Header image

Parking payments The payment game Andrew Potter, director at Parking Perspectives, goes in search of the total cost of offering cash, card and mobile payments nother stolen cash box from a pay and display machine. It registers large on the day, not only because of the cash taken, but also because of the lost revenue until the machine can be repaired, and the costs of those repairs, plus dealing with complaints from angry customers. It makes sense that, in those dark moments, the idea of removing cash from the parking estate is very attractive. No more costs to repair the coin mechanism or upgrade to accommodate new coins, and no cash-handling expenses. A cashless operation could offer better data on customer usage and a range of ticket and pricing options to support market disaggregation or other services. It could also offer now, or in the future more efficient ways to enforce. The business case should be compelling, but we wanted to examine this to find out if cash really does cost more. A People who pay using coins will sometimes not have the right change, so will overpay. Add that into the mix, and the net cost of a cash transaction halves Our research For our cash model, we included the cost of installing a machine, its maintenance and replenishment, and costs associated with collecting coins. We have added power and communications, and a share of the back-office software. Theft and vandalism rates vary significantly between areas, so we took a contextual view, accounting for a break-in occurring to one machine in every 20 each year. Weve added to this the cost of repairs for vandalism to three machines per 100 per year. Weve spread each of these costs to present a cost per transaction. For a system based on contactless or chip and PIN readers, weve considered provision of a completely new machine and just the marginal cost of adding a reader to an existing pay and display machine. The serviceable life of the readers is taken to be between five and seven years. Weve applied credit card transaction charges and payment service provider charges for each transaction. For phone payments, there is no significant physical infrastructure. Weve applied a unit cost per transaction and bank acquisition charges at two per cent. Our findings We set out thinking that, as the typical fee paid for parking 18 britishparking.co.uk PN June 2021 pp18-19 Parking Perspectives.indd 18 21/05/2021 11:26