Mobile Payments Trends
March, 2020
In this month’s edition of Ask Kevin Anything, we have a question about the changing landscape of mobile payments in the U.S. parking markets.
Dear Kevin,
The City of Atlanta recently announced they were moving from a single mobile payment provider to multiple mobile payment providers. Is this the beginning of a larger trend in the United States or a one-off situation? If our city is interested in making a similar move, what should we keep in mind as we move forward with multiple payment providers?
Intrigued in Illinois
Dear Intrigued in Illinois,
That is an excellent and timely question. To answer it, let’s first dive into what this is and some of the history behind it. Most parking organizations today offer some form of mobile payment for on-street and, in some cases, off-street parking. These mobile apps provide consumers a way to electronically pay for their parking after they have parked without needing to pay at a physical meter. Due to procurement, organizational, and technological limitations, almost all organizations in the United States select a single provider model that grants one mobile payment provider a monopoly for the mobile payments of that organization.
The multi-provider model has been beneficial in locations where it has been deployed (mostly outside of the United States.) It also offers many advantages over the single-provider model. Due to this, I do predict that a significant shift to the multi-provider model will occur in the United States over the next 2-5 years. This switch will not happen overnight, but as more organizations make the jump and demonstrate positive results, I believe the shift will accelerate.
The opportunities are numerous and are demonstrated by the performance of other organizations that have moved from a single-provider to a multi-provider environment. These include higher mobile payment utilization, which can reduce meter collection and maintenance costs. Another benefit is increased consumer choice, which spurs competition between providers.
While there are many opportunities in moving to a multi-provider environment, this change (as with most things) is not without challenges. The first significant challenge is with the existing signage and zone identifications. Many of the current mobile payment signs are designed for, and many times provided by, one payment provider. New signage supporting a multi-provider system would have to be rolled out, replacing the existing signage.
Additionally, many organizations have their parking split up in zones, which are often identified by number. Since most mobile payment systems were only designed for a single provider environment, many of these numbers are reused between customers. Due to this, either the mobile payment providers will need to implement technical solutions to solve for the duplicated number situation or new unique identifiers would have to be rolled out as part of the updated signage. Requiring a reasonable annual fee to become a payment provider is a way to both cover these types of costs, as well as helping to vet the payment companies.
Another issue can be with the existing technology systems used for parking enforcement. Many of these systems currently do not support multiple mobile payment providers. Overcoming this lack of support would require officers to look at a separate system to find payment information, requiring existing providers to update their systems, or parking organizations to select a new enforcement provider who can support multiple systems.
One more significant challenge is ensuring that all of the payment systems are in sync in terms of parking pricing, rules, and availability. There are a few newer companies that have offerings to manage this situation. Additionally, some of the existing mobile payment providers are offering to be a management system for all of the other mobile payment providers.
Looking forward, I believe this is an excellent opportunity for U.S. parking operations. A move to a multi-provider mobile payment system is well overdue and would improve the parking experience for users and operators. When considering moving to a multi-provider platform, both the opportunities and challenges must be weighed. And all of the overall costs must be counted, even if they are passed along to the end-user.
Creating opportunities for fair competition not only improves the overall parking experience but also increases the chances that new innovative companies can provide value to the parking industry. I would encourage you to do your homework, give it a try, and let us know how it works out.
All the best,
Kevin
If you have a parking technology (or other) question that you would like me to answer, please send it to me at aka@slsinsights.com.
