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January 2006 • Volume 11 Number 1
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Feature of the Month Smart Cards and Parking Over the last decade, advances in technology have fueled major innovations in electronic payment strategies. These strategies are revolutionizing the way payments are made in a variety of environments including retail, banking, and transportation. Transportation in particular has witnessed large-scale investment in the electronic payments infrastructure, with a variety of such programs now reaching the launch stage . Smart cards are playing an integral role in these new payment strategies. Smart cards provide increased security, enable more distributed processing, and provide a variety of communications options. Smart cards that support contactless communication are becoming more prevalent in mass transit programs and are also being used for financial payment, with millions American Express, MasterCard and Visa contactless payment cards now in use in the U.S. Contact smart cards are seeing continued use in European and Asian financial payment card programs and are also being used for domestic security, on-street parking, and other applications. Contact Smart Cards in Parking Use of contact smart card technology is well established in the parking market, with vendors providing solutions for all segments: single-space meters, multi-space meters, and off-street parking. The large parking vendors have installed closed-loop contact smart card solutions in cities around the United States. In these implementations, the parking operator issues (and reissues) the smart cards, manages retail outlets (where they exist), manages cardholder queries, reloads the cards (where this is possible), and manages the entire card system. Many of the cities implementing smart cards are doing so by leveraging their existing meter infrastructure, replacing single-space meters with smart card-enabled single-space meters. MacKay Meters, one of three North American manufacturers of single-space meters, estimates that at least 75% of the tenders/bids for single-space meters received during 2004 and 2005 have specified the requirement to accept payment by both coin and a contact smart card, or to accept payment by coin and have the ability to be upgraded to accept payment by a contact smart card at a later date. Other cities are upgrading their single-space meters to accept smart cards and adding additional multi-space meters where appropriate. In those cities, the multi-space meters and single-space meters share the same smart card program, and multi-space meters anywhere in the city can be used to load value onto the smart cards. Some of these solutions only work with one parking payment vendor's technology, although there are instances of collaboration between non-competing vendors in some cities. The current implementations are restricted to one type of parking operator (either public or private), with no cross-operator implementations (for example, between public and private operators). Other solutions being implemented allow multiple cities to take part in a single collaborative parking payment system using smart cards. In these systems, a third party manages and operates the smart card payment system on behalf of the participating cities. Two examples of contact smart card-based parking programs are New York City and Portland, Oregon. The New York City Department of Transportation (DOT) has been using contact smart cards to pay for parking since the summer of 1998. The cards are prepaid and sold as disposable cards. To date, over 1 million cards have been circulated, at a rate of about 25,000 cards per month. The cards are sold by mail order, over the Internet, and through the CityStore, which has two locations in Manhattan.
In many cities, however, the adoption rates for smart card-based parking systems have been low, with usage rates in single-figure percentages. This limited success has been due to a variety of operational challenges: patron acceptance, distribution, convenience, interoperability of systems, and program support costs. Most city meter card programs depended on disposable smart cards that were sold through selected retail merchants. Parking patrons were forced to seek out these merchants both to acquire the initial card and to replace the card once its value was exhausted. In addition, due to lack of standards, smart cards were not interoperable across systems and metering technologies. The parking card could not be used consistently throughout a region. As a result, patrons did not find that the increased convenience of using a card for parking payment justified the effort of acquiring the card; however, with on-street parking rates on the rise, coins will become a decreasingly viable payment mechanism. If implemented properly, a smart card system can allow a city to increase revenues dramatically. The city can increase rates on existing meters without incurring the high initial replacement costs associated with implementing a completely new system. Contactless Smart Cards in Parking In the United States mass transit sector, the combination of the fare collection infrastructure life cycle and the introduction of new technologies has resulted in 18 cities awarding over $1 billion in contracts for regional transit payment systems that use contactless smart cards as the primary form of fare payment. The transit industry is also leading the way in integrating contactless smart card technologies into parking applications, with transit operators worldwide (e.g., Washington, DC, Philadelphia, Atlanta, Hong Kong, Lyon, France) implementing parking solutions based on contactless smart card technology. Transit payment programs using contactless smart cards addressed issues that limited usage through the establishment of standards, broad regional collaboration of agencies in adopting a common system, establishment of regional customer service operations, and the use of reloadable cards.
