Possible? yes
Likely? no
-Several cities rely on paying for their very expensive transit systems with consumer fares and are only going to trust relatively proven technology. I think the best we can ask for is an external chip (a sticker really) connected to a case or something that can then authorize and communicate with the phone. That separation layer adds significant security, especially for android phones where root access is very common. Similar technologies are being evolved for VISA payments.
-Another problem mentioned above is frequencies. However the core problem here is the investment in the readers (two per bus, dozens per station/train etc) which are extremely expensive. For example:
Toronto:
http://www.thestar.com/news/city_hal...operators.html
Costs are even higher in Ottawa where (despite a smaller system) there have been delays due to people getting on the bus for free and the frequent use of backdoors as entry points.
Ill also throw this out there: there will not be any real pressure to implement Phone NFC tech into anything real until Apple *cough* "revolutionizes" *cough* the technology by bringing an old version to an iPhone. With the exception of Samsung, Android/Other companies are too small and non-influential to push any real movement. Samsung is expected to roll out a massive VISA supported "wallet" payment program with the S IV but I doubt such tech will reach mainstream transportation for a long time.