The cost of SEPTA’s Key card system just swelled to nearly $200 million — way more than planned

A big spending increase for SEPTA’s smart fare system, approved Thursday, swells the Key card’s primary contract to $192.5 million — about $70 million more than planned when the project began eight years ago.

SEPTA officials said most of that increase would go toward basic annual maintenance and services to keep the system running, but it also included some unexpected costs. Chief among them was $4.4 million to replace the agency’s 4,226 card readers, the devices that process transactions on buses and trolleys, and in transit stations. The six-year-old readers are already obsolete, unable to meet the banking industry’s changing security standards.

“We saw other problems just popping up with the equipment,” said Kevin O’Brien, SEPTA’s senior program manager for the Key program, “so we knew it was time — that we’re going to be stuck if we don’t do this.”

The latest news is another setback for a fare system that promised much but has struggled to deliver. Once, SEPTA predicted a full rollout of the smart-fare card by 2014. But endemic delays pushed its introduction to 2016, and after that, problems continued to arise.

There were machines that wouldn’t accept cash, and card readers on buses that failed to record transactions. A confusing website frustrated users, as did a card expiration date that came as a surprise to many. SEPTA still is having difficulty finding businesses willing to sell Key cards, as they once did with tokens. A full introduction of the card to Regional Rail remains incomplete.

“It’s a big undertaking,” said Rich Burnfield, SEPTA’s treasurer and deputy general manager. “This is the only project that SEPTA has done, will ever do, that impacts all of our customers.”

It isn’t clear when the new card readers will be purchased, officials said, but they are needed to fulfill one of the early promises of the Key system — that it would be possible to pay for a ride without SEPTA’s proprietary cards. The system was designed to allow riders to pay with a credit card, an app, or a digital wallet, but in recent weeks, SEPTA learned the current machines can’t be upgraded to comply with banks’ standards. New hardware was needed.

“The industry is changing quickly, and that impacts the fare collection,” Burnfield said.

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The existing card readers would have likely needed replacement by 2021 anyway, said O’Brien, when it was anticipated they would no longer be able to support new software patches and updates.

“How often do you have to change your cell phone?” he asked. “If you have a cell phone for three or four years, it becomes somewhat useless.”

SEPTA officials noted that even though the machines need replacement, the Key infrastructure should be able to adapt and grow at the pace of technology.

Once there, hardware and software upgrades should give riders more flexibility to pay for a trip. It also will allow users to transfer Key card balances from one card to another online when an older card expires. Now, that can only be done in person or on the phone.

How often do you have to change your cell phone? If you have a cell phone for three or four years, it becomes somewhat useless.

The cost of the most recent contract change could have been even higher, but Conduent, the primary Key contractor, accepted financial responsibility of $3 million for 166 days of delay, largely related to the fare card’s introduction to Regional Rail. SEPTA expects to complete the Regional Rail rollout by April 2020.

Conduent did not reply to requests for comment.

The card’s introduction to Regional Rail has been slow and halting, with problems including the discovery that the batteries for the handheld card readers couldn’t hold a charge.

More Regional Rail station ticket offices began selling Key cards in 2019 and SEPTA started to phase out legacy TrailPasses. Plans include making the Travel Wallet, which allows riders to pay by trip, available to Regional Rail riders.

A few commuter rail passengers filing into Suburban Station earlier this week said they hadn’t made the switch to the Key yet, while a handful of those who had said they haven’t seen any problems. There were some lingering questions.

“I like the fact that I can load it,” said Jeff Kearns, 43, a Warminster Line rider who just started using the Key. “But I have to find out whether or not you have to buy the monthly amount, or I can just put any dollar amount? Right? Because you sort of lose money, right?”

SEPTA officials said about $14 million of the contract increase covered administration, maintenance, customer service, and warranty expenses through the end of next year, functions that will need to be provided throughout the life of the system. SEPTA officials are unsure whether they will continue to contract for those services annually or bring some in-house.

Also Thursday, SEPTA’s board approved a cost increase of $17.8 million in a contract related to the Key system that will cover expenses for workers from Edens Corp., who act as ambassadors and ticket agents on the Regional Rail system, through November 2020 — a year later than originally anticipated. Contracts with Edens related to the Key card are cumulatively valued at $117 million.

Edens contracts aside, SEPTA has spent about $214 million on the Key system.

Improvements made in the last year include a new website. For the first time, riders could manage their Key cards through SEPTA’s app. Customer feedback and complaints also prompted SEPTA to lower the minimum load fare on its Travel Wallet feature from $5 to $1 at all stations, though the $5 minimum still applies on the app.

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The agency also saw its first wave of expiring cards in July, when about 40,000 cards gobbled up by “early adopters” three years ago lapsed. The next wave of cards — impacting about 23,000 customers — will expire at the end of November.

The Key program is still at least 14 months away from being complete, according to Thursday’s change order. The change provides for additional Key-related work through December 2020. Officials would not commit to the system being fully functioning by then, though.

“That would be an ambitious hope,” O’Brien said, “but that would be a hope.”