The Oyster touch-in and touch-out card readers, which are used across the underground tube, buses and trams of London, failed to activate - forcing station staff to keep the ticket barriers open for everyone.
It is expected to have caused Transport for London (TfL) thousands of pounds in losses.
"We're experiencing technical issues with our Oyster Card readers this morning where customers are unable to touch in or out," the firm tweeted.
The Oyster is a plastic smartcard which can be used for pay-as-you-travel fares as well as for pre-paid passes.
The card can be used to travel on bus, Tube, tram, Docklands Light Railway, London Overground, TfL Rail and most National Rail services in London.
TfL has confirmed that the problem has now been resolved.
Public transport in London is normally only free for a brief period overnight on New Year's Eve, when fares are waived to allow party-goers to get home.
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