‘Pay-by-Cellphone 101’

December, 2011

Pay-by-cellphone parking has seen a dramatic increase in North America, with many major cities (Washington, DC; Miami; San Francisco; Houston; Vancouver, Canada) either in full deployment or running extensive trials.
As with any new technology, there’s always a concern about something new and the law of unforeseen circumstances. In reality, however, pay-by-cell has been around now for more than 10 years and has processed at least 90 million payments around the world without any significant glitches. It has bought clear benefits to the many organizations that have adopted it.
This 101 Q&A Intro to pay-by-cell parking is by nature generic and covers the fundamental principles of this technology. As with any payment system, there will be differences between vendors and, more markedly, between regions of the world driven by local demands, regulations and banking systems.
How does pay-by-cell work for drivers?
Drivers use their cellphone to start parking. Smartphone users can download and use “apps”; regular phones can call an automated phone number or send a text message; payment online is commonly available too. Typically, a text message reminder is sent before parking expires, and if there are no restrictions, more time can be bought without returning to the car.
Does pay-by-cell require special meters?
No. In most cases, pay-by-cell is deployed alongside your existing parking meters or payment system without integration and provides an alternative method of paying to using the meter. The payment does not show on the meter. Many manufacturers of meters and pay stations have incorporated support for pay-by-cell in their new models so that it can be integrated for an additional cost.
If I keep my old meters, how do I know when someone has paid?
A pay-by-cell transaction is recorded in real-time on a secure web server. This information is displayed on a handheld device with wireless data access. It could be a handheld ticketing device or it could be a separate device such a smartphone. The information available to the parking enforcement officer can be a combination of the paid location, license plate or space number, start/ end time and amount paid. This can be shown as an individual transaction or a list for a given area. Many pay-by-cell companies have already integrated with the major handheld ticket software providers and more recently with LPR systems.
How much does the service cost?
Typically, pay-by-cell is a transactional commercial model, so there are no capital or fixed monthly costs. But every time the service is used, the pay-by-cell company charges a fee. This sometimes is passed on to the driver as a “convenience” fee for the added value service or paid by the parking operator to encourage adoption and reduced reliance on meters. Hybrid models are available where the basic fee is paid by the operator and optional fees paid by the driver. Higher adoption when the operator pays usually means lower transaction fees. This transactional model is risk-free to the operator, in that if no one uses the service, no fees are due.
How does the money get to me?
The most common payment method is by credit or debit card registered on the driver’s pay-by-cell account. You choose whether the funds go either directly to your merchant account or to the pay-by-cell merchant account and then to your bank account. Major pay-by-cell providers are Payment Card Industry (PCI) Level 1 compliant and process card transactions in real-time, not batch mode. One might think the cost is billed to the phone bill; in practice, the carriers do not support this, and where they do, the rates are not competitive. Options of using PayPal or Google Wallet instead of a credit card are becoming available.
Do I have to install and manage back office software?
No. Pay-by-cell providers were early proponents of web-based back office systems, so all that is required to access the parking management platform is a web browser and Internet connection. The management system will have the typical features of rate management, operational and financial reports, and customer support tools.
What are the challenges to a successful pay-by-cell program?
As with any new program, communication is key, and the most important element is signage. Pay-by-cell companies typically have experience as to what is the right signage for the environment that can incorporate your existing branding. Consistent reinforcement of the benefits on operator websites and the initial media interest all help. At the end of the day, the driver has to see the value.
There are, of course, many more questions and “what ifs,” but the major pay-by-cell providers will have dealt with these before and can address them in much more detail than space allows here.
Pay-by-cellphone is a proven solution that is delivering tangible benefits in customer service, choice and cost reduction that should be on every parking organization’s radar.
Neil Podmore is Vice President of Verrus / PayByPhone. Contact him at npodmore@paybyphone.com.