ONLINE PAYMENTS

Millions of Americans have become comfortable paying for goods and services online, and several independent online payment options have developed to process those transactions securely. The services are popular particularly with the GenX and GenY age groups, making them appropriate parking payment options for cities with large numbers of college students.

Through online payment services, customers create accounts and deposit money into them using credit cards or electronic checks. When customers pay for items online — such as parking permits or parking tickets — they actually are transferring money from their online accounts.

At least one online payment service, PayPal, allows account holders to use debit cards on their online accounts so they can pay for items without having a credit card. So, if the city accepts debit or credit cards, residents can use them for parking, and the cities save money because processing and service fees for online payment services are not as high as those from credit card companies.

SMART CARDS AND RFIDS

With Smart Cards, customers “load” money onto a card electronically, and the money is debited with each use. The “smart” comes from an embedded circuit (chip) that is inactive until inserted into a reader or device, which enables any programs on the chip. When powered, the chip can perform processing tasks, such as access control, cash and wallet functions, activity tracking and security/decoding functions. To use the technology, card readers need to be installed on parking meters.

Smart Card technology is highly secure and relatively inexpensive. Most commonly used like debit cards, Smart Cards are generally available for purchase from various retailers (just like pre-paid phone cards), or money can be loaded onto an existing card.

The good news is that cities do not have to pay fees for each smart card transaction. For example, if a credit card company charges the local government a flat fee of 25 cents plus 3 percent of the transaction, then the fees to process a $100 purchase would be $3.25. However, to pay for 100 transactions each worth $1, the fees would total $28. The city does not pay any fees for smart card use.

Radio frequency identification (RFID) tags are becoming popular payment devices, replacing credit and debit cards. They have a transmitter that includes an antenna and computer chip embedded into a smart card, a cell phone or key fob. Money is not loaded on the RFID tag. Instead, RFID tags serve as account numbers from a third-party system responsible for billing and history.

When the tag passes a reader, the unique identifier of the tag is recorded. The ID is used to debit an account held by the user and backed by a credit card, and when the value in the account becomes low, the credit card is automatically charged to “top up” the account. Fees are managed by the tag provider when users top up their accounts. The most common example of an RFID tag in many U.S. cities is the E-Z Pass used for toll roads in New Jersey, New York, Houston and Boston.

PAY BY CELL

Some cities are incorporating payments by cell phones into their parking operations. The option can work well in a city that does not want to remove or replace existing single-space meters or other metering devices that do not accept credit cards.

Parkers set themselves up for the payment method by establishing an account with a Pay by Cell (PbC) provider that the city has contracted with to provide the service. Residents supply their license plate information when they establish accounts. When the parker arrives at a meter, he or she uses a cell phone to call the PbC and “start the clock.” When the parker leaves, he or she calls to “stop the clock.” In parking zones without time restrictions, parkers can even “feed the meter” without running back to the vehicle. The PbC company remits payments to the parking office.

Parking enforcers use wireless hand-held computers to query the PbC database to determine which parkers have made payments. Even if a meter indicates that time has expired, the parking officer can see in the database whether the parker has paid. The city has the option to use hand-held computers or cell-phones with browsers provided by the PbC vendor. In some cases, the PbC interface is integrated into the hand-held device.

PbC companies advertise the service to residents, and they do not charge cities to implement the service. The PbC provider makes money with surcharges for parking, and parkers agree to pay the fee during each of their transactions.

The method works within multiple parking zones, rates and tariffs; however, the parking office must be comfortable with being completely dependent on real-time wireless — either cellular or Wi-Fi — hand-held enforcement. Several North American cities are using PbC technology, including Coral Gables, Fla.

PAYMENT AGGREGATORS

Many cities have been accepting credit card payments at parking garages and on-street pay-and-display meters for years, but the small transaction fees that card providers charge cities add up quickly. To reduce the costs of accepting credit cards, some cities are beginning to use micro-payment aggregators to group multiple small transactions from the same credit card into larger payments, resulting in fewer transactions and fees.

Parkers pay with their cards as they normally would, but the transactions are saved over a month instead of settled immediately. For residents who pay to park frequently, the aggregators combine their multiple transactions into one transaction before sending it to the credit card company. On parkers' credit card bills, a single line item for one aggregated parking transaction for the month appears.

Some micro-payment aggregators allow residents to establish accounts tied to a debit or e-check settlement system. That way, residents can swipe their driver's license with a magnetic stripe at the payment unit rather than a credit card, and their monthly payments are billed to their checking accounts.

Blake Laufer is chief technology officer for Indianapolis-based T2 Systems (www.T2systems.com) and host of the blog www.parkingplanet.com.