How to collect on-street parking fees (and why it matters)

Today, a primer on mechanisms for collecting on-street parking fees.

But first, why should you care?

I think of you, dear Reinventing Parking readers, as having a keen interest in making parking policy wiser. But I don't expect you to be deeply into the technical details. I don't expect parking to be your main preoccupation.

Even so, I think a primer on this technical issue might help you! Why?

Because a basic understanding of pricing mechanisms, especially recent digital ones, is important in many of the parking policy debates you might get involved in.

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Busy places need effective on-street parking management. And that almost always means a smart approach to on-street parking fees. There is no escaping pricing if we want parking success without parking excess.

Unfortunately, public support for parking fees can be fragile, to say the least.

Most of the unhappiness is about charging fees at all. Some anger is about the price levels.

But irritation or anxiety about the physical act of paying can make resistance to parking fees very much worse.

News items about street parking fees invariably include complaints like these:

• I suspect that the parking attendant cheated me
• I didn't have enough coins
• I paid for an hour but my appointment took two and I got a penalty notice
• I paid for three hours but ended up only needing one
• It was pouring with rain and I was soaked before I even got to the parking meter
• Paying seemed so complicated
• This payment system ignores my disability
• I heard this fancy parking fee system cost a bomb! What a waste!
• The meter was broken
• It is such a hassle!

I could go on but you get the idea.

The good news is that some modern options can minimize such worries. Don't let pricing mechanism mistakes make things any worse than they need to be.

Today's article, like the earlier one, 'How to set on-street parking fees: eleven ways compared', is based on a section in the toolkit on On-Street Parking Management that I wrote for GIZ's Sustainable Urban Transport Project (SUTP).

As always, please alert me if you find any errors! I will try to look into them and correct if necessary. This is a complicated and fast-changing arena.

Let's get started.

If you are in a hurry, scroll straight down to the most advanced digital options near the end (from option 9 onward).

An aside about payment methods

This article is mainly about Pricing Mechanisms (how parking fee payments are physically organized, such as in-street parking meters and so on).  

But we can't help dipping into the related issue of Payment Methods too, at least a little bit. 

Payment methods refers to how the money transfer for the payment is handled. Choices include cash (coins, notes or both), credit cards and debit cards, stored value cards, payment through a mobile telecoms carrier, mobile wallets or direct debits from bank accounts.  Keeping transaction costs low is an important issue in the choices here.

An aside about criteria for choosing street parking pricing mechanisms

I am almost ready to list the pricing mechanism choices. But first, what issues should a municipality consider in choosing pricing mechanisms?  

• Overall costs (capital and operating combined). This is always important but it is make-or-break if the parking is cheap. Low costs are also important if more than one pricing mechanism will be running in parallel (for example, meters and mobile payments).
  Capital cost. Mechanisms with significant street infrastructure tend to have high capital costs.
  Operating cost. Labor costs may dominate here.
  Transaction costs. Important especially where parking is high-demand, short-duration. Be wary of significant flat fees per transaction with certain mechanisms/payment methods. 
• Convenience for users. This includes several dimensions:
  Convenience of mode of payment.  Accepting only small denomination coins, for example.
  Choices of payment mode. Having more options (such as coin. note, card AND phone) is usually equated with convenience.
  Not having to predict length of stay in advance.   Ability to extend parking sessions.
  Convenience for diverse users. Especially for motorists with disabilities. 
• Ease of price adjustments. Includes the ability to set different fees for different locations and for different times of the day and week. 
• Ease of special offers. This includes the ability to offer discounts to special groups (such as local residents or for short vehicles)
• Ease of enforcement/ integration with enforcement. The costs and efficiency of enforcement of the pricing system can be heavily influenced by pricing mechanism choices. 
• Ease of data collection. Digital pricing mechanisms often enable cost-effective data collection, which is a great boost for evidence-based, outcomes-focused parking management.
• Trustworthiness.  Resist or deter theft/leakage.   
• Robustness/reliability.  Will it cope with severe weather, vandalism, power failures, computing failures, and operator or user errors? 
• Suitability for motorcycles. In many parts of the world motorcycles are important and usually need on-street fees too.  

By the way, you will notice that I haven't linked to any vendors in this article. Looking at vendors is not the place to start if a municipality is in the market for parking fee mechanisms. Instead, think carefully first about the goals of pricing and which of the criteria above are important. Then start preparations for a tendering process. An early step is to publicize a Registration of Interest (ROI) call. Don't start by talking to any specific vendor!

Also be aware that mobile payment mechanisms mean that the days of awarding the contract to a single vendor should be over. Parking meters (if any) and several mobile payment options can operate simultaneously in the same streets. 

Pricing mechanisms: the options and their main strengths and weaknesses 

Let's take a look at the pricing mechanism options, starting with low-tech options and ending with recent digital mechanisms.

These are for casual on-street parking. I am omitting the mechanisms for handling permits or season parking tickets from today's list. This article is also not for off-street parking, which has a number of additional fee mechanisms not discussed here.

