Victoria’s $1.7bn myki upgrade facing turmoil after company exit, credit card tap-and-go years away

A Sunday Herald Sun investigation has uncovered part of the consortium overseeing the $1.7bn myki revamp for credit card and phone touch on has walked away from the lucrative deal.

Victoria’s $1.7bn public transport ticketing upgrade is in turmoil, with tap-and-go travel using credit cards or smart devices still years from being rolled out across trains and trams.

The Sunday Herald Sun can reveal that part of the consortium overseeing the myki revamp has walked away from the lucrative deal, and that key project milestones are months behind schedule.

Insiders say the fresh crisis, which follows a legal dispute between the project and the state over costs and technological issues, risks further delays and blowouts.

A 15-year contract to update the troubled myki system and progressively introduce new technology was won by US-based giant Conduent Transportation in mid-2023, which partnered with Australian tech company Convergint.

The new technology will allow Victorians to ditch their plastic myki cards and touch on with credit cards and phones instead. Picture: Supplied

The deal included introducing technology to allow travel using credit cards, phones and smart watches – which is already in place in Sydney, Brisbane and many international cities – so that passengers could ditch their $6 plastic myki cards.

But Convergint’s representative on the project board abruptly resigned in December, with Conduent now set to buy out that company’s stake in the deal.

It is understood Conduent would need to subcontract parts of the project to get it back on track and has hired consultants to advise on a restructure, which would require approval from the Allan government.

It is the latest crisis to hit the $1.7bn myki upgrade project, which was bogged down by a legal dispute last year between the state and Conduent over a proposed contract variation.

That dispute has been settled, but it is unclear whether more money was poured into the project as a result.

The initial myki development came in $550m over budget at about $1.5bn, with Auditor-General John Doyle slamming weaknesses in the original contract back in 2015.

The new contactless technology is yet to be trialled on trams and trains. Picture: Luis Enrique Ascui

Only one trial of contactless ticketing technology has begun in regional Victoria, on a local bus network in Wangaratta.

A government spokesperson declined to say whether the legal settlement with Conduent would add to the project budget, but said any changes to the project board would not impact costs.

“Any changes to the board of the Conduent Victoria Ticketing System will not impact the cost or delivery timeline of the ticketing rollout,” he said.

Senior transport sources said there was no doubt the legal and corporate chaos surrounding the deal would have financial implications and would impact passengers, however.

“It’s going to run late, and cost more,” one said.

Opposition public transport spokesman Matthew Guy said the government “deserves points for consistency”.

“Every transport project this government has touched over the last decade is either delayed, dodgy, or blown out,” Mr Guy said.

The government has refused to commit to a date by which contactless payment – allowing for touch on with credit cards and mobile devices – would become available, citing the complexity of technology and the need for extensive testing.

It is understood the government hoped testing would begin on trains and trams later this year, with the potential for some sections of the public transport network to use contactless technology – such as credit cards – next year.

The government has refused to commit to a date by which contactless payment would become available. Picture: Jake Nowakowski

The Wangaratta trial is scheduled to take as long as May to complete, with buses on four routes fitted with myki readers that allow for credit card, phone and smartwatch payments.

It is unclear when trains and trams will join trials, but budget papers show the Allan government has forked out $66m less on the project than what it had planned to last financial year.

As part of the upgrades, the government said myki readers would be replaced across the network.

More than 23,000 device readers were ordered as of September – which was before Conduent had tested if the new technology would work with existing myki cards.

Conduent also had not obtained banking and payment certification needed to take card payments on those readers by the time they were ordered.

It can also be revealed that outdated machines cannot be retrofitted for tap and go once the certification is secured, meaning all older machines would have to be replaced before Victorians could ditch plastic myki cards.

It is understood that former-myki operator NTT Data had obtained required certifications and argued it could have grandfathered the existing technology across the network, potentially saving hundreds of millions of dollars.

Outdated machines cannot be retrofitted for tap and go and must be replaced. Picture: Luis Enrique Ascui

The state government did not respond to questions about whether Conduent’s new touch-on technology would be able to acknowledge concession-card holder and child discounts, which NTT Data was unable to do when it held the contract.

It is understood reduced fares will not be supported by the first stage of the technology upgrade, meaning students and children would need to carry a $6 myki card.

The government says it has introduced upgrades to the myki system over the past few years, including allowing tickets to be stored on Android phones for tapping on and off.

These digital mykis require users to load money from their bank account onto their virtual myki before touching on and off, unlike in other major cities, where commuters use credit and debit cards directly.

Originally published as Victoria’s $1.7bn myki upgrade facing turmoil after company exit, credit card tap-and-go years away