Auckland's "integrated" public transport cards, introduced in May with a $1 million marketing budget from the public purse, will have to be replaced because they are not compatible with a new system for trains, ferries and some bus companies.
More than 93,000 electronic Hop cards, supplied by Snapper, are in use - but they work only on NZ Bus services.
NZ Bus and Snapper - which was beaten in 2009 by French electronics and military technology giant Thales to an $87 million supply and operating contract for an Auckland region-wide integrated ticketing scheme - are owned by Wellington-based investment company Infratil.
From the middle of this year, the Hop cards will have to be replaced at an undisclosed cost to Auckland Transport by upgraded versions suitable for all forms of public transport using the Thales system.
These include trains, ferries and bus services such as Northern Express operator Ritchies Transport, Howick and Eastern, Birkenhead Transport, Urban Express and Bayes Coachlines.
Auckland Transport will not say how much the replacement will cost it.
"This is a commercial matter between Auckland Transport and its card supplier," spokeswoman Sharon Hunter said.
"The supply of cards has always been within the scope and budget for the project."
Auckland Transport has paid $11 million on top of the main contract, for cable connections to ticketing machines at railway stations and ferry terminals, which it is testing between now and July in a trial using up to 2000 passengers and upgraded cards.
Rechargeable Hop cards cost $10.
Despite losing out on the main contract, Snapper won Auckland Transport's agreement to insert its own microchip technology into the initial Hop cards, after saying it would install new ticketing machines in more than 600 NZ Bus vehicles.
Campaign for Better Transport convenor Cameron Pitches is questioning the allocation of public funds to market what he sees as one transport company's commercial product.
"Of course the current Hop card is nothing more than a Snapper card in drag, and clearly Snapper haven't been able to make their card compliant with the Hop system.
"So now we are all having to swap our cards over, which makes me question Auckland Transport's launch of the Hop card on behalf of Snapper."
Ms Hunter last night defended the marketing budget, saying her organisation had learned from challenges faced by cities overseas and had deliberately chosen a step-by-step approach to implementing "this significant project for Auckland".
"Stage one was launching the Hop brand itself, which is very much Auckland Transport's brand," she said.
She said operators and suppliers were required to meet a standard of "interoperability" suitable not only for Auckland, but also as a platform for schemes the Transport Agency hoped to introduce elsewhere.
Having to swap the initial version of Hop had always been "on the cards" and budgeted for.
"Auckland will have a fully integrated ticket by the end of 2012 - that is just three years since the contract with Thales was signed," Ms Hunter said.
Auckland Transport marketing budget: $1 million.
Overall public cost (excluding cost to bus operators of card-reading machines): $98 million.
Public cost: Shared by Transport Agency ($56 million) and Auckland ratepayers ($42 million).
Users: 93,000 NZ Bus passengers.
Next steps: Replacing initial cards and adding rail, ferry and passengers of five other bus companies to the scheme between middle and end of year.By Mathew Dearnaley Email Mathew