A brief history of contactless parking payments

A lot of us are fans of contactless payment systems now. In fact, the RBA reports that in 2019 around half of all in-person payments were made by ‘tapping’ a debit or credit card on a card terminal, part of an ongoing trend towards what some commentators predict will be a completely cashless society.

It’s a convenient way to pay for low-cost items and services, and we have naturally therefore adopted it.

More and more, this is also applicable to how we pay for parking. Parking Australia’s contactless parking directory reveals that across the country there are many parking providers adopting this contact-free technologies.

But where did it come from? And how did we get here?

There are certain preconditions that were required for the creation of the contactless parking payment systems we use today. The most important two are the development of cashless payments and the evolution of parking payment systems.

In the scope of human history, cashless transactions actually predate cash. By consensus, it is believed that humans probably began first trading with each other in barter systems before recorded history. As far as currencies that modern people might recognise go, we see that coins emerged as a form of commodity money around the 6th or 5th century BCE, and we have some evidence of representative currency systems predating those, as early as the 14th century BCE in ancient Egypt.

Various forms of cash-free payment are seen at different points in history. Money orders, cheques, and charge, credit and debit cards are some of the clearest examples recognisable to the modern reader.

This nonlinear and meandering evolution of currency finally converged with parking payments in 1933. Oklahoma City was suffering problems with traffic control and spaces for vehicles when Carl Magee began work on the very first parking meter. His design was manufactured and patented, and it was installed in Oklahoma City on the 16th of July 1935, where paid parking enjoyed its first success as a method of controlling traffic congestion and motorist behaviour.

(The Magee-Hale Park-o-Meter manufacturing company later became POM, and they still manufacture meters in America today—including meters that now facilitate contactless payments by cell phone!)

As far as purely contact-free, cash-free payments go, home computer-based banking was technically available (in some places and to some people, of course, as computers were not ubiquitous in the home as they are today), in the 80s. But when it comes to the specific kinds of transactions used to pay for parking—always on the spot and in person—our turning point is 1997.

In 1997 Coca-Cola experimented with a system whereby a person could send an SMS to their vending machine to be vended a can of Coke— marrying new technology with exciting novelty in an interesting marketing ploy.

Somewhat more importantly for our purposes, 1997 is also when we saw the release of Mobil’s Speedpass.

Speedpass is a keychain device using RFID—radio frequency identification, a technology that uses electromagnetic fields to track information attached to objects. The device links to a credit card, and allows touch-free, cash-free payment at participating retailers. And you’ll notice I’ve written this in the present tense—while Exxon-Mobil now looks to be transitioning to a mobile app to perform the same function, Speedpass tags have been in operation for 23 years.

From 1997, cashless, contact-free payments were increasingly available. PayPal was launched in December 1998 in the USA and acquired by eBay in 2003, allowing thousands of people to make purchases at whichever inadvisable time of night they pleased. The company began operation in Australia in 2005, affording us the same privilege. The eBay-PayPal relationship hasn’t continued—eBay spun PayPal off into a separate, publicly-traded company in 2015, and in 2018 it announced that it would no longer use PayPal as its primary payments processing partner.

In the sphere of parking technology specifically, the parking meter made technological advances, but they were still largely mechanical right through the 1980s. Most cities didn’t begin replacing their mechanical meters with battery operated ones until the mid-90s. New York started making this shift in 1995, and the last mechanical meter was replaced in 2006.

From the late ‘90s to the mid ‘00s, various systems of contactless, cashless payment were examined as new possibilities, and contactless mobile phone payments came along late in that period. Smart card parking payments have been implemented in some European locations, but have been criticised for their inconvenience and lack of scope.

Mobile phone-based payment services for parking payments have been in operation for up to 13 years, with cellular phone RFID already mentioned as an emerging technology in the literature at that time. However, their implementation across local government areas and councils wasn’t becoming common until they seemed like a sure thing—for most, this wasn’t until we saw parking payment applications develop. By 2014, those systems were at the cutting edge of proven technology, and still greeted as new and innovative.

We were moving toward cashless payment methods at that time in most other spheres as well. By 2015, BBC news was reporting that in the United Kingdom, 52% of transactions were electronic—not cash.

They also predicted a further decline of up to 30% in cash payments over the next 10 years.

They probably hadn’t accounted for COVID-19 in that prediction.

The pandemic has been the strongest recent driver for the adoption of cashless, contactless payment options. Because cashless, contactless payments don’t require motorists to touch any object that is shared among the public, they entirely eliminate parking payments as a vector for transmission, but they ensure that business continues as usual.

A significant minority of Australian transactions were still made using cash in 2019, according to a report from the RBA on Consumer Payment Behaviour in Australia. But as soon as the seriousness of the pandemic settled into the minds of most of the population, we began to see businesses rejecting cash payments.

Cash might be legal tender, but businesses are still able to refuse it. In the interests of protecting their business, many are opting to exercise that right and preserve the maximum practical social distance for their staff and customers.

In light of concerns around social contact and the spread of disease, the Australian payments industry has also increased the contactless transaction limit from $100 to $200. The change started rolling out across cards and retailers in April. It follows similar changes in other countries around the world.

What, then, does that mean for parking payments in 2020 and beyond?

Well, it’s good news for mobile apps: occupancy may itself be down, but mobile app usage is up to 70-90% of transactions, instead of the earlier standard 50/50 split between mobile and meter. COVID-19 has caused concerns about making physical contact with terminals, giving motorists a strong new motive for trying parking app technology.

In light of this increase in adoption, it seems likely that, once motorists eventually flood back into city streets, the numbers of mobile app users will remain high and only continue to increase in the future.

About the Author

Kristy Cook is Marketing and Communications Lead and has over a 15 years’ experience in the conception, development and implementation of strategic sales and marketing programs. Kristy’s strategic and branding insights informs how DCA positions its dynamic technology and data solutions in market.

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