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Metro moves to modernize fare-collection system

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Metro, fast approaching 40, is embarking on a lot of mid­life projects.

The transit agency is spending $5 billion rebuilding the tracks and other vital infrastructure. Millions of dollars are being eyed to help redesign the system, which has a distinctly ’70s-era look. And there are preliminary plans to build another tunnel under the Potomac River.

Now, Metro is poised to revamp the way passengers pay their fares. By July, the transit agency is expected to choose a contractor to lead the costly and complicated task of modernizing Metro’s fare-collection system.

Riders would no longer have to convert their money into Metro’s main currency — the $5 electronic SmarTrip card — to ride trains and buses. Instead, they would be able to wave a smart phone, key fob or credit card in front of a scanner as they board a bus or walk through a subway station fare gate.

“If you look at how people are making payments these days with their phones or the cards they already have in their wallet, that’s the way of the future,” said Carol Kissal, Metro’s chief financial officer. “That’s what we want to adopt.”

A lot is riding on the change, officials say. When Metro raises fares or offers a new discount, for example, it may have to spend as much as $1 million to have its fare-collection software reprogrammed by the company that owns the technology and software.

Metro says it wants to have a new system in place within four years. But it is a complicated, expensive undertaking, freighted with risk for a transit agency that in recent years has endured chronic service problems and striking safety failures.

General Manager Richard Sarles said it is time to make these ­changes because existing fare equipment, like a lot of the system, is worn out. “We’re rebuilding the system, and one of the things that our customers interface most with is the fare system,” he said. “Technology has improved, and we should bring that to the customer.”

The new technology is not expected to replace SmarTrip cards, which nearly 90 percent of Metro bus and rail riders use, and riders would still be able to pay with cash. But Metro officials said they expect that as more consumers shift to credit cards with a computer chip and smartphones with similar capability, they will choose a new way to pay fares.

Plans to upgrade Metro’s fare-payment system come as the transit agency is reaching a critical juncture in its 37-year-old life. Metro is the second-busiest subway system in the country, with about 750,000 rider trips taken daily on its rail system and 400,000 on its buses. By 2020, the Metrorail system is expected to reach its capacity of nearly 1 million passenger trips a day.

Implementing a new payment system promises to be a test of technology, logistics and timing. It will involve replacing the roughly 2,000 fare gates and 700 vending machines at all 86 stations, even as the transit system continues to collect fares from hundreds of thousands of passengers, many of them all too accustomed to missteps by Metro. Metro’s oversight of technology contracts has been faulted by the transit agency’s inspector general.

Many transit agencies, including Metro, have unsuccessfully tried in recent years to modernize their payment systems. In New York, even after a successful pilot with Xerox, the project stalled amid repeated changes in agency leadership.

“Transit agencies are really cash-strapped,” said John McGee, who is spearheading a new payment system for Philadelphia’s transit agency, which still uses tokens for subway rides.

“Fare systems are an opportunity you only have every 20 years or so to take a stab at,” he said, “and you have to keep up with technology that’s rapidly changing.”

Metro did a pilot program a decade ago with Citibank that allowed riders to use bank-issued credit cards to pay for fares. It was considered a success, but the technology wasn’t sufficiently developed or widely enough used to make it viable, said Peter Benjamin, a former Metro board chairman who has long advocated a new fare-payment system.

“Introducing this concept is exceptionally complicated because it involves a fundamental ­change not only in the transit industry, but in the nation’s financial network,” Benjamin said. “It took more than 20 years for ATMs to be an accepted way of doing banking transactions. Now no one thinks twice about using them.”

Metro is soliciting a vendor for a five-year contract, which is expected to be worth at least $200 million. It had expected to award a contract for a new payment system last year, but “bidders dropped out along the way” and Metro made ­changes in what it was looking for, said Dan Stessel, a Metro spokesman.

The new round of bidding has attracted some of the biggest names in business. More than 60 vendors — including Verizon Wireless, Xerox, AT&T Wireless, Samsung, IBM, Cisco, HP, MasterCard and Bank of America — are vying for a role in the contract.

Benjamin is an adviser to one of the firms bidding on the contract; he would not disclose the company’s name.

Once the deal is awarded, the payment system would be tested in a pilot project for 18 months and would be in place across Metro within four years, officials said. In the basement of Metro headquarters, nine fare gates from vendors sit cloaked in white tarps, as Metro staff members review them.

Under the new system, riders would not need to go to a fare machine. Instead, they would be able to walk directly to fare gates and pay their fare by flashing a smartphone, key fob, or credit or debit card at a reader.

Sarles compared it to using E-ZPass, the electronic toll-collection system.

You just get on the highway and go right through,” he said. “You don’t worry about what it says on the toll ticker or how much change do I have to get out. You just go right through. It would be so much more convenient and so much less confusing for all our customers.”

A new way to pay would be a welcome change for some Metro riders.

“I think it would be a good idea,” said Samira Ghazi, a software engineer who rides the Red Line daily from Shady Grove to Farragut North. “It is probably a little more convenient rather than having to stop and put money on a SmarTrip card.”

“I appreciate their trying to streamline the process,” she said about paying at Metro’s fare gates. “It seems a little simpler and like it would get rid of an extra effort” in converting money to SmarTrip cards.

Other riders were more skeptical of the new fare-payment system.

Ben Ball, chair of the Riders’ Advisory Council, said he thinks many Metro riders would prefer that the transit agency spend its money, time and energy on other problems in the system, such as crowding on the Blue and Orange lines and at downtown stations.

“I’m skeptical of the number of people who will actually use it,” Ball said. “You can already use your credit card to buy a paper card or a SmarTrip card and add value.

“This doesn’t seem like it’s going to add that much convenience.”

When Metro’s first trains began running in the 1970s, riders used paper Farecards with a magnetic stripe. A version of those paper cards remains in use, although a recently imposed $1-per-trip surcharge has reduced its use. As the new payment system comes in place, Metro officials said they expect fewer riders to use ­SmarTrip cards.

In the 1990s, Metro introduced SmarTrip cards, which were considered revolutionary. But the cards crack easily and can stop working if they rub against a credit card.

Processing millions of dollars a day in revenue is also expensive, the agency said. For every dollar Metro takes in, it spends 12 to 13 cents in labor, maintenance and other related costs. Metro has said it thinks it could save as much as $35 million by fiscal 2020 with a new fare-
payment system.

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