Why Cash Payments for Parking Are Dying Out
Why Cash Payments for Parking Are Dying Out
Out With the Old, In With the New
For decades, motorists paid for parking using paper money and coins, but that is changing fast as people increasingly rely on technology to pay for goods and services across the economy and in the parking lot.
Smartphone ownership has resulted in a convenience-based economy driven by digital transactions and payments. The COVID-19 pandemic strengthened the emerging digital trend as customers and businesses feared the health risks associated with physical currency.
Nearly 9 out of 10 customers in the United States (89%) are using digital payments. Within the next two years, 60 percent of Americans are expected to have a digital wallet.
Reasons For the Decline of Cash Payments for Parking
There are multiple reasons why cash payments are declining in the economy at large, especially in the parking industry. One large reason is the shift in consumer preferences to seamless digital payments. Studies indicate consumer preference for digital payments, largely due to increased market share from younger generations like Millennials and Gen Z.
Another reason is the proliferation of mobile parking apps, creating a new paradigm for searching and paying for parking. Technological advancements and the introduction of multiple new parking technologies are working to provide an all-around beneficial experience for operators and parkers.
Digital payments provide a quicker and more convenient payment experience for the consumer. The speed and security associated with digital payments also serve as a boon for operators, reducing cash slippage, loss, and handling costs, all while boosting sales. These benefits are noteworthy in low-value transaction industries such as parking.
Main Impacts on Businesses in the Parking Industry
Before transitioning to any new technology things, a cost-benefit analysis will allow you to see whether it is worth the asking price. Transitioning to digital payment methods is no exception, but in this case, the pros greatly outweigh the cons.
The adoption of digital payment technologies reduces operating costs, significantly enhancing the efficiency of parking asset management. These methods not only streamline the revenue collection process but also simplify the management of your parking assets.
Additionally, digital payment systems offer the advantage of collecting digitized data on parkers’ spending behavior, which aids in effortlessly tracking inventory and monitoring the availability of parking spaces or tickets.
There are a few challenges to address when transitioning to a digital payment system.
Around 7.1 million American households were unbanked in 2019, meaning they did not have any bank or credit union account. While this was down from 8.4 million in 2017, the pandemic may play a role in an increase in unbanked households going forward. Without a bank account, many Americans find it difficult or completely impossible to use digital payment technologies.
Other parkers with bank accounts may also find it hard to adapt to new digital technologies for a variety of reasons. Many customers may simply resist the change involved in digital payment systems and digital parking, even if they have the technology and knowledge to use them.
To smoothly transition to digital payment methods, it’s crucial to implement strategies that facilitate the switch. Providing clear written and oral instructions and guidance to parkers, as well as installing informative signs at parking assets, can ease this process. Encouraging the switch through incentives can also make it more appealing to reluctant customers. Additionally, maintaining a physical payment option for those unable or unwilling to adopt digital methods can be effective, albeit with a small additional fee.
The Future is Cashless
The old adage “cash is king” still reigns true, but in the parking industry, it’s becoming a metaphor that no longer literally means physical currency. Digital transactions are reshaping the business landscape, and the parking industry is no exception.
This transition from cash to digital payments in the parking industry reflects a broader shift toward technology-driven transactions. Driven by smartphone ownership and heightened by COVID-19 concerns, the change is further cemented by consumer preference for seamless digital experiences.
Speak With a Parking Expert
Making the switch to a digital parking solution may seem daunting, but the advantages make it worth the effort. Implementing and using this technology will yield long-term benefits for your business, including increased efficiency, enhanced security, and improved customer satisfaction. When you are ready to transition to the digital frontier, know that you don’t have to do it alone.
ParkHub has the experience and know-how to make your transition seamless and help implement digital parking solutions. Book a demo today to experience the ParkHub difference firsthand.