Parking
Parkmobile raises fees, blames Congress
Parkmobile, the vendor that provides the District's pay by phone system, just sent out an email to all of its customers, saying that it is raising its fee for each parking transaction by 10¢. However, it is also introducing a system that lets people store up value and then pay a lower fee.
Photo by Wayan Vota on Flickr.
Beginning October 29th, transaction fees in DC will increase from $0.32 to $0.45 due to increased costs triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act's Durbin Amendment.The wallet essentially works more like SmarTrip or E-ZPass. Instead of paying by credit card for each transaction, you store some value in a Parkmobile account and then spend that down.To help offset this increase Parkmobile has developed the Parkmobile Wallet which will provide a more cost-effective parking experience in DC
— Wallet transactions will carry a $.30 transaction fee.
DDOT has an exclusive contract with Parkmobile. The contract does give DDOT authority to approve or reject rate increases, and DDOT spokesperson John Lisle said that the company had been talking with DDOT. DDOT officials were persuaded that the reasons for raising the rates were real, and agreed to a rate increase.
Lisle also pointed out that 45¢ is not out of line with other Parkmobile installations; fees in Rehoboth are 45¢ today, for instance.
The way the email blames regulatory reform seems somewhat suspicious, though. According to Parkmobile spokesperson Laurens Eckelboom, the Durbin Amendment last year capped the "interchange fees" that card issuers could charge. Banks responded by eliminating discounts they had previously given to merchants who process a lot of very small transactions.
As a result, Parkmobile's transaction fees tripled. Eckelboom was not willing to say what the fees they pay to banks are, but he said that they were losing money with the current 32¢ fees.
Whether or not this is actually a consequence of the Durbin amendment or just bank behavior is a subject of dispute. Eamon Murphy wrote for AOL last December:
But higher costs due to swipe fees are not direct consequences of the law itself; rather, they result from the card companies' response to the law. This is not the financial industry's first attempt to avoid any loss to their own profit margins by raising costs for others: Big banks previously floated plans to charge consumers a monthly fee for debit cards, before a public backlash caused them to back down.It's clear this change was out of Parkmobile's control, but less clear they needed to specifically blame Durbin and not their banks, or just note that this was a result of rising credit and debit card fees without blaming anyone.
DDOT did not choose to share any information with the public as these discussions were going on. Lisle noted that DDOT negotiates other contracts, like streetlights, without public input. However, those contracts involve spending DDOT's budget, whereas this one authorizes a third party with a government-granted monopoly to charge residents more.
Pepco has to go through more of a public process to raise its rates. Should a more participatory process apply here as well, or is it best to leave it to those whose job is to manage the program?
One long-term solution is to set up a mechanism where multiple companies can compete. Establish an API where any authorized provider can register parking actions with a central DDOT database. Each provider collects payments on its own, however it wants, and then gives DDOT all of the base parking fees at the end of each week or month.
Such a solution would require some software development and take effort, but that would let companies choose their own fees and compete based on them, service, app quality, and more. The same API and maybe the same backend technology could work across many cities, letting cities share the cost of building the system.
 | David Alpert is the Founder and Editor-in-Chief of Greater Greater Washington and Greater Greater Education. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He loves the area which is, in many ways, greater than those others, and wants to see it become even greater.   |
Comments
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by Bossi on Oct 25, 2012 4:15 pm • link • report
by ah on Oct 25, 2012 4:25 pm • link • report
What's the justification for that? If they get $25 from me, on a recurring basis, why is it reasonable to charge me 30c each time I access that?
by ah on Oct 25, 2012 4:26 pm • link • report
give Parkmobile a monopolybind themselves into an exclusive contract? Why not run pay-by-phone through an open source system allowing free market competition between different companies with different fee structures?You know, the way they run things in communist Europe.
by Jasper on Oct 25, 2012 4:31 pm • link • report
by ah on Oct 25, 2012 4:39 pm • link • report
by jaybeas on Oct 25, 2012 4:42 pm • link • report
Yes, DC has always been draconian about meters and is about the most skilled service DC government provides. If you are more than 10 minutes late back to your meter, you can pretty much assume you have a ticket.
However, I downloaded the app a month ago and have used the service twice. BOTH times I got back to my car less than 4 minutes after the time was up (once, literally 2 minutes late, I watched the ticket lady walk away) and BOTH times I got tickets.
Yes, you have the option of putting more money on automatically, but both times I was walking back to the car and didn’t think 2 minutes would get me.
My brother as also experienced the same thing. Parking enforcements uncanny ability to get to the meter within 2-3 minutes of it being up.
I haven’t used it since, opting to pay cash instead and have been my usual 7-10 minutes late back to the meter (parking on the same street mind you) and haven’t gotten a ticket since.
by Setmeup on Oct 25, 2012 5:20 pm • link • report
by abh on Oct 25, 2012 5:43 pm • link • report
I am not sure what you mean. Cities put up numbers with the parking spots. Those numbers are made available to companies who wish to offer their services. Cities have some process to determine if companies are legit, and then let them do their thing. For instance, in Rotterdam, you can pay via:
Park-line
Yellowbrick
SMSParking
Parkmobile
http://www.rotterdam.nl/product:06_parkeren_
In Antwerp, you can pay via:
Sms-parkeren met Mobile-For
Gsm-parkeren met Parkline
http://www.parkereninantwerpen.be/parkeren/bezoekers/gsm-parkeren/gsm-parkeren
[I apologize for the Dutch websites, but you get the gist]
Different companies have different payment schemes. With some you pay a surcharge per time you park, with others you pay a monthly or annual fee on top your parking fee.
In any case, consumers have choice and payment providers have to compete and can not yank customers around in a monopoly.
by Jasper on Oct 25, 2012 8:48 pm • link • report
What sucks is the whole wallet idea means people will credit money to Parkmobile which sits in its bank account and earns interest, and when there is a wallet transaction it doesn't result in transaction fees since its an accounting move rather than a credit card transaction. Parkmobile could probably have no fees on its wallet transactions.
Sorry for the rant, just tired of hearing companies complain.
by jason on Oct 25, 2012 9:15 pm • link • report
It was undiplomatic and borderline unprofessional in how it presented the issue- basically, "we're increasing the rate, but blame Congress and not us. Bye"
by Wilsonia on Oct 25, 2012 10:25 pm • link • report
This entire arrangement is wrong. No, Parkmobile is not providing a service to people that park; it is providing a billing service to DC. Instead of sending a collector around with a heavy box on wheels full of change, vulnerable to robbery and employee theft, parkmobile sends in a check with an auditable account trail. It is amazing that they get to stick the bill to the drivers.
I agree with Jasper, there should be alternatives, just like there are alternate credit cards. And this contract should not be renewed.
by goldfish on Oct 26, 2012 8:27 am • link • report
by Susie Cambria on Oct 26, 2012 8:39 am • link • report
by Paula Product on Oct 26, 2012 8:55 am • link • report
http://www.parkmobile.nl/tarieven
You have a choice of two.
1: Pay parking + €0,25
2: Pay a membership fee of €1,75 per month + parking
They even spell out that if you use their services more than 7 times a month, you should sign up.
http://www.parkmobile.nl/tarieven
by Jasper on Oct 26, 2012 9:21 am • link • report
http://www.parkmobile.nl/nle/costs//
by Jasper on Oct 26, 2012 9:43 am • link • report
They are dealing with it - by increasing the prices customers pay them.
@Jasper
I am not sure what you mean. Cities put up numbers with the parking spots. Those numbers are