[Dave Birch] Many years ago, as I was reminiscing to a bored audience today, when I was involved with the Mondex project, I can remember writing some enthusiastic pieces about cashless payments. I used the car park at my local train station, Woking, as the exemplar. This is where I, and a great many other commuters, came face to face with the cash menace on a daily basis. I used to drive to the ATM to get cash, then go to the petrol station to buy a newspaper that I didn’t want in order to get some change, and then go to the car park and use the change to buy a ticket. It was a couple of quid for the ticket, and I can remember standing up at conferences and enthusing that the car park would be the ideal place to demonstrate the value of digital money to the Great British Public.

It never happened.

In the short term, Woking Borough Council fixed the problem by putting the cost of parking up to eight quid and installing ticket machines that took credit cards. Indeed, Consult Hyperion worked for a couple of the service providers in this area, helping with chip and PIN business models and migration plans for the unattended terminals.

Over the last four or five years, I never once paid at the car park with cash. I always used a card, except for the one time I can recall when the card machines were out of service (I bet it was a software upgrade that went wrong, otherwise why would they have all gone down at the same time?). I can well remember being totally pissed off that I couldn’t use a card and had no cash, so I just left a note on the dashboard saying something like “sorry no cash, fix the machine and I’ll pay when I get back”. I fully expected to get a fine, but the wardens were clearly sympathetic that day.

A couple of years ago, I began to wonder if the transition to contactless might be an opportunity to enhance the parking experience still further: quicker and more convenient for the customer, less fraud (there was a certain amount of fraud at the machines because they didn’t use PINs) and the potential for robust, maintenance-free contactless-only outdoor units. Like many other hapless commuters, I also wondered if our good friends at TfL might extend the remit of the Oyster — which 99% of commuter using the car park have in their wallets — so that you could zoom up, tap your Oyster card, grab the ticket and go.

Once again, the leading edge of retail payments remained tantalisingly out of reach of the Woking station car park. No contactless interface of any kind, either EMV or Oyster, arrived.

Now, however, the next chapter in the Woking payments story has been opened. The card slots have been taped shut, and you can no longer pay with cards of any description, contactless or otherwise. Why? Because 40% of the parking sessions are now paid for by mobile phone using RingGo.

RingGo, which we discussed in a podcast a year ago, gets you to open an account and register a payment card. Then when you want to park, you call them and punch a couple of keys on your mobile phone. That’s it.

The typical user experience is now…

I drive to Woking train station and park the car, go and get on the train. Either on the platform waiting for the train, or on the train, I call RingGo. The IVR says “do you want to park the same car at the same place as last time, punch 1 for yes” or something like that. I punch 1, then I punch 1 again to park for one day. Then I punch in my CVV, and hang up. A second or two later a text message arrives confirming the session.

The parking wardens have PDAs that list the registration numbers of the cars legally parked, so that’s how they check whether you’ve paid or not. If they don’t see a ticket on the dashboard, they punch the number in to the PDA.

Having registered with RingGo at my local car park, it is of course now my first choice at other car parks. I stopped in at PayPal in Richmond the other day, and was delighted to see that the car park opposite them takes RingGo. What a relief: no more scrabbling around under the car seats to find change.

Having allowed mobile to get a toehold, it’s really not clear to me how contactless cards, or bank mobile payments, can fight back. I can well imagine that in a year or two, there will be car park levels that are RingGo only so that they council can take out the ticket and coin machines completely and cut their maintenance costs to zero.

After that, RingGo will get fed up paying for card payments so they will come to regular customers like me and offer me a discount for signing up to a monthly direct debit or for loading a prepaid account instead of billing to a payment account.

But I wanted to mention a particular cost-benefit aspect of the system. The system is not especially cheap. It costs 40p to use it. On an £8 ticket for the day, that’s a 5% transaction charge. Yet I’m happy to pay it, and so are hundreds of others. Why? Thinking about it, I think that there are two key reasons and they are both to do with value-added services around the payment rather than the payment itself (although that is more convenient that messing around with coins or cards at the machine at the end of the car park).

The first reason is that sometimes I might only be going to London for a morning meeting, so I want to pay for four hours. However, from time to time something comes up and I might have to stay on. I used to have to pay for a full day, because I didn’t want the risk of a ticket, or sometimes I would take taxis if I knew I might end up coming back late. Now I pay for four hours, and when the “about to expire” text message arrives, I can simply call up and buy another parking session.

The second reason is that most of the time I park, it is because I am travelling on business, so I need to remember to collect the paper tickets for my expenses at the end of the month. A lot of the time I forget them or lose them. Now, I log on to RingGo at the end of the month and get a single print out with all of the parking sessions on it, and I can then submit this with my expenses. How could contactless be more convenient than that?

The point of this parable? Value-added services are the way to get people to pay for payments. Charging me 40p for a payment is a hard sell, but charging me 40p for a payment with some pretty basic additional services is entirely viable.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

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