Beyond cash, the new world of cashless payment is just opening up: in the Netherlands, Japan and the USA, it has already become established, in Germany it is just starting: cashless payment has picked up speed in the Corona pandemic and is becoming increasingly popular. For parking operators, too, this is a development to which they must respond. In the pandemic, more than 20 percent of respondents tried contactless payment for the first time. According to a survey by the Bundesbank, the most popular means of payment here is a contactless checking or credit card.
Learn more about how payment methods work and their benefits so you can make well-informed decisions about which options to offer your customers.
Basically, a distinction is made between three different payment methods without cash:
Cashless payment means that no cash is involved in the payment process. This includes contactless payment, mobile payment, payment by QR code, and other forms of payment.
Contactless payment describes a cashless payment option in which, in principle, no contact is required between the means of payment and the terminal. NFC is often used as the technology here, but the use of QR codes is also possible. Examples of contactless payment are contactless card payment and payment by smartphone or smartwatch.
Mobile payment is a payment method that is also carried out using a smartphone (or smartwatch). It is a subtype of contactless payment. NFC technology can also be used here, as well as QR codes or in-app payment.
The options for cashless payment are diverse and are primarily characterized by the development of 5G and NFC technology. In the following, the functionalities, special features and the associated advantages of the various payment options are highlighted.
NFC plays a major role in cashless and especially contactless forms of payment. NFC stands for "near-field communication" and is an international transmission standard for the contactless exchange of data over short distances via radio. This requires a chip in a card or smartphone on one side and an invisible radio antenna on the other. The two communicators, i.e. the chip and the antenna, have to be very close to each other during the payment process, as communication only works up to a maximum distance of four centimeters.
For example, if a card with NFC function is held up to the NFC symbol at a payment terminal, the card and the terminal communicate with each other using NFC technology. The card number, expiration date and amount to be paid are exchanged within a few seconds. Once this process is complete and successful, this is displayed on the payment terminal and the payment process is complete. The NFC function is marked with four small white radio waves. These can be found on payment terminals as well as on checking or credit cards.
Thanks to a variety of security mechanisms, payments with NFC are just as secure as payments at the terminal where the card is inserted.
The conventional Girocard can be used for both cashless payment and contactless payment. The contactless payment process is then carried out using the NFC technology explained earlier. You can see whether a Girocard can be used for payment using NFC by the small white radio symbol. Without a PIN, you can then make contactless payments up to €50; for higher amounts, the PIN is required. In general, contactless payments can be made up to the card limit. The amount paid is then debited from the current account, as with a normal card payment with insertion.
Just like the girocard, the credit card can also be inserted or used contactlessly via NFC. The credit card must also have an NFC function for contactless payment, which is also indicated here by the white radio symbol. NFC is integrated with Mastercard and Visa via Paypass or Paywave. Just as with the Girocard, contactless payment without a PIN query is possible up to €50 and is debited from the reference account. If contactless payments are made several times in succession without a PIN, the PIN is usually requested after the fifth contactless payment for security reasons, regardless of the amount to be paid. The number of payments previously made is determined individually by each bank. A PIN can also be requested after a contactless payment amount of more than €150.
Cashless, contactless payment is also possible via smartphones. Just as in checking or credit cards, smartphones nowadays have an integrated NFC chip that can communicate with payment terminals.
In addition, to pay with the smartphone via NFC, you need an app on which the card is virtually stored, such as Apple Pay on iPhones and Google Pay or Samsung Pay on Android devices. The credit card account or the Paypal account is linked in the respective app. In order to be able to use these apps at all, cooperation between the app operator and the respective bank is a prerequisite. Once the card or Paypal account has been loaded into the respective app, the payment process looks like this:
The payment is authorized at the terminal and debited from the corresponding linked account. As an alternative to the offerings from Google, Apple. Samsung, etc., it is also possible to pay via cell phone using customer apps such as the "Mobiles Bezahlen" app from Sparkasse or "Digitales Bezahlen" from Sparda Bank, in which a checking or credit card is also stored. As part of customer loyalty programs, many retailers also offer customer apps with the option of in-app payment. This does not require an NFC function. One advantage of this is that purchasing behavior and the associated customer data can be collected in order to analyze customers and increase their loyalty to the company.
Payment with a smartwatch works very similarly to smartphone payment. These must also be equipped with an NFC function. Examples of smartwatches with NFC function are Apple Watches with Apple Pay, Samsung Watches with Samsung or Google Pay, Garmin with Garmin Pay, Swatch with Swatch Pay and Fitbit with Fitbit Pay. The card to be used is likewise loaded into an app. To make a payment, all you have to do is unlock the smartwatch, open the app and hold it up to the terminal.
The term QR code stands for "Quick response code" and can also be used for payments. The code is able to store a lot of data and is considered more secure than barcodes because the information is encrypted. The code on a printout or screen is scanned by a cell phone camera or barcode scanner, decoded and transformed into a string of characters. This string can then trigger various commands, including payment instructions. There are various ways in which QR codes on smartphones can be used to make payments.
The most relevant method for parking operators is this one: The code will be scanned on a bill or screen at a cash register by an app that supports QR code payments, such as apps from banks. The price may still need to be confirmed to complete the payment.
In another method, the personal, unique QR code that exists in a payment or business app can be scanned. The account or card data is stored in the app and the QR code is scanned at the checkout using the barcode scanner. However, this code can also be scanned by other people with their smartphone.
These payment methods are becoming more prominent and popular in parking management. Increasingly, thought must be given to whether and which payment methods operators want to support. For this, it is important to think about the advantages of cashless payment methods for the companies themselves and customers. In this way, the payment options can be offered that both support the operator's business model and optimally satisfy the needs of parkers. A selection of the benefits of cashless payment is given here.
Even though cash is still the most widely used means of payment, accounting for 60 percent of transactions, a shift toward cashless payment has been observed since the Corona pandemic. The number of cashless transactions increased by 51 percent from 2010 to 2020. Changes in purchasing and payment behavior are leading to a desire on the part of consumers to be able to make contactless payments.
Nevertheless, Germany is not yet ready to offer services only on a cashless basis, as this will exclude many potential customers, such as the elderly. Parking operators need to address these multiple payment options in their long-term planning, incorporating their knowledge of their clientele and offering a choice of payment methods. This is because limiting customers to one or two payment options prevents growth, especially if the options offered are not adaptable to new developments.
In addition, thought must also be given to cooperations with parking apps such as PaybyPhone, easyPark, ParkNow, Parkster or Handyparken. The coverage of different payment options as well as cooperations thus appeals to as many customers as possible, increases convenience and thus customer satisfaction and the attractiveness of the parking offer.
Likewise, new developments and innovations are to be kept in mind in order to adapt the offer accordingly on the one hand and to coordinate the payment options on the other. One example is electric vehicles and the parking challenges that arise with them, such as charging and battery infrastructure and use, as well as payment for them. Another example is connected vehicles: a digital account is linked to the vehicle, which is identified by license plate or facial recognition and automatically debits payment. This eliminates the need for much-used kiosks. A future in which payment is made only through a collected app, facial recognition or license plate recognition is conceivable. Through such and other innovations, payment methods are changing continuously.
Cash is still important in Germany, but cashless and contactless payment methods are rising steadily every year. Parking operators must adapt to the current change and respond to the needs of their customers. This means that cashless, contactless, and mobile payment methods should be offered in addition to payment with cash.
In April 2023, the parking area of the Söllereckbahn was digitalized with the smart parking system from Peter Park . Since then, operators and visitors to the leisure facility have benefited from the barrier-free system through seamless parking processes, reduced waiting times and ticketless payment.
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