Cape Town will be one of the first cities in the world to use a large-scale automatic fare payment system for its new public transport service based on contactless debit and credit cards issued by South African banks.

This ‘smart card’ system will be an integral part of the city’s new Integrated Rapid Transit (IRT) network when it is launched around the end of 2010. Its open access makes it a significant upgrade from the closed proprietary technology based payment systems used for public transport in other major international cities.

The first major difference will be that the cards used in the IRT system will be compatible with the point of sale (POS) devices that can be found in most shops, allowing them to be easily loaded with credit, or even used to pay for goods and services.

The second important factor will be that the cards can be branded and issued by any institution that issues payment cards that conform to the specifications of MasterCard Worldwide and Visa International, including, for example chain stores. The only difference is that the cards used on the IRT will also have a special piece of electronic data added to them. This standardised data structure has been created by the National Department of Transport and will be freely available for integration onto all cards.

The cards will have all the usual functionality and benefits of an electronic payment system making it easy for large numbers of people to move very quickly in and out of the IRT system through stations, providing better security for operators and users, providing detailed data on passenger movements and significantly reducing the cost of handling transactions. They also allow for distance-related fares, with users tapping their card each time they enter or leave a station and only being charged when they leave the system altogether.

But on top of these standard features the system in Cape Town will have a number of added advantages that arise from not using a proprietary, closed system.

To begin with, it will make banks responsible for handling all of the financial risk associated with the system, and updating the data security of the cards, which means that the system will never go out of date. In return for this, the banks will earn a small amount from the City for each transaction, which will still be much lower than the costs of handling cash.

The second advantage will be interoperability with all modes of public transport, no matter who the operator is, together with a host of additional services, for example parking, road tolls and bicycle hire. The system will eventually be deployed at all major public transport systems in the country, which will be very useful for tourists, and people travelling between cities.

But because the payment cards are actually simplified bank accounts and can be used in any shop, they will have an impact beyond transport. For some Capetonians, especially youth, their smart card will be their first ever bank account, and provide an important introduction to the country’s banking system.

The cards will be sold at a wide variety of outlets, with the City aiming to get as many cards into use as possible. Although it will be possible to get a card that is directly linked to a normal bank account, most cards will be sold on their own, without needing to sign any forms. Currently, the cost of a new card is around R22, but this may be subsidised, for example through advertising. While people will still be able to use cash, there will be cost penalties for this.

Although Johannesburg has also begun preparations to launch the new smart card system in their Rea Vaya BRT system, Cape Town’s IRT is set to be the first city in South Africa where it will be used. The consultants working with the City of Cape Town are the same people working with the National Department of Transport on preparing the national implementation of the system and have made enough progress in their preparations to launch it at the same time as a full IRT service begins operating, although paper tickets will still be used as an interim measure during the FIFA World Cup™.