By Kristen Locke, CAPP

Originally published in the IPMI Blog on May 27, 2021

In the world of parking, mobile apps and contactless payment are becoming the new norm. This rapid digital acceleration has been largely advantageous for parking operators who are looking to offer better customer experiences, reduce hardware maintenance, and streamline operations. With the bulk of transactions now electronic, how payments are processed has a huge impact on a parking provider’s revenue.

Despite all that, payment processing is rarely part of a discussion about long-term business strategy. Why? Now more than ever, having flexible choices in payment processors is vital to making smarter business and technology decisions moving forward.

Payment Processing Basics

When considering a new mobile payment vendor, there are a dizzying number of factors to consider: customer ease-of-use, integration with other systems, backend reporting, and more. Understandably, the specifics of how each vendor processes payments can get lost in the shuffle of larger concerns.

Generally speaking, when someone pays for parking through an app, it’s processed in one of two ways:

Integrating with Existing Merchant of Record

Many clients have specific payment processing requirements that have to be met. For instance, a city or other large parking operator may be required to act as the Merchant of Record (MOR), or to use a particular payment processor for all transactions. In this case, a vendor will integrate their system with the client’s preferred payment processor. Future payments are authorized through the client’s merchant account and the client pays a service fee back to the vendor.

Leveraging the Mobile Payment Vendor to Process Payments

Other clients, especially operations just starting to accept electronic payment, rely on the vendor to act as the MOR. Often in these scenarios, a vendor will charge a processing fee to process payments, and then remit net parking revenue back to the client. Lately, this has also led some vendors to push for all-inclusive payment processing for all transactions, including things like permit or citation payments.

Why Choice Matters

Admittedly, many clients don’t exactly have a say in whether they act as MOR or have a vendor handle processing. Every client’s circumstance is different, and one isn’t necessarily better or worse than the other. But as we hinted at earlier, the larger problem is that choice is being removed from the decision-making process and clients are being presented with an all-or-nothing model: the vendor handling all payment processing or none.

That lack of choice can be severely limiting to businesses as they grow, technology changes, or unexpected events arise. To ensure clients have the most strategic flexibility, ParkMobile offers both options for payment processing: either integrating with a client’s preferred processor or acting as the MOR directly. Most importantly, we think it’s crucial not to lock clients into one system or the other.

Here are a few reasons why choice in payment processing is important:

 Enables Smarter Business Decisions

On a personal level, many of us reassess our finances periodically to ensure we’re getting the best rates possible for the services we pay for. Ideally, the same should be true when parking services consider merchant processing fees. After all, a fee structure that was advantageous when you set up a new system may not make sense years down the line when your parking rates increase, technology changes, or customer behavior changes.

Ideally, parking providers should factor merchant fees into their decision-making. By definition, that means having the ability to choose.

 Reduces Risk of Disruption

 When a product doesn’t have the ability to integrate with a client’s merchant processor, it has the potential to lock up transactions if that service goes down. This is doubly true for vendors whose main focus isn’t processing payments. Having processor redundancy significantly reduces the risk of failed transactions or disruption.

Decouples Financial and Parking Operations

When every aspect of parking and financial operations are tied together, it gets significantly harder to utilize the latest and greatest technology as it becomes available. The ability to switch payment processing lets you factor in those fees as circumstances change. It also affords some agility to make separate changes to parking, permitting, and enforcement systems without having to completely change the others.

As we’ve all seen – digital experiences are exploding. People everywhere are embracing new forms of digital interaction and payment. Many times, we’ve seen parking operators lose potential revenue because they can’t use new technology under the restrictions of their current vendor. When stuck with a single payment processor option, you are limited in your ability to offer better, up-to-date experiences to customers.

Transaction Fees and the Customer Experience

The world of payment processing is a complex one. As digital payment becomes the norm, it’s also an inexorable part of the overall business model. When a customer pays for parking using a credit card, a processing fee is inevitable. A prevalent school of thought is that when fees – both processing and convenience fees – are passed on to a customer, it may disincentivize them from using a given service. Concerns like this factor into the larger debate over how those fees affect the customer experience.

Largely, we’ve found that fees are a secondary concern for most customers. Providing a best-in-class user experience is still ultimately the biggest driver for increased adoption rates.

Working with a Trusted Partner

Put simply, choice is important because no single payment processing solution will be ideal for every client. ParkMobile currently processes over 9 million payments per month nationwide for a wide variety of cities, universities, event centers, and more. We’ve found overwhelming success thanks to a highly collaborative, flexible approach which doesn’t shoehorn you into a financial situation that doesn’t align with your long-term goals.

Regardless of whether you need to be the Merchant of Record, use a specific third-party payment processor, or aren’t even sure where to start – ParkMobile can help.

To learn more about how ParkMobile’s payment processing options can help you make better decisions click here.