To Thrive, Parking Operators Must Understand Consumer Payment Preferences
By Scott A. Petri
Is there tangible value in considering customer conveniences?
As payment technology evolves, the future of parking transactions will likely continue to move toward cashless methods, driven by consumer preferences for convenience, speed, and security.
Unquestionably, it’s important. In a 2018 report titled Experience is everything: Here’s how to get it right, the global consulting firm PwC says it best: “Give customers a great experience, and they’ll buy more, be more loyal and share their experience with friends.” The report concludes that consumers will pay a premium in almost every sector of spending.
PwC’s report also notes that a bad experience can devastate even premium brands. “Even if people love your company or product, in the U.S. 59% will walk away after several bad experiences, 17% after just one bad experience.” Although these figures may vary in the parking industry, it appears that as customer payment options expand, consumer expectations will also rise.
Several studies have examined the importance of convenience to consumers. Although they are broader than parking, a consistent message emerges. Convenience is a key factor for consumers, along with the speed of transactions and security.
Trends in Payment Technology
A February 2024 study by Umair Bashir, a junior research manager at the global data and business intelligence platform Statista, identified the most utilized online payments as of December 2023. PayPal topped the list at 79% of the polled users, followed by Apple Pay (38%), Venmo (37%), Google Pay (31%), Amazon Pay (30%), along with several others.
How do consumers select and use contactless payment options? In its 2022 Annual Payments Report, the payments solution provider InComm Payments noted that consumers loyal to using QR codes do so primarily because of ease of use, speed, and security, eliminating the need for a wallet or purse.
Although use of QR codes remains steady, it ranked lower in the study when consumers were asked what type of payment method they might try in the next three months. Mobile wallets, personal payments apps, and pay by phone ranked higher in near time use. Among mobile wallets, Cash App rose significantly from a previous poll, as did Zelle, according to the report from InComm Payments. Consumers identified convenience, ease of use, and speed as the top three reasons to use a mobile wallet.
Consumer diary polls conducted by the U.S. Federal Reserve also shed light on user preferences regarding payment methods. Since 2016, the Federal Reserve has conducted a representative survey of U.S. consumers that asks participants to report all payments made during a 3-day period in October. Data is then used to compare rates of use among cash, debit and credit cards, checks, or other electronic payment methods.
In a summary of its 2023 Findings from the Diary of Consumer Payment Choice, the Federal Reserve noted that an ongoing shift from cash and toward credit cards that started at the beginning of the pandemic “has become a persistent trend.” However, one in five consumers indicated a preference to use cash for in-person purchases. Although the report concluded that the use of cash may cease in the future, the Federal Reserve emphasized the need for continued investment to ensure cash access for those consumers who want or need it.
This author could not find any study regarding payment trends in the U.S. parking industry. In the United Kingdom, the world’s third largest economy, a July 2023 parking study conducted by the payment solutions provider Elavon Financial Services DAC indicated these preferences based on age:
55-years-old or older — 48% cash, 36% card
35 to 54-years-old — 60% cash, 26% card
Under 35-years-old — 77% card, 17% cash
Of those preferring to pay by card, the preference is to pay at a machine or a barrier. Interestingly, almost 50% of those surveyed in the UK poll used an app to pay for parking, a figure that rose to 57% in London. Other methods were less popular. For example, 14% favored a QR code, while 10% pre-booked using an advance payment. Overall, the study noted that “having the flexibility to offer drivers the option of paying in-app or in-person with either cash or card means that you’re meeting the preference of the vast majority of drivers and ensuring you’re not turning business away.”
Diving deeper into the trends regarding payment options suggests that the best alternative is to allow the consumer to select the form of payment they desire, if feasible. For instance, the use of a digital wallet on smartphones or watches accounted for one-quarter of the payments.
Challenges of Providing Preferred Payment Options
Often, a parking facility operator is dependent upon incumbent technology and its platform for acceptance of payment. An operator might have to build or require the vendor to create a rate engine or partner with a company that already provides an open platform that can be accessed by any merchant of record. It is impractical for rates to be changed by every payment provider. It is far better to utilize a software system that pulls the rates for each vendor and provides a platform open to online payment sources.
Parking operators should avoid being the merchant of record or having to comply with the daunting requirements of the Payment Card Industry (PCI) Data Security Standard, a framework used to help secure and protect payment card account data.
Meanwhile, some customers resist using apps. “Too many apps!” they say. Instead, some providers offer devices that allow links to vehicle data, avoiding the need for an additional app to process payments from an automobile.
Choosing a technology that provides as many payment options as is feasible and that undertakes the PCI compliance responsibilities is key.
Consumer choice of payment options may be a differentiator in a consumer parking setting. Artificial intelligence enables the use of GIS coordinates to track someone’s location, duration of parking, and preferred method of payment. Platforms can also manage parking history, receipts, and discounts.
As payment technology evolves, the future of parking transactions will likely continue to move toward cashless methods, driven by consumer preferences for convenience, speed, and security. Mobile wallets, contactless payments, and apps are poised to play a significant role in shaping parking’s payment landscape, offering operators and consumers greater flexibility and efficiency in completing transactions.
Scott A. Petri is president of Mobility Parking & Advisors. He can be reached at scott@mobilityparkingadvisors.com.
