Loyola University Chicago students and residents of Chicago may not need to buy CTA transit cards ever again.

The Chicago Transit Authority is in  the planning stages of implementing a new payment method that will allow train and bus riders to pay their fare with their debit or credit cards. The program may one day make it possible for riders to use prepaid cards and maybe one day their mobile phones.

Here is the story from the Chicago Tribune:

CTA riders would be able to pay fares with credit and debit cards, as well as prepaid cards and, eventually, mobile phones, under a long-awaited new payment system that will be proposed Tuesday, transit officials said.

CTA President Forrest Claypool will ask the transit agency’s board to approve a $454 million, 12-year contract for a new fare-collection system provided by Cubic Transportation Systems, officials said. Cubic is the company that installed the current CTA fare system that uses magnetic-strip cards and the Chicago Card and Chicago Card Plus smart cards.

But unlike Cubic’s proprietary fare-collection equipment in use, the new open fare system, which would be in operation in about two years, is designed to work seamlessly with the same credit or debit cards that CTA customers use for many other purchases.

The fare-payment technology, while perhaps revolutionary for Chicago, is being used to the raves of commuters on a widespread basis in Europe and Asia.

The credit/debit cards and prepaid cards, and later cellphones, would be tapped on electronic readers to pay CTA fares. The prepaid cards would be available starting at more than 1,000 retail and station locations, doubling when the system is running, up from about 700 sites today, officials said.

CTA would retain full authority over controlling fare increases, officials added. In addition, unlike Chicago’s controversial 2008 parking meter concession agreement, all system revenue would remain at the CTA, officials said.

The new system is expected to start in late 2013 or early 2014, officials said, and it likely would serve as the model for Metra and Pace to use. The General Assembly this summer required that the Regional Transportation Authority implement a universal fare-collection system by 2015.

Under the CTA’s proposed contract with Cubic, which is expected to win board approval Tuesday, riders who do not use credit or debit cards will have the option of purchasing prepaid cards for use on trains and buses. Only CTA buses would continue to accept cash fares, officials said.

Equally important as the anticipated customer conveniences, the shift to new technology would finally get the CTA out of the fare-collection and banking businesses, helping the transit agency save an estimated $5 million annually and focus on its core mission to improve the quality of bus and train service, officials said.

The CTA would no longer assume the challenges involved with collecting fares, handling credit and debit card processing fees, incurring operating expenses or dealing with security breaches and equipment failures, officials said.

“For decades, CTA has been essentially creating its own money, from tokens to magnetic-strip cards to smart cards like the Chicago Cards,” a senior CTA source said. “The new system will put the CTA on the cutting edge of payment technologies.”

Cubic would provide and maintain all equipment, and the CTA would own the equipment. The CTA would pay Cubic $2.5 million per month, strictly using fare revenue and no capital-improvement funds, officials said. The agency currently spends about $57 million annually for fare media, management, maintenance and construction, officials said.

San Diego-based Cubic, which operates fare systems in New York, London, Los Angeles, San Francisco and Washington D.C., was chosen from among six bidding teams, CTA officials said. The runner-up bidder’s proposal was significantly higher than Cubic’s, the officials said.

-by Enrique Silva