Payment Processing Inc. is hoping low-cost Internet technology will persuade parking meter and kiosk operators to use its system to accept payment cards.
The Newark, Calif., transaction processor said this week that it is handling transactions for Verrus Mobile Technologies Inc., which operates parking systems in more than six cities, including its hometown of Vancouver.
Peter Smith, a director of client partner development for PPI, said its processing service offers clients a simple value proposition. “We’re able to price it down lower” by sending payment information over the Internet instead of standard dedicated telephone lines.
The market opportunity for processing parking transactions is huge because cities and private companies are eager to shift from cash to electronic payments, he said. Cash is expensive to handle and easy to steal, while cards are easier to use and make it easier for customers to spend more, he said. Several parking companies’ systems, including Verrus’, also permit people to authorize payments with mobile phones, which offer the same advantages.
In June the Federal Reserve Bank of Philadelphia estimated that consumers would spend $10 billion in cash on parking this year.
Verrus rivals, including Mint Inc. of Toronto and Reino Parking Systems Inc. of St. Leonards, Australia, have also been aiming to replace coins with cards and mobile phones.
In addition to having a low-cost communication system, PPI provides a single gateway service through which all of its clients route transactions, Mr. Smith said. It currently supports 25,000 parking spaces, and he expects that number to triple within six months. He would not say in how many cities these spaces are located.
Neil Podmore, the vice president of business development for Verrus, which began using PPI early this year, said the value proposition was compelling. “Price was a factor” in the decision to switch to PPI, and the lower costs are going straight to his bottom line. “We’ve been using it to increase our own margins.”
He would not say what vendor was handling the transactions previously.
Verrus’ system lets municipalities and parking structures accept card payments by cell phone. A sticker on parking meters has a number people dial to pay for parking. The system also sends text messages to cell phones to notify customers when parking is about to expire; they can also use their phones to buy more time.
The Verrus system processed more than a million transactions last year, Mr. Podmore said. “We’re on track to easily double that this year.”
Mr. Smith said the fact that PPI authorizes transactions immediately, rather than in batches, has cut down on fraud.
For example, a Florida parking garage was losing $2,000 to $5,000 to fraud each weekend, because criminals were using stolen cards to purchase vouchers they would resell for cash.
J.J. MacKay Canada Ltd., which sold the garage its meters, was working with a company that processed the transactions in batches, after the criminals had purchased the vouchers, Mr. Smith said; by switching to PPI, which could spot the bad card numbers immediately and reject the transactions, the fraud “went right down to nothing.”
Also, the Florida garage required its kiosks to run without an outside power supply, and PPI has developed a solar-powered system to approved payments in seconds over a cell phone connection.
The solar-powered system and the faster transaction approvals “opened up a whole new market for us,” he said.
PPI is marketing elements of its systems to self-service laundries and photo-printing kiosks.
Mr. Podmore said that PPI plans to collaborate with Verrus on projects besides parking. For example, his company has developed a system that lets sports fans buy concessions with their mobile phones. The system is being tested this season at Safeco Field, the home of baseball’s Seattle Mariners.
Edward Kountz, a senior analyst for financial services with the Jupiter Research division of Jupitermedia Corp. of Darien, Conn., said that as vendors pitch cashless systems to garage operators and municipalities, cost is one of the biggest factors.
“You have to have a system that is cheaper” than cash, he said. The cost of handling cash is high, especially since attendants and maintenance workers can pocket it so easily. The proliferation of cards and cell phones makes them compelling alternatives. “The goal here is to make money.”
