SEPTA Key card costs continue to balloon with an additional $14.4M spending increase

The primary contract tied to SEPTA’s smart fare system, the Key card, has now surpassed $200 million, nearly double its original amount when the program moving the authority away from tokens and paper tickets began nine years ago.

SEPTA’s board approved a $14.4 million spending increase Thursday to Conduent Inc., the company contracted to design, build, install, and support the Key to $207.7 million from $122.2 million in 2011. Thursday’s measure — the 24th time the contract has been changed — pays mainly to continue supporting the Key’s Customer Call Center, but also replaces hundreds of soon-to-be obsolete handheld sales devices used by Regional Rail conductors.

Nearly $13 million will go toward support, warranty, maintenance, and wireless services, about $1.5 million less than when the board last approved the ongoing annual expense in October 2019. The authority has been able to shift some of the contracted work to in-house resources. It’s a cost SEPTA will need to pay in some capacity to help customers with Key-related questions, especially during peak times, as on Monday mornings when workweek commutes begin, or the start of the month when Key users load monthly passes, said Rich Burnfield, SEPTA’s treasurer and deputy general manager.

The ongoing expense is “almost like owning a cell phone. You’re always going to have AT&T, or Verizon, or whoever your carrier is,” he said. “I get a bill every month for that.”

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About $1.6 million of the $14.4 million will swap out 700 handheld devices used mainly by Regional Rail conductors. The equipment verifies or validates passengers’ Key card trips aboard trains, or occasionally at crowded bus stops, such as outside the Municipal Services Building where many routes intersect, Burnfield said.

The devices, Samsung Galaxy 7 handsets, are three to four years old, he said, and are “reaching end of life in April 2021 and will no longer receive the required security updates,” according to a summary of the spending increase.

The upgrade will also make way for mobile ticketing, in which riders can buy tickets on their phone. The option supplements SEPTA’s “Quick Trip,” or its single-ride fare option found at kiosks. The new devices also will have a longer battery life to address a problem seen with the current devices.

“Since the handhelds will be used for sales, you want to make sure that you have a device that has all the appropriate security systems in place,” Burnfield said.

Asked why the solution comes as a hardware replacement and not as a software upgrade, he said Samsung “will no longer support” needed security updates.

Last year, SEPTA’s board approved $4.4 million to replace about 4,200, six-year-old card readers on buses, trolleys, and in stations, to meet changing bank industry standards and allow riders to eventually pay with a credit card, app, or digital wallet. It’s unclear exactly when that will happen.

The process has been slowed by the COVID-19 pandemic, Burnfield said. SEPTA has yet to receive the readers’ replacements but expects to get a few dozen by December and can begin testing equipment early next year.

The board also approved a six-month contract extension valued at about $915,000 to LTK Engineering Services Inc., a technical consultant, to help with the future enhancements. Aside from mobile ticketing and the ability to pay with a digital wallet, SEPTA is planning an update to pay for parking at Regional Rail stations.

Instead of the current system, that lets riders pay with a permit or with quarters plunked into a slot box, SEPTA riders will one day be able to pay with their Key card.

“It was not fun on a cold January morning to take your gloves off and put your four quarters in the slots,” Burnfield said.

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Deborah Mahler, one of two SEPTA board members representing Philadelphia, abstained from the 15-member board’s vote. Attendees on Thursday also heard comments from General Manager Leslie Richards on possible service cuts and layoffs as it continues to face financial challenges, in part from the COVID-19 pandemic.

SEPTA has postponed fare increases to help riders during the pandemic until at least January, but SEPTA Board Chairman Pasquale T. “Pat” Deon Sr. said during Thursday’s meeting that he would ask the board during its December meeting to push the timeline back until July.

“We know how difficult this year has been for our customers,” he said.

SEPTA last approved a change to the Key card’s primary contract in September to allow for a customized Key card for Philadelphia school students.

The road to the Key’s implementation, once expected to fully roll out in 2014, has been filled with speed bumps, from surprise card expirations and a difficult website to navigate to glitches that have forced SEPTA to waive fares for riders.

Authority officials justified inflating costs as being “comparable” to other transit agencies’ spending, said Kevin O’Brien, SEPTA’s senior program manager for the Key program. The authority is “not out of the ballpark,” he said.

“Whatever we have done,” Burnfield said, “we have tried to negotiate a fair and reasonable price.”