Non-Digital Mechanisms

The low-tech options early in our list are varied but have in common the inability to easily capture a stream of digital parking usage and payment data for the parking authority or operator.

1. Attendants: cash payment and paper tickets

Attendant seeks flat or time-based fee on arrival or departure and (in theory) issues ticket on arrival.
Pros: Simple; Very low capital cost; Convenient for motorist; No need to predict duration
Cons: Very high leakage risk; Very labour intensive; Makes time-based fees difficult so this mechanism often prompts flat fees per arrival (which undermines parking management) 
Examples: Most cities in Indonesia; Dhaka; Parts of Beijing, other Chinese cities, some cities in India.

2. Pre-purchased coupons (tear, pierce or scratch then display)

Buy coupons from various retailers. Indicate starting time on correct value coupon and display to prove payment for a period of parking. 
Pros: Low capital cost; Low-tech (although anti-counterfeiting effort needed)
Cons: Motorist error is common; Must predict duration; No data stream; Minor cheating (indicate arrival later than actual); Enforcement cost; Counterfeiting.
Examples: Singapore, some cities in Brazil, Malaysia, Ireland.

3. Valet (usually cash)

Pay an attendant who parks the car elsewhere. Usually a private-sector initiative.
Pros:  Can be a 'safety valve' for extreme parking problems at busiest times and places. Low capital cost.
Cons: This cannot be the general approach to on-street parking payments; High operation costs.
Examples: Common in many countries, especially in restaurant or entertainment areas with localized parking problems.

4. Mechanical single-space meters

This is the classic old-fashioned coin-operated parking meter invented in the 1930s.
Pros:  Simplicity; Familiarity (in some cities)
Cons: High capital/operating cost; No data stream; Coin-only; Must predict duration; Difficult to change prices.
Examples: Still in place in some cities but rapidly disappearing.

5. Electronic meters (early generations) - usually multi-space, pay-and-display

Deployed in the 1980s and 1990s, these are electronic meters but are less sophisticated than today's ‘smart’ digital meters highlighted later. Most such meters have been pay-and-display multi-space meters. Users walk to the meter, pay for expected duration, return to vehicle and display receipt. 

Pros:  Improved reliability and price flexibility over mechanical meters; Electronic monitoring and recording of repair and collection; Moderate capital and operating costs (one meter per 6-12 spaces); 

Cons: High capital costs; High enforcement costs for pay-and-display. Must predict duration; Limited payment methods (usually coin only). Pay-and-display is poorly suited to motorcycles 

Examples:  Still common in Malaysia, Australasia, North America (although rapidly being replaced by modern meters).

Digital mechanisms (all those below)

Modern digital parking payment mechanisms have digital capture of transaction and parking data.
Many use purely digital proof-of-payment, without printing tickets. Most allow digital payment modes (credit/debit cards and mobile payments of various kinds). Some are cashless.
Common Pros:  Easy price adjustment; Rich data stream; Usually real-time, two-way data exchange with a control centre, which has many benefits. Several digital mechanisms can often coexist. User can be notified by message or app before time expires. See below.
Common Cons: Beware of payment modes with a significant fixed cost per transaction. See below for strengths and weaknesses of specific digital options and example cities

6. Attendants and digital handhelds (pay on arrival)

Pay attendant fee for expected duration and display ticket. May allow multiple payment modes.
Pros:  Motorist convenience; Lower leakage than non-digital attendant options; Easy price adjustment; Data stream
Cons: Very labour-intensive; Must predict duration
Examples: Makati in Metro Manila; Medellin, Colombia; parts of Delhi, India; Seoul;.

7. Attendants and digital handhelds (pay later)

Attendant makes regular rounds and fixes tickets to vehicles found parked. New ticket at regular intervals. Motorists pay later online or through local retailers.
Pros: Motorist convenience; No need to predict duration; Low leakage; Easy price adjustment; Data stream
Cons: Very labour intensive.
Examples: Taipei

8. Electronic single-space or two-space meters (e-card payment)

This category refers to modern but relatively simply electronic meters with payment only by contactless stored-value smart cards.  Some cities have added contactless stored-value card payment to older single-space meters (for example, Ann Arbor, USA)
Pros:  High reliability; Low leakage; Theft proof.
Cons: High capital cost; medium operating costs; Must predict duration; Limited payment methods. Limited data stream I assume.
Examples:  Hong Kong, Guangzhou

9. Smart (digital) single-space meters

Digital meters with data connection to the parking operator.
Pros:  Multiple payment options including cash. Convenient; Can integrate with other digital options to allow extend-by-phone, etc; Easy price adjustment.
Cons: High capital and operating costs;
Examples:  San Francisco (SFPark).
[Tokyo's single space meters may be a variation on this, although they have very limited payment options (usually 100 yen coin only). And I am not sure how sophisticated their data exchange capabilities are. As far as I know, there is no integration with pay-by-phone in Tokyo. However, Tokyo's single-space meters each have an in-built sensor that detects a parked vehicle. ]

10. Digital multi-space pay-and-display meters (6 – 12 spaces per meter).  

Walk to meter, pay for expected duration, return and display receipt on/in vehicle;
Pros: Often with multiple payment modes Robust; Easy price adjustment. Often integrated with top-up-and-extend via any meter or via mobile payments. 
Cons: Relatively high enforcement costs for pay-and-display. Moderate capital and operating costs (high compared with low-infrastructure options below); Poorly suited to motorcycles
Examples: Common in Europe and increasingly in North America.

