Myki card readers on most trams, buses and train stations are capable of accepting credit card payments, but the operator has never enabled the feature, according to a company that has upgraded the same machines overseas.

Amin Shayan, chief executive of the Melbourne headquartered Littlepay, said the transport payment company could enable Melbourne’s Vix Technology myki card readers to operate on a system that accepts bank cards as it had done in Gothenburg, Sweden.

A myki pass being used on Melbourne public transport.Credit:Scott McNaughton

Shayan said Littlepay had previously approached Victoria’s Department of Transport about equipping its existing myki readers to accept tap-and-go bank card payments but was rebuffed.

Myki operates as a “closed-loop” system based on physical smart cards tied to prepaid accounts. Transport systems in London and Sydney use “open-loop” systems allowing passengers to tap on with a bank card or smartphone and links them to a personal account, which applies fare types and discounts based on travel patterns.

Android users were able to ditch the physical myki card for an app in 2019, but the state has not reached an agreement with Apple to enable the same technology on iPhones.

The Andrews government is looking for a new operator to run the outdated ticketing system and has promised improvements to allow commuters to tap on and off with a bank card or iPhone, rather than a physical myki card, once current operator NTT Data’s $100-million-a-year myki contract ends in November.

But Shayan has warned that it could take years longer than necessary for a new operator to set up a modern ticket system.

“It would have been possible to enable mobile and card payments for most simple fare types fairly quickly on these [existing] validators and subsequently upgraded the rest of the network,” he said.

“Under the current plan this is likely to take years.”

An Andrews government spokesperson said that while existing myki readers were compatible with credit cards, “a fundamental overhaul of the system would be required” to make that possible.

“This type of technology is what we are seeking as we look to replace Victoria’s ticketing system.”

Vix machines have been gradually rolled out to the network since 2015, but some older devices which are incapable of reading bank cards are still in circulation.

Public Transport Users Association president Tony Morton said Victoria should avoid being locked into a deal which means the system cannot be easily upgraded by another operator at the end of the contract.

“With all the changeovers of ticketing systems that we’ve had in the past, there’s a lot of wastage involved,” Morton said. “Having to take working hardware out of the system and scrap it and replace it with something entirely new … is not the sort of thing you want to be doing.”

Transport authorities, including those in London, Toronto and Helsinki, are trying to avoid this by breaking up their ticketing system contracts between different companies, so parts can be replaced or upgraded more easily.

NSW is also considering this model for its Opal card system, with different contracts to run its ticket machines and passenger accounts and payment systems, overseen by a system operator.

Shayan said Victoria was “repeating many of the mistakes of the original myki by procuring in a single vendor to provide an expensive, inflexible solution”.

“A more modern and modular approach, as now being considered by [NSW], would have made the tender process more competitive, and given Victoria a more future-proof solution at a lower cost,” he said.

In 2005, the Keane Australia Micropayment Consortium – known as Kamco – was contracted to develop the myki system, which replaced the paper Metcard system under a 10-year deal worth almost $1 billion.

In 2010, Kamco was bought out by Japanese technology company NTT Data, which won another seven-year $700 million contract in 2016. NTT, which is seeking to extend its contract past this year, was contacted for comment.

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