The Brave New World of Electronic Payment:

April, 2007

Is it the Next Frontier for Parking?

New technologies are revolutionizing the way small payments are made in transit, retail and public venue environments.
Business managers in these segments are embracing these technologies as a way to improve customer service, drive greater sales and reduce operating costs. In the process, improved data on customer behavior are being generated, along with greater financial controls.
Among the key technologies are contactless smart cards and mobile phones enabled with newly emerging Near Field Communication (NFC) technology. These developments create new opportunities for the parking industry to reap similar rewards through collaboration with these industries and their suppliers.
Contactless smart cards (CSCs) have been moving into the transit space since the mid-1990s. Transit agencies faced with aging first generation Automatic Fare Collection (AFC) systems began to look for new ticket media that offered superior performance over the magnetic stripe cards that were widely in use.
CSCs enable field equipment to securely read file data off the card, process this information and update the card data at high speeds. In a typical transaction, a turnstile examines card resident information – such as pre-paid balance, user profile and trip history – to determine what fare to charge. The amount is then debited from the on-card balance, with new usage information posted to the card for fare calculations on subsequent trips.
The field equipment is programmed to determine which fare product to process based on the rules established by the operator/owner of the device. The ability to update card data at high speeds along with modern network technology also enables new distribution strategies, as pre-paid products can be delivered to the card at the point of use. This allows patrons to purchase products over the phone or online and collect them during the course of their travel or simply register them for automatic renewal.
Transit communities are using these new solutions to establish regional networks where a single card is honored across multiple operators. The investment in new technology that began a decade ago is now paying off. The development of national card data standards that govern the content/format of on-card data files, as well as inter-systems messaging, allows agencies participating in a regional system to procure systems from different suppliers yet still maintain interoperability.
Recently, these systems have been expanded beyond the bus and rail systems into parking facilities. Agencies such as Washington Metro, Metro Atlanta Rapid Transit, and Philadelphia PATCO have fielded smart card enabled parking systems that accept the transit card as the primary payment vehicle.
The adoption of common standards for contactless technology has given rise to dialogue between bankcard issuers and transit authorities concerning shared smart card platforms. Agencies are looking at new ways to directly accept contactless bankcards within their systems.
In a related development, two of the contactless smart card industry’s leading players, Philips and Sony, jointly developed a compatible communications standard for use on mobile phones and other hand-held devices. The NFC standard is now being embraced by wireless carriers, handset suppliers and infrastructure developers, which are using it to develop new methods of delivering over-the-air-applications and digital products to the handset.
The implications of these developments for the parking industry are dramatic. Parkers could pay their fees with their contactless bankcards, transit smart cards or mobile phones, which could significantly reduce cash-processing demands.
Parking management companies could issue their own branded cards and establish interoperability agreements with transit operators. Voucher, permit and parking benefit programs could be migrated to smart media using the same tools developed for the transit industry, which could result in significant reductions in administrative/distribution costs.
Fee calculations currently performed via bar code and magnetic ticket processing could be performed simply by reading and writing to data files on smart media, leading to large reductions in ticket consumption costs, major improvements in equipment reliability and large decreases in field maintenance costs.
Parking operators could offer a host of new patron services that could be developed to enhance operator marketing programs and build greater parker loyalty. Parking management companies would have much richer patron data that they could use for marketing and financial control.
The opportunities are there for the taking.
User groups including the American Public Transportation Association and the Smart Card Alliance Transportation Council are bringing constituents together to explore collaborative business models and provide a forum for education and information exchange.
The parking industry need only get engaged.

David deKozan is Vice President of Marketing for Cubic
Transportation Systems.