Three of the region’s mass-transit systems will sign a memorandum of understanding by the end of the summer, promising to develop a fare card with embedded computer chips to be used interchangeably on the subways, buses, and commuter trains.

At its meeting June 30, the board of the Port Authority of New York and New Jersey decided to join the Metropolitan Transportation Authority and New Jersey Transit to develop technological standards, payment mechanics, and potential revenue opportunities offered by the credit-card-size plastic cards known as Smart Cards.

The Smart Cards, used in transit systems of Paris, London, and Washington, D.C., would eventually replace the MetroCard’s magnetic-strip technology and low data capabilities with a computer chip that would allow riders to use one card to pay fares on all the region’s transit systems.

The new card, though, could one day do more than combine the information from different transit cards into one format. The Smart Card, because it can hold up to 20 times more data, has the capability to be used much like an unlimited-fare MetroCard but across the entire region’s transportation network. Advocates hope that like the free subway-to-bus transfer that stimulated record levels of bus ridership, future unlimited Smart Cards would spur riders to move from commuter rail to subway and back in record numbers without having to pay additional fares.

That day is still far off, according to spokesmen for both the MTA and the Port Authority. Closer at hand, however, is a card that will contain the separate debit accounts corresponding to each transportation system. By the end of July, all 13 stations of the Port Authority Trans-Hudson lines will be equipped – at a cost of $75 million – with new turnstiles, designed to eventually accept Smart Cards. Already the new turnstiles accept MetroCards that can pay the $1.50 PATH train fare as well as the PATH train-fare card, known as the QuickCard.

A spokesman for PATH, Steve Coleman, said the new turnstiles could accept Smart Cards as early as next year. At first those cards would be used much like the E-ZPass popularized by drivers crossing the city’s bridges, tunnels, and tollbooths. As with the EZPass, fares on the Smart Card would be either deducted from a prepaid account or charged to a credit or debit card, eliminating the need to refill cards or buy new ones at stations.

Unlike MetroCards, which use a magnetic strip that is swiped through a reader, Smart Cards can be waved in front of a turnstile from as far as four inches away and through clothing, wallets, and purses.

Already, businesses make use of Smart Card technology in employee identification cards used to gain entry to guarded office buildings.

The speed of the card – said to be six times faster and more reliable, sturdier, and scam-resistant than a MetroCard – could also allow for new modes of transportation.

The associate director of the Permanent Citizens Advisory Committee to the MTA, William Henderson, said he believes the time-saving technology of a Smart Card will allow the city to operate a rapid-transit system along busy corridors such as 42nd Street, where transit advocates have long been calling for a light-rail system to shuttle people quickly between the Hudson and East rivers.

“It would have all the operational characteristics of light rail, but you use it with buses,” Mr. Henderson said. “With the MetroCard, boarding is very time-consuming. The Smart Card is very quick.”

It was only in 1997 that New York City Transit completed its $700 million transition from the token, introduced in 1953, to the MetroCard by installing 1,869 new turnstiles in the system’s 468 stations. How much it would cost to refit those turnstiles with Smart Card readers is unclear. The MTA, in the capital plan it originally submitted to the state, allocated $43.9 million toward Smart Card technology.

The Capital Plan Review Board, however, has yet to pass the MTA’s budget.

Critics of the card have said the new technology has distracted transit officials from confronting the stickier political issue of integrating the fares of the region’s major transit systems. Doing so would allow riders to pay one fare in return for unlimited access to buses, subways, and commuter rails between New Jersey and New York, in the view of one participant in an informal collaboration between mass-transit advocates from New York and New Jersey.

“It would only take a wink and a nod between the two governors to have one fare for both systems,” the Regional Rail Working Group’s George Haikalis said. “It may be a useful device, but the underlying question is: ‘What should the fares be?’ All that’s missing for fare integration is the will to do it. You don’t need a Smart Card for that.”

Mr. Haikalis said the decision by the MTA to allow riders free transfers from the subways to buses instantly integrated the road and rail systems. Indeed, daily weekday bus ridership jumped 21% in the six months after New York City Transit gave riders free transfers in July 1997, the same month all subway stations and buses were equipped with MetroCard readers. He predicts a similar surge if riders can buy one unlimited card and gain access to all forms of transportation.

Riders could take Metro North for an express ride from Grand Central to 125th Street or the Long Island Rail Road from Penn Station to Queens without having to pay an additional fare, he said.

Smart Card advocates argue that the old MetroCard does not have the data storage or versatility needed to integrate the disparate fares that commuters face.

The magnetic strip on a MetroCard can hold 200 bytes of data, while the kind of Smart Card envisioned for transit use can store between 1,000 and 4,000 bytes, the executive director of the industry group Smart Card Alliance said.

The most complex Smart Card, which will eventually be embedded in passports, holds 64,000 bytes.

“Paris, London, and Singapore, they have dozens of different fare rates and package deals,” that official, Randy Vanderhoof, said. “They are able to manage them because the chip capacity is greater and more flexible.”

Promotions offering, for example, a free ride on New Jersey Transit could be easily coded into the software used by the chip, Mr. Vanderhoof said. The card reader could separate which transit system a rider used and send the corresponding agency an invoice based on a set fare.

“The agencies would have to create a reciprocal agreement to determine how much each one would get,” Mr. Vanderhoof said. “It’s really not a technical issue. It’s just a matter of building the accounting system to support that.”

Though subway ridership has swelled by more than a million riders daily to 4.8 million since 1997, the average fare paid per ride has decreased to $1.30, a direct result of unlimited fare cards.

Creating such a region-wide card would pose a bureaucratic hurdle that the region’s transportation agencies are unready to face, despite the advances in technology.

“Those kinds of issues would have to undergo lots of discussions between the agencies,” Mr. Coleman, the Port Authority spokesman, said.