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The Zero Cost of Parking Payment Processing Web Account or Bitcoin?

December, 2014

By Amalendu Chatterjee

I have always been keen on researching the subject of parking payment options and their charges or fees to the parking operator and, in turn, their customers.

One objective has been to explore if such fees can be reduced or even eliminated so that arbitrary parking rate increases or decreases can be rationalized to consumers. Another objective has been to avoid subsidization of an airport’s or a city’s other budgets from parking revenues.

Payment processing for the parking industry started about100 years ago. Payment was cash only during the early stages. On-street meters accepting coins started in 1935. Off-street acceptance of credit cards began in 1950, with cashier. Automated credit card entry and exit started much later.

Payment options are so many and still evolving, with the latest being “bitcoin” and EMV – chip cards or chip-and-PIN cards, which refers to a computer chip embedded in a debit, credit or ATM card.

The questions are how, what and why to choose the best payment option.

For large or medium-size parking operations, all options may be required to satisfy the variety of customers, under the current paradigm of the parking business practice. That’s why in my several articles in Parking Today and my presentation at the 2014 IPI Conference & Expo (“The Zero Cost of Civilized Parking”), I defined a new paradigm with robust web parking protocol (RWPP).

In those articles and presentation, I showed that the cost of on- and off-street configurations could be reduced drastically with a new paradigm. In this article, I will show how to reduce the cost of parking payment options and their processing fees with the help of RWPP and bitcoin.

Payment Choices – Choices and options of payments evolved mainly for the convenience of the customer. These choices also improved the security of payment systems and decreased fraudulent activities. This latest of all options is EMV, the ultimate choice to derive all benefits, especially the security of payments. This, in turn, has raised the cost of parking operations. This is the time to go back to the basics, so that options are reduced and, at the same time, to achieve the flexibility of modern payments and the required security.

Comparing Payment Systems of

Other Services –

Mobile phone, electricity, city water service, waste collection and other services have always had one simple option for payment collection – invoice or bill, and then payment by cash or check. Is it possible to adopt one unique system, rather than have so many options for parking payment?

Let’s investigate that theory. For analysis, we can divide parking payments into three major groups:

• Traditional– meter, pay-on-foot, pay-In-lane equipment, event handheld, cashier/fee computer, credit card, website, kiosk, mobile payment.

These options’ days may be numbered. They are expensive in two ways – setup and maintenance costs and processing fees.

• E- Wallet – Google Wallet (MasterCard), Apple wallet, V.me/Checkout by Visa.

This may be an interim solution before “virtual currency” takes over. The advantage of E-Wallet is a consolidation of too many cards. In addition, attempts are made to reduce the processing fees.

• Virtual Currency – Digital Wallet Plus (DW+), bitcoin (“digital mining”).

This option may be the ultimate disrupting technology of payments and financial transactions. If it is widely accepted in the industry, the current processing fees may be reduced to almost nothing.

Cash components of traditional parking payments are many, such as labor, counting, storage, collection, delivery to bank, cashier booth, processing fees, card terminal, PCI compliance, administrative cost, exception handling and refunds issued, hardware units, associated software updates, signage, and infrastructure.

In a large airport, for example, almost all options such as credit card (76% collection), cash (22% collection) and other (2% collection) are deployed, and the total cost of payment processing is more than 17%of total collections, according to another paper presented at the 2014 IPI conference.

The same total collection cost can be reduced from 17% to below 5% of total revenues if only a credit card option is deployed, eliminating cash and other options. This scenario of the cost optimization is applicable to the medium-size or large city and university.

If operators change the parking paradigm with a web parking portal (WPP), customers will need to set up an individual account with a credit history for payment, like paying for any other services.

In this scenario, there is no need of credit card processing on-site. Customers can pay online (web account) or from their bank account, with no requirement of on-site payment processing.

Is bitcoin the newest and cheapest payment option? Yes, if planned correctly. Bitcoin transactions are equivalent to cash transactions, except done via the Internet. You can call bitcoin the cash of the digital virtual world.

Bitcoin transactions (in contrast to credit card or bank transactions) are almost free, except in some special cases, and recognized internationally on, as yet, a limited scale. As of today, applicable fees are small or flat, irrespective of the number of transactions, but they may evolve into different fee structures lower?) as the market matures.

Fees are paid to the bitcoin “miners” (like credit card issuers), as their incentives for mining different bitcoin blocks.

With the Digital Wallet Plus and virtual currencies such as bitcoin, there’s a very good potential for cost-scope optimization.

Amalendu Chatterjee is Vice President – Technology at EximSoft International, which provides “innovative mobile software solutions and services.” Contact him at amalendu@eximsoft.com.



 


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