ERG, the company dumped by the Government after it failed to deliver the disastrous TCard project, has provided the technology to Bass and Flinders, the family-owned company running the service to replace the axed JetCats.

Commuters will buy a $3 card, similar to the Oyster card in London, and top up its credit balance at ticket booths at Manly or Circular Quay. An online option to add credit to the cards will aim to reduce the already long ticket queues at Manly.

The new ferry service is expected to start on Monday, operating for three hours in the morning and afternoon peaks.

Bass and Flinders was awarded the 12-month contract to run a fast ferry service to Manly after the Government scrapped the notoriously unreliable JetCats late last year.

The Transport Minister, David Campbell, initially promised to have a replacement service operating by January 12 but did not anticipate the level of interest from private operators.

A Bass and Flinders spokesman said the company was not suggesting the smartcard technology could be introduced on the whole Sydney transport network but believed it could operate well on the new ferry service.

"This is a reasonably straightforward back-and-forth commuter run so it is relatively easy to try out such technology," the spokesman said.

"There could be teething problems so the message to commuters is to be patient during the phase-in period."

He said commuters would not be restricted to the smartcard and would still be able to buy single paper tickets.

The Government aimed to have a smartcard ticketing system for the Olympics but, after several false starts, ERG ultimately had almost four years under its contract to introduce the card in NSW.

The project was dumped after five years and the Government is now embroiled in a $200 million damages claim.

Next week, the Government will announce the shortlist of companies bidding for a new smartcard contract.

The Public Transport Ticketing Corporation last year called for expressions of interest for the new smartcard project, which will use pricing based on distance rather than the current complicated ticketing formula. ERG complained that the fare system in NSW was so complex that it was impossible to integrate it with the smartcard the company was contracted to provide.

Under the new contract, NSW intends to introduce a system that will allow passengers to top up smartcards via the internet, including an option allowing cards to be automatically credited from bank accounts.

The project will require modification to ticketing barriers at train stations and ferry terminals, and the replacement of ticketing machines for the State Transit Authority's fleet of buses.