Originally published in the April 2021 edition of IPMI’s Parking & Mobility magazine
In recent years, smart cities and other modernization initiatives have transformed how people interact with public spaces. This explosion of new ideas and technology is sparking conversations about parking’s role in making cities more livable, convenient, and attractive. As a result, mobile payment options have become crucial for cities and parking operators looking to meet modern consumer expectations.
Consumer demand for contactless payment opens up more opportunities to streamline operations and increase revenue. This has left parking operators looking for strategies to provide more payment choices without increasing complexity or alienating users.
Here, we explore the contactless landscape and look at effective, inclusive strategies to increase mobile adoption and move towards an asset-light future for cities.
Even before the pandemic, people showed a growing preference for contactless payments and connected experiences. Now, as we move towards a post-pandemic world, expectations keep evolving and the mobile payment landscape rapidly expands.
Several striking trends emerged when comparing customer preferences between 2018 and 2020. First, payment with smartphones is more commonplace than it’s ever been. The number of people who prefer using a mobile app to pay for parking rose an additional 4 percent to 80 percent. And compared to 2018, people who preferred to pay at a meter or pay station dropped by a whopping 20 percent.
Once users tried a contactless option, they were more likely to keep using it as their preferred payment method. This signiﬁes that adoption is tied much more to user experience and convenience than a preference for traditional payment methods.
The convenience of mobile parking payment has also led to unexpected increases in revenue and compliance. Whereas people might choose to risk a parking citation rather than sprint to top up a meter, parking app users chose to extend parking 74 percent of the time. If it’s easier to pay, people are more likely to do it. Naturally, compliance goes up.
Choice and Risk
Contactless payment options are great news for cities looking to beautify their streets and reduce the maintenance cost of on-street equipment. But what’s the right option for you?
Regardless of size or demographic, the key to accelerating the adoption of contactless payment is giving people more options. Many equate more options with more apps and a multi-vendor approach. It’s easy to see why – more than half of the app system users we surveyed only had one parking app on their phones. In other words, once people have a preferred app, they’d prefer to keep using it. So theoretically, accepting more apps lets people pay how they want.
Despite this perceived advantage, a multi-vendor strategy has a few inherent risks to consider:
- More complexity. It’s worth weighing the potential benefits of multiple vendors against the complexity they add to your backend processes. As new vendors are onboarded, you’ll be working with different systems that don’t communicate with each other, so errors can arise if changes in one app aren’t replicated correctly in another. Also, lacking a holistic view of parking operations can lead to issues with enforcing parking rates and financial reconciliation. In some cases, a multi-vendor approach increases operating costs and complexity overall.
- Doesn’t solve core adoption challenges. The multi-app mindset also limits the ability to reach people who aren’t interested in or can’t use the full mobile app experience. Consider just a few common scenarios where a mobile app may not be ideal:
- A tourist or short-term visitor who doesn’t want to install a full-featured app only to use it once.
- People who don’t have or prefer not to use smartphones.
- People without credit cards.
Not to mention people who simply don’t want to create a new account or download an app just to park.
Despite the popularity and benefits of contactless payments, conventional wisdom suggests physical parking equipment is still necessary to ensure everyone has a way to pay. But more capital investment in hardware presents a challenge for many cities experiencing revenue shortfalls due to COVID-19. As a solution, many mobile parking apps now offer additional choices for payment beyond just full-featured apps. Forward-thinking integrations such as Google Pay’s recently announced partnership with ParkMobile and Passport, for instance, allow payment with just the Google Pay app.
A new option to quickly pay for parking in a mobile web app is by scanning a QR code or through text message. Some vendors also offer guest checkout, allowing people a way to pay on mobile without creating an account. Most mobile parking apps also provide inter-active voice response (IVR) systems, so people without smartphones can pay with a phone call.
By expanding the payment options, mobile apps will continue to drive more adoption. Once there are more contactless payment users, city leaders may see chances to scale back their reliance on old hardware. This is potentially very good news for municipal budgets.
Payment with smartphones is more commonplace than it’s ever been. The number of people who prefer using a mobile app to pay for parking rose an additional 4 percent to 80 percent.
While providing more contactless ways to pay is an important first step, how they are implemented is just as important. To understand best practices, we looked at several cities that successfully transitioned to asset-light or mobile-only to see what worked.
What we found is that a phased or incremental rollout was overwhelmingly the most effective path to long-term change. Instead of making unilateral decisions to remove old hardware across a city or campus, it’s best to start in one or two areas. Ideally, these are in places where demand for contactless is already high. Not only is this easier logistically, but it offers a chance to identify and fix any unexpected problems on a smaller scale. The general rule: small rollout, test, then expand. This also eases the transition by exposing people to new payment options gradually, smoothing the overall process.
COVID-19 upended a lot of people’s habits in a very short time. One study noted that retailers saw a 69 percent increase in contactless payments just in 2020 alone. We agree with many others that this trend is only going to accelerate in the years to come.
What does this mean for parking? For one, the public, local governments, and businesses are more enthusiastic to adopt contactless payment than ever before. Public familiarity and acceptance of mobile payment have spread to even small, family-run businesses.
But that acceptance is a double-edged sword. As people get more comfortable, they will also be less accepting of mobile payment options that offer only a subpar experience. With more options available than ever, cities and parking operators have a significant opportunity to accelerate contactless payment adoption and increase compliance and revenue in 2021.
Kristen Locke, CAPP, is Senior Regional Sales Manager, West at ParkMobile. She can be reached at email@example.com.