Smartcard ticket readers, which were brought in last year, have saved £24m, say Transport Scotland – which runs the scheme – by cutting fraud, red tape and inaccurate payments.

The readers were introduced as a public spending watchdog warned there was a "major risk" of money being claimed fraudulently or in error on the travel scheme which offers free bus travel to over-60s and disabled passengers, and started in 2006.

It was criticised at the outset for not being fully costed and government financial projections last year indicated it would become unaffordable during this parliament.

Smartcard ticket readers, which allow more accurate data to be recorded about passenger journeys, went live in April last year – four years later than intended – and cost £33m more than the original budget of £9m. Since then the cost of the scheme has been capped at £180m, rather than around the £200m predicted.

Michael Leach, chief executive of technology firm Itso which provided the software system for the smartcard readers, said they have saved £24m, adding: "We're seeing pretty similar numbers in other parts of the country which have implemented similar fraud management plans."

Mr Leach said losses had been incurred as a result of fraudulent activity by bus companies, some of which are thought to have deliberately submitted misleading claims, and passengers using stolen or borrowed travel cards.

MSP Willie Coffey, who serves on the Audit Committee, which examined the scheme, said: "One of the big questions that remains unanswered from the audit committee is that we were told the ticketing system would cost £9m and ultimately it cost us £42m."

Labour's transport spokesman Lewis Macdonald said: "I will be writing to the Transport Minister to demand answers to what went wrong."

A spokeswoman for Transport Scotland confirmed £24m savings had been made in the 2010/11 financial year. Estimates of the annual savings that could have been made over the first four years plus the extra costs of implementation have resulted in the total extra bill of around £100m.

The spokeswoman added: "Transport Scotland has continually driven efficiencies through technology and by developing staff capabilities"

A spokesman for the Confederation of Passenger Transport, which represents bus and coach firms, said it welcomed the " many benefits" of smartcard ticketing.