Removing Friction: The New Parking Transaction Models October 18, 2020 | #Parking

The parking industry is in the throes of innovation. Novel ways of facilitating the customer-operator relationship are emerging, catalysed by new technologies and new payment methods more broadly. Most importantly, research suggests that users are fully on board with these changes in parking – and are actively moving around for the payment methods they prefer.

In this article, I want to discuss some of the most significant new payment models within the parking industry – both off-street and on-street. In general, the trend is toward a reduction in the interaction between the user and any payment barrier or station; it’s towards a frictionless relationship. Let’s look at the emerging transaction models, which are enabling this seamless experience.

Existing Payment Models: How We Pay for Parking Now

Before we start, what’s the current state of play? Parking has, until recently, been largely dominated by two transaction models – payment in advance and payment in arrears. These are simple and familiar, and they demand active participation from the user, usually through cash or card payments.

Pay-and-display, pay-on-foot before leaving, and ticketed entrance and exit barriers all use these two models. A user engages with a payment device before or after parking, with a ticket in most cases facilitating the relationship between user and device.

Whilst these models have become ubiquitous within the parking industry, they do have their weaknesses. Payment in advance requires users to estimate how long they are intending to park, inevitably meaning risk of overstaying or overpaying. And there’s the issue of the centrality of on-foot payment devices, where searching for the machine and queues add friction to the system.

These elements add unnecessary complexity and hassle to the experience of parking. On the other hand, the transaction models that are emerging are offering a much smoother interaction between users and the parking environment…

New Transaction Models for Parking

Recent developments in contactless technology – and the wider trend toward a cashless society – have streamlined the payment process within the existing transaction models. Rummaging around for change is no longer something that drivers need to do before or after parking their vehicle.

However, more new ways to pay are in demand, too – ways that remove the need for on-foot payment machines whilst giving the user the chance to pay only for their length of stay.

Pre-Authorisation

Pre-authorisation is the primary mechanism that’s challenging the two conventional models of parking payment. Technically, pre-authorisation remains a type of payment in arrears. However, by being automated, tech-enabled, and flexible, pre-authorisation offers a smoothness of experience which is missing from the traditional pay-on-foot alternative.

Fundamentally, pre-authorisation removes the need for users to estimate their length of stay, whilst giving parking operators security of payment before a final value is known. On entry to the site, a maximum sum is authorised on a payment card. This payment remains pending until exit, when the payment terminal then calculates the stay’s actual value.

This model is enabled primarily by two methods. Tap-in tap-out uses contactless technology for user recognition and payment processing, whilst tap-in drive-out integrates – and matches – a payment device (contactless card or mobile wallet, for example) with number plate recognition.

Tap-In Tap-Out

Tap-in tap-out is a ticketless model that removes the need for on-foot payment terminals. Payments are enabled through contactless interactions with payment devices at entrance to – and exit from – the car park. On arrival, the payment card is tapped to register the arrival time and to pre-authorise the maximum amount. On exit, the card is tapped again, with the device calculating the amount to be paid.

Tap-In Drive-Out

While tap-in tap-out relies solely on contactless technology, tap-in drive-out is also enabled by Automatic Number Plate Recognition (ANPR). In this model, only a single interaction between user and payment device is required, on entry.

As a user arrives, they tap their contactless reader with their card or device to authorise the prepayment, whilst an ANPR device reads their number plate. Exit consequently requires no further user engagement. Customers can drive straight out, whilst an ANPR camera reads their number plate and charges the account linked to that identity.

Tap-in drive-out can be streamlined further. Known users need not tap their card at all. Rather, on entry, ANPR can read the vehicle’s number plate and automatically pre-authorise a sum on a stored card. In this way, technological solutions can make parking entirely frictionless.

Off-Street and On-Street

These innovative payment solutions have been entering the parking industry for some time. However, they are not limited to off-street parking environments. Rather, they are solutions increasingly considered for on-street scenarios too.

In on-street contexts, parking spaces can be fitted with ANPR sensors embedded in the ground, rather than the conventional cameras on entrance and exit. These technologies can be integrated with smart parking initiatives too, enabling access to real-time data on space availability and location.

Added-Value Services

Parking operators, meanwhile, are recognising opportunities to add value to the parking experience and make their parking location the top choice for drivers. Simple related services such as car washing and electric vehicle charging are widely offered, and these can be built into payment models. But more advanced partnership offers with shops, restaurants, and other services are now gaining extra traction.

Payment for these services can now be seamlessly integrated within the pre-authorisation model, enabling drivers to enjoy an exceptional experience while reducing friction, hassle, and wasted time.

Summary: New Transaction Models in Parking

The new transaction models in parking are a sign of the impact of technology, but they’re also a driver for increased connection between different services and stakeholders within the parking industry.

Above all, these new models reduce the friction for customers. Nobody enjoys parting with their money, but by offering a smooth, flexible, and enjoyable experience where real value is truly felt, parking operators can set their location apart from competitors and attract new – and returning – customers.

About the Author

Simon Wood is an energetic international business professional with experience of working with innovative industries in the UK and overseas. Experienced developer of channel and partnership routes to market for both products and service offerings. Enjoys the opportunity to develop the strategies used to deliver results. You can contact him at s.wood@ccv.eu and +44 7885 433 457.