In June 2004, SmarTrip became the only form of payment accepted at Metro-operated parking lots. To handle card availability and distribution, WMATA placed card dispensers in each of its rail stations with parking facilities. The cards can be reloaded using the current WMATA reload infrastructure. The system is also designed to allow riders to use the WMATA web site to determine space availability and current monthly rates. This mandatory use of the card at parking facilities resulted in a surge in the quantity of cards sold. During the last year, WMATA sold over 700,000 SmarTrip cards, of which 80% were sold from the card dispensers. Similarly, the Metropolitan Atlanta Rapid Transit Authority and the Port Authority Transit Corporation (a subsidiary of the Delaware River Port Authority operating in Pennsylvania and New Jersey) have contracted for contactless smart card-based payment systems controlling all of their park-and-ride facilities. In both cases, a regional transit smart card is in the implementation stages. The system will allow transit users to pay for parking with the same card they use for bus and rail travel. The international standard ISO/IEC 14443 is being used by both the transit industry and financial industry for contactless smart cards. Transit agencies are also collaborating at a national level to create technical standards aimed at system interoperability. Multiple national standards are nearing completion in different parts of the world bearing striking similarity to each other in terms of approach and content. Within the United States, the American Public Transit Association has sponsored application-level and inter-system messaging standards allowing systems provided by disparate suppliers to be interoperable, with final standards expected to be published in 2006. Benefits of Smart Card Technology for Parking Payment The parking industry generates over $17 billion per year in revenues. A significant portion of the fees paid for parking is collected as cash. However, according to the American Bankers Association (ABA) 2003/2004 Study of Consumer Payment Preferences, increasing numbers of consumers are using electronic forms of payment. Both traditional credit/debit cards and smart cards are well suited for all-day and long-term parking payments. However, smart card technology is the clear leader for on-street and short-term electronic parking payments. By implementing smart card technologies, parking operators can take advantage of the increasing consumer preference for electronic payments and achieve significant benefits:
Conclusion All of the activity in both the transit and financial industries paves the way for the parking industry to leverage the broader transportation and payment card industry initiatives and develop solutions for the challenges previously experienced in the use of smart cards. Through industry groups like the Smart Card Alliance Transportation Council, parking facility owners and managers and parking equipment vendors can be exposed to industry developments and establish the relationships needed to benefit from them. By participating in industry initiatives, the parking industry has the opportunity to influence the development of standards and commercial structures aimed at facilitating regional, and ultimately, national transportation payment networks. Without such participation, parking owners and managers face the risk of having such standards imposed on them without their involvement in the development. The Smart Card Alliance urges parking industry participants to join these transportation industry initiatives and take advantage of the substantial benefits being reaped by counterpart transportation market sectors. About this Article This article is an extract from the Smart Card Alliance Transportation Council white paper, "Smart Cards and Parking," researched and written by the Transportation Council and published in January 2006. Individuals from 21 organizations in the Smart Card Alliance Transportation Council collaborated on this white paper. Lead contributors included representatives from: ACS, Cubic Parking Systems, First Data Corporation, MacKay Meters Inc., Massachusetts Bay Transportation Authority, OTI America, Parcxmart Technologies, Inc., PARSONS, PBS&J, Tri-County Metropolitan Transportation District of Oregon, Visa USA, ViVOtech and WMATA. The full white paper and additional information about smart cards and the role that they play in payment and other applications can be found on the Smart Card Alliance web site at www.smartcardalliance.org . About the Transportation Council The Transportation Council is one of several Smart Card Alliance technology and industry councils that were created to foster increased industry collaboration within a specified industry or market segment. The Transportation Council is focused on promoting the adoption of interoperable contactless smart card payment systems for transit and other transportation services. Formed in association with the American Public Transportation Association (APTA), the Council is engaged in projects that support applications of smart card use. Transportation Council participation is open to any Smart Card Alliance member who wishes to contribute to the Council projects. Additional information about the Transportation Council can be found at http://www.smartcardalliance.org/about_alliance/councils_tc.cfm
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The City of Portland, Oregon, started a contact smart card program, the SmartMeter Parking Card, for pay-and-display parking meters in 2003. SmartMeter Parking Cards with pre-loaded value are sold and recharged at retail partnerships in downtown Portland. Card use is popular, with approximately 6,000 cards in circulation and hundreds of cards recharged on a regular basis. In 2004, the City of Portland financed a business case analysis that examined combining existing smart card services with transit, off-street parking, and other city visitor service applications. The business case was positive and it recommended a pilot project to verify business case assumptions. Implementation of a pilot project is pending. 
The Washington Metropolitan Area Transit Authority (WMATA) in Washington, DC, was the first U.S. transit authority to push aggressively for the use of smart cards in its systems. WMATA has been using the SmarTrip card for Metrorail and parking since May 1999. The Metrobus system became fully SmarTrip capable in August 2004, and a series of contracts are in place between the system provider and multiple independent transit agencies throughout the State of Maryland, the District of Columbia, and Northern Virginia to expand SmarTrip acceptance throughout the region. In all, 17 agencies will accept SmarTrip, with over 8,000 processing devices deployed. 