PSD2: Is parking the wake up call the payments industry needs to start listening to consumers?

In 2017, AA research revealed that 70% of drivers would be less likely to use a car park that only had ‘pay by phone’ machines. However, this drops to 54% for respondents between 18 and 44. In fact, nearly a quarter (23%) of 18-44 year olds already preferentially use pay-by-phone parking services wherever they are available.

Looking deeper into these numbers reveals a far more complicated picture –  that half of consumers (53%) don’t care how they pay as long as it is as easy as possible. This is a clear indication that consumers are motivated to use the payment solution that offers the least friction.

Reviewing the common concerns revealed by the survey, it is clear it is the complexity of the card payment process and the fees, rather than the concept of phone payments, that is slowing down adoption. The frustration drivers feel related to parking reveals a wider problem within the European payments industry and highlights that Authentication). This is because of its ability to deliver convenience and security – avoiding the  customer demand for convenience is still not being met.

The good news for both the mobile industry and consumers is that the Payment Services Directive 2 (PSD2) regulation, which comes into force this week, has recognised this issue. As a result, the new EU regulation has exempted DCB payments for ticketing and parking from SCA (Strong Customer problem of ‘shoulder surfing’ when consumers have to input confidential card details into a mobile or ticket machine. As a result, operators and parking providers have an opportunity to work together to deliver new and better mobile payment offerings, by allowing consumers to charge parking directly to their mobile bill.

To make the most of this opportunity, what can ticketing and parking companies, payment providers and mobile operators do to ensure this process is as frictionless as possible for consumers of all ages?

  • Phone card payment systems are too complex

The recent AA research reveals people are put off by complicated voice-controlled mobile card payment systems . To avoid this consumer frustration, businesses must offer appropriate payments to customers based on the context of the user and the transaction – not just default to credit cards as this is no longer the preferred option for on-phone purchases.

  • Cash is difficult too

However, while cash remains the default option for many ticketing and parking machines, nearly two thirds (64%) of drivers reported it is often a challenge as they may not carry cash and most machines do not give change. This is a key factor behind why many younger consumers are quickly turning to pay by phone solutions as an alternative to card and cash.

  • Consumers resent paying admin fees for phone services

The AA research shows that as well as complexity – most consumers (70%) are put off by the additional administration fees often associated with park by phone services. This is a concern that the industry must confront if it is going to encourage widespread adoption.

  • New EU regulation will open up new options

With the AA research revealing that half of consumers (53%) don’t care how they pay as long as it is as easy as possible , the industry is getting a clear sign that consumers are motivated to use the payment solution that offers the least friction.

When PSD2 comes into effect in January 2018, it will encourage payment providers and mobile operators to work together to offer new transport payment options – including direct carrier billing for parking. DCB radically reduces the friction customers experience when paying for parking by phone, delivering nearly 10x the conversion of card.

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