Will the Buck Ever Stop Here?


Will the Buck Ever Stop Here?

Think about the very first instance in which a customer paid to park his car. Depending on which historical reference you use, this occurred sometime in the early 1900s. The transaction involved some form of currency to satisfy a fee.
Move ahead 100 years. Thousands of parking transactions that occurred just yesterday involved some form of cash, although the notes and coins look different from those used in the early 1900s. Yesterday’s transaction payments also included checks, credit cards, mobile payments, debit cards, proprietary applications, toll authority AVI transponders, and perhaps even “electronic wallets.”
While we have not rendered obsolete any accepted form of payment since eliminating the bartering of beaver pelts, the breadth of payment mechanisms has increased substantially. Concurrently, there have been increases in the level of external influences such as:
The PCI (Payment Card Industry), the EMV global standard on “chip cards,” and the Durbin Amendment on interchange fees;
Adjustments of operational and audit processes;
And a commensurate dependence on technology.

Electronic wallets
Let’s take a look at one of the newer non-cash payment processes: electronic wallets. The first effort at a commercially viable electronic wallet was introduced by Google with its Google Wallet. This was followed by the introduction of the ISIS Wallet developed in a partnership among Verizon, AT&T and T-Mobile.
Both “wallets” use a form of contactless communication known as near-field communication (NFC) to “transact” with an NFC-enabled reader. (You might be aware of other NFC-enabled transaction terminals branded as MasterCard PayPass and Visa PayWave.)
Why is knowing this important to me when examining my payment processes? I do OK now collecting payments in the manner I do, and my patrons seem to be happy.
But consider the following:
Per the MIT Technology Review, only 2% of smartphones today have NFC-enabled chips. By 2015, more than half of the anticipated 863 million phones in use globally will have embedded NFC chips.
Per Javelin Strategy & Research, in 2012, roughly one-third of all banking transactions in the US were processed through smartphones or tablets.

Time spent using smartphones continues to grow, a KCPB Internet trends report shows. Many users consider the smartphone their social and functional “appendage.”

Examine the Nielsen Social Media report graph below indicating the increase in smartphone market penetration for a period of just one year.
Taken together, the incoming generation of consumers will conduct their financial activities in a manner different from all previous generations. They look at traditional banking as an inconvenience to be avoided. Most have never seen a checkbook, and credit cards are something their parents use.

Changing B2C practices
These are the next generation of parking product consumers. They have an aggressive and technology-driven expectation: changing the way we look at business to consumer (B2C) practices. They will seek out and continue to patronize businesses that accommodate their preferred methods.
There are advantages to the parking industry as well:
As with other types of electronic payments, there is no cash processing, thereby eliminating the associated “shrinkage.”
The terminals used to process the NFC transactions are relatively inexpensive, and do not require complex maintenance and service.
Use of the terminals for electronic wallet patrons is quick and uncomplicated, needing only to place the smartphone within a few inches of the reader.

Auditing is no more complicated than the review of other non-cash transactions. Parking operators also have a dynamic conduit to their customers. Whether through an application or a browser session, those patrons can gather parking facility information real-time and have access to special programs or amenities the facility might offer. This electronic “face to face” session is a major business opportunity realized with the use of smartphones.
Will the buck stop here? Not likely.
Cash will still be around, and with few exceptions, we in the parking industry need to accept it. But the manner in which we conduct financial transactions will continue to evolve. But for the parking industry – and more important, the overall transportation industry — to keep pace, we need to accept and embrace the evolution.

Tom Wunk, President of Intelligent Parking Concepts, can be reached at twunk@msn.com.

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Tom Wunk
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