The Southeastern Pennsylvania Transportation Authority (SEPTA) approved a proposal that will fund an "open" fare payment system, which would allow riders to use bank cards, mobile devices and other "smart" technologies to pay for fares.

SEPTA's board authorized a loan commitment agreement with the Philadelphia Industrial Development Corp. (PIDC) Regional Center that will provide up to $175 million in funding for the “Smart Card” project, as well as related improvements to infrastructure, communications and customer service.

A modernized fare payment and collection system is critical to SEPTA’s near- and long-term financial health, as illustrated by its inclusion as a key component of the Authority’s business plan. The system will make fare collections more efficient, and its “open” nature is expected to attract new riders.

Riders will be able to pay for travel on SEPTA trains, buses and trolleys using common retail methods such as bank cards, mobile devices and other emerging “smart” technologies. It also means a move away from outdated fare instruments such as tokens and paper transfers.

The New Payment Technology initiatives, as the project is known, will be financed through the “The Welcome Fund,” a low-cost loan program developed by the PIDC Regional Center in conjunction with CanAm Enterprises LLC.

SEPTA pursued innovative financing after the main fare modernization project was cut from the Fiscal Year 2011 Capital Budget due to a 25 percent reduction in funding. With the loan commitment agreement in place, SEPTA can begin to advance its New Payment Technology plans. The projects are expected to be complete in about three years.