11. Smart (digital) multi-space meters with Pay-by-Space

No need to return with receipt. Parking space number is entered at meter and registered as paid for relevant period.
Pros: As above. But easier/cheaper enforcement. Often allows top-up and extend via any meter or phone.
Cons: Requires spaces to be marked and numbered; Must enter space number (prone to user error)
Examples: Various OECD cities

Ann Arbor digital pay-by-space multi-space parking meter. By Dwight Burdette (Own work) [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons)

12. Smart (digital) multi-space with Pay-by-Plate (or Pay-by-License)

No need to return with receipt. Vehicle license number is entered at meter and registered as paid for relevant period.
Pros: As above; Easy LPR enforcement; Often allows top-up and extend via any meter or phone; Integrates well with discounts and permits;
Cons: Privacy concerns; Users must remember their license plate number. Relatively new.
Examples: Increasingly common in OECD; Mexico City’s ecoParq; Chennai.

Pay-by-Phone: Several variations below.

Each can register either a parking space number,  small parking zone number or the vehicle license plate number.   Often used as a complement to digital meter options above. Rapidly growing % of on-street parking payments in many cities.
Pros: Low additional capital costs; Eases enforcement, especially if licence-plates used. Easy price adjustment; Discounts and permit integration; Easy extension of time paid. Suits motorcycles.
Cons: Prior registration usually; Capital cost savings only if street infrastructure removed; May need alternatives for certain users; Extra complexity in enforcement if combined with pay-and-display.

13. Pay-by-phone call

Call automated phone line and enter details including space or zone and desired time.
Pros: As discussed above for pay-by-phone options;
Cons: Significant cost per transaction;
Examples: Shenzhen; various OECD cities.

14. Pay-by-sms

Send text with space, zone or license plate number and desired time
Pros: As for pay-by-phone options above; Convenient payment often via mobile phone bill;
Cons: Significant fixed cost per transaction
Examples: Dubai; Sharjah; and many others.

15. Pay-by-smart-phone-app

Pre-register payment account and license plate. When parking use app to register location and desired time.
Pros: As for pay-by-phone options above; In addition: Very convenient; Very low transaction costs;
Cons: May feel need to have other options for non-smart-phone users.
Examples: Shenzhen, Tel Aviv (mobile-payment-only cities), São Paulo and many others (where this is in addition to other options).

16. In-vehicle meters

Device displayed in vehicle is loaded with pre-paid credits or linked with payment account. Manual activation is usual.
Pros: Low-moderate capital costs; Low operating and transaction costs; Usually easy price adjustment; Convenient. Pay exactly for time used; Near-field communication enables integration with enforcement.
Cons: Usually need to retain alternatives for non-locals and others
Examples:  various OECD cities; Tel Aviv.

17. Global Positioning System (GPS)-based in-vehicle meters

GPS tracks device installed in vehicle, detects parking events, calculates fees for billing or deduction. May include in-vehicle display.
Pros: Very convenient for motorist; Low-medium capital costs; Low operating, transaction costs; Easy price adjustment; Pay exactly for time used; Excellent integration with enforcement, discounts and permits; Well-suited to delivery vehicles.
Cons: Possible privacy concerns (although design can protect privacy, these worries are difficult to allay); Usually need to retain alternatives for non-locals and others
Examples: Calgary.

So You Want a Recommendation?

It is best to start with clear criteria not a prejudgment about the technology or mechanism.

But having said that, here is my view (for now).

The digital pay-by-plate options seem to do best to maximize parking-management effectiveness and minimize the pain.

They score highly on most of the key criteria mentioned earlier, especially high convenience for users, easy price adjustment, data stream, low-cost integration with enforcement, low transaction costs, suitability for motorcycles, and ability to integrate with permits and special discounts.

This means that any city tackling this issue afresh today should probably focus on these options (in pay-by-plate mode): 
12: Smart (digital) multi-space meters with Pay-by-License-Plate
15: Pay-by-smart-phone-app
16: In-vehicle meters, or
17: Global Positioning System (GPS)-based in-vehicle meters
or some combination of 2 or more of these (including all of them together).

In addition, if your city does not already have parking meters, then seriously consider skipping in-street meters completely and just use the mobile options (15, 16 and/or 17)!. These mobile phone and in-vehicle meter options have very low capital costs. But be careful to keep transaction costs down (via mobile wallets for example). For example, in Tel Aviv the only options to pay for on-street parking are pay-by-phone (two companies) and in-vehicle meter (one company).

What do you think about on-street parking payment mechanisms? And could more places skip the parking meter altogether and just use mobile payment options?

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