts.

But the Ventra system will also allow riders to tap to pay with their bank-issued contactless credit and debit cards. The system should be able to accept contactless open-loop cards from all brands, including Visa payWave, MasterCard PayPass and ExpressPay from American Express.

Chicago would beat such other major U.S. cities as New York, Philadelphia and Washington, D.C., which are also planning to introduce open-loop collection of fares. The much smaller transit authority in Utah already accepts payment from contactless bank cards.

Transport for London has said it would be ready to accept contactless credit and debit cards to pay bus fares by the end of this year, after missing its Summer Olympics deadline. The authority said it could move open-loop acceptance to underground train gates as early as 2013.

The Ventra Web site said users could register their personal bank-issued contactless credit or debit card and add transit passes and value or use the cards for “pay as you go” rides. In order for cardholders to be able to add weekly or monthly passes or value to their bank cards, these fare products would have to be stored on servers. Otherwise, banks would have to include a separate area on their contactless chips reserved for the transit passes or value, which is unlikely.

Chicago transit officials said they would also issue contactless tickets that work like current magnetic-stripe cards for single-ride or one-day passes. They did not say whether the passes would be disposable paper contactless tickets.

Officials said they plan to phase out their current contactless and mag-stripe cards by 2014.

And while they didn’t include a specific date for enabling the Ventra payment system to include applications stored on NFC phones–perhaps because they are unsure about the speed of transactions–they said that is definitely on the roadmap.

“Eventually, you will be able to pay for rides with compatible mobile phones, freeing up your wallet even more,” according to Ventra.