Metro Board's Finance Committee Approves Use of Bank Cards at Fare Gates
Friday, May 15, 2009
A Metro board committee took the first step yesterday toward allowing riders to pay for rail, bus and parking using the same bank cards they use to buy gas, food and other items.
The finance committee gave its approval, and if the full board votes for the idea this month, the agency will solicit proposals from financial institutions that would be responsible for issuing and managing the cards. Proposals would be evaluated this fall and could include plans that use mobile phones, officials said. However, it would be several years before such a system could be in place.
The technology relies on a small chip in a plastic card or key chain. Riders would tap or wave a device, such as a bank card, across a reader to pass through fare gates at rail stations and fareboxes on buses. The cards would be in addition to traditional paper Farecards, cash and Metro's SmarTrip electronic Farecard. Metro will continue to upgrade SmarTrip capabilities as it explores the new payment option.
SmarTrip also has a chip, but the technology is proprietary, which has too often worked to Metro's disadvantage, board members said yesterday. The new payment system would use a chip that conforms to one set of international standards. Anyone with such a bank card could ride transit anywhere in the world without buying a ticket as long as the transit system uses the same chip technology. New York City is testing a bank card system, and one is in use in Utah. Several other large transit systems are also considering proposals.
Metro would not have access to riders' credit card information; all transactions would be handled on a back office computer in the same way as with other merchants.
During the meeting, Maryland board member Gordon Linton spoke strongly in favor of a new system but also disclosed a business interest with a potential bidder. After the meeting, Linton said he has been an engineering consultant for the past two years with a potential bidder, whom he declined to name. He said that his contract prohibits him from financial dealings on projects relating to Metro and that he would follow advice from Metro's general counsel and inspector general to ensure there were no potential conflicts of interest.
Metro officials said the agency and a consortium of wireless carriers are on track to install equipment so riders can receive and make cellphone calls on all carriers at the 20 busiest Metrorail stations by mid-October. Only Verizon and Sprint roaming customers can use their phones on the Metro now, and coverage is often spotty.
The stations are: Ballston-MU, Bethesda, Crystal City, Columbia Heights, Dupont Circle, Farragut West, Farragut North, Federal Triangle, Foggy Bottom-GWU, Friendship Heights, Gallery Place-Chinatown, Judiciary Square, L'Enfant Plaza, McPherson Square, Metro Center, Pentagon, Pentagon City, Rosslyn, Smithsonian and Union Station.
But don't expect to stay connected between stations. That won't happen until the consortium finishes installing cable and other equipment underground, a process that is likely to take until October 2012.
Under an agreement announced in February, Verizon, Sprint Nextel, AT&T and T-Mobile will be allowed to install equipment in the tunnels over the next four years. The agreement will provide the cash-strapped transit agency with nearly $25 million over the first 15 years. The estimated $2.4 million in expenses will also be paid by the wireless carriers.
Metro plans to buy electricity at wholesale prices. The finance committee approved a request to lock in below-budget prices in the regional wholesale market. The plan, likely to be approved this month, would make Metro the first transit agency in the country to take advantage of wholesale pricing.
Officials estimate potential savings of up to $9 million a year.
Metro has price guarantees for a year with retail supplier Constellation NewEnergy. Electricity prices have risen steadily over the past five years. Metro spent $74 million on electricity in fiscal 2008. The agency uses electricity to power trains and stations and other facilities. The budget is more than $106 million this fiscal year, which ends in June, and is projected to rise to more than $110 million for the next fiscal year. The transit agency forecasts using more than 886 million kilowatt hours of electricity next fiscal year -- enough to power about 79,000 American homes a year.