After further acrimony and lawsuits with the developer ERG, in 2007 the state government terminated the project and the $64m invested in it has been written off. ERG and the independent regulator attributed some of the delays to CityRail's complex fare structure.
On 12 April 2010, the NSW Government announced that a new contract had been awarded to the Pearl Consortium for the roll-out of a simplified system. It was announced in September 2011 that the new system would be called Opal.
Sydney has used a number of automated ticketing systems since the opening of the Eastern Suburbs Railway in 1979. At present, government-run buses, trains and ferries use the automated fare collection system, rolled out between 1988 and 1993.
A replacement system, based on smart card technology, was first announced by the New South Wales Government in 1996, with hopes of a system to be in place before the 2000 Summer Olympics. The Government put the project up for tender attracting competing bids from US-based Cubic Transportation Systems, Inc., which created the CityRail magnetic strip system and Perth-based ERG Group, creator of the existing AFC system. The contract was initially awarded to ERG Group but Cubic launched legal action against ERG and the NSW Department of Transport, obtaining an injunction against the contract. Finally on 26 July 2002, the Supreme Court of New South Wales ruled in favour of the Department of Transport, in which the judge rebuked Cubic's 'dishonest' business practices. As a result, the contract to install and operate the integrated ticketing project, or Tcard, as the plan became known, was finalised and awarded to ERG Group at the end of 2002. ERG previously developed the Octopus smart card ticketing system in Hong Kong and delivered magnetic stripe based ticketing systems in both Sydney and Melbourne in the 1990s.
In 2005, a limited trial of the technology involving school children using the School Student Transport Scheme was undertaken, and expanded to cover all private-sector bus services in 2006.
In a bid to smooth the introduction of Tcard, the government established the Public Transport Ticketing Corporation to oversee the project. The corporation commenced operations in July 2006. Originally slated for a 2007 introduction, the Tcard rollout timetable project was pushed back. Ridiculing the revised timetable, opposition transport spokesman Barry O'Farrell told Parliament that "The only smart move by the Minister for Transport is putting off implementation of the full operation of the Tcard until after the 2007 state election campaign."
In mid-2006, the future of the project was in doubt as ERG Group was forced to borrow $14 million to prop up company finances. The government moved to renegotiate the contract, having already spent $54 million.
In April 2007, an official letter from the Public Transport Ticketing Corporation was sent to ERG expressing numerous concerns, such as software problems dogging the project.
Beginning in August 2006, commuter field trials were held on selected lines of Sydney Buses and the Punchbowl Bus Company. The trials hit a hitch when bus drivers threatened a boycott due to the machine crashing when printing tickets, distracting drivers, which in turn led to safety issues. Discontent among workers involved with the trial renewed calls for the Tcard system to be scrapped.
On 9 November 2007, the New South Wales government issued a notice of intention to terminate the contract with ERG. On 23 January 2008, the NSW government announced it had terminated the contract and would be seeking to recover $95 million from ERG.
On 18 March 2008, the School Student Transport Scheme Tcard system was switched off in response to the terminated contract.
On 3 July 2008, after 3 months of a terminated contract and a $200m lawsuit by ERG, it was revealed that the a smartcard system project had been revived by cabinet. This decision also required the state government to change the structure of its fare system to suit the new system.
On 17 February 2012, the Tcard legal dispute was settled under the new Liberal Government.
Tcard was based on smart card technology and employed the 13.56 MHz MIFARE technology. A MIFARE DESfire chip embedded in the Tcard communicated with the card reader through radio-frequency induction technology. These types of cards require only close proximity to an antenna to complete the transaction. They are often used when transactions must be processed quickly or hands-free, such as on mass transit systems, where smart cards do not have to be removed from a wallet for use.
Like smart cards with contacts, contactless cards do not have a battery. Instead, they use a built-in inductor to capture some of the incident radio-frequency interrogation signal, rectify it, and use it to power the card's electronics.
Similar systems operate in many cities in Asia, Europe, and North America. Particularly successful examples including the Octopus card of Hong Kong (also developed by ERG) and the Oyster card of London. The SmartRider system was launched in Perth in 2007, the TransLink Go card was launched in Brisbane in 2008, and myki was launched on a limited basis in Geelong in late 2008, as the start of its eventual introduction in Melbourne and rest of the state of Victoria.