CTA selects Cubic for open-standards AFC

The Chicago Transit Authority has awarded Cubic Transportation Systems (a business unit of San Diego-based Cubic Corp.) an estimated $454 million contract to integrate, deliver, operate, and maintain a next-generation OSFS (Open Standards Fare System) that will accept bank cards and, ultimately, mobile phone payments. The contract is the largest AFC (automated fare collection) contract ever placed in North America. Cubic will operate and maintain the entire system, resulting in an overall 12-year partnership between Cubic and CTA.

To create CTA’s OSFS, Cubic will transition the agency from its current, Cubic-supplied agency-issued fare media to an open payment system where customers can use their existing credit or debit cards as a ticket, “bringing the retail experience to transit ticketing,” Cubic says. “Like most transit agencies today, the CTA operates a ‘closed loop’ fare collection system, selling its own magnetic tickets and smartcards that can be used only on CTA and Pace.” With OSFS, riders without credit or debit cards will be issued reloadable prepaid debit cards that can be used for everyday purchases and CTA rides.

Cubic will be the systems integrator and services provider, leading a team that will also include First Data Corporation, Carolyn Grisko & Associates, Americaneagle.com, Bank of America, and Bank of America Merchant Services. The estimated contract value of $454 million consist of both fixed and variable revenue components. Payments under the contract will begin when the commercial service status of the system is achieved, which is expected to be within the first two years of the contract. Cubic says it “will not likely recognize revenues from the contract until that milestone is reached.”

“The CTA is taking a revolutionary approach that will transform travel for the more than 1.6 million rides citizens take each day on the CTA to get to their jobs, schools and other destinations,” said Richard Wunderle, senior vice president and general manager of Cubic Transportation Systems North America.

“In taking this action, the Chicago Transit Authority will upgrade its fare equipment, save additional money over time, improve the customer experience, grow ridership, and keep abreast of rapidly-changing technology. It’s a major step forward, and we and our partners are eager to begin,” said Cubic Transportation Systems vice president John Satterfield.

Cubic says it is the transit industry’s leading provider of revenue management and business information systems and services. The CTA, which has been a Cubic customer since 1993 when Cubic was awarded the contract to deliver Chicago’s current system, is among major customers that include London, Washington, D.C., San Francisco Bay Area, Atlanta, Miami/South Florida, Los Angeles, New York MTA, Brisbane, Sydney, and Vancouver.

Cubic won the contract following a competitive procurement process that included several major competitors in the transit industry. Cubic expects to execute the contract in the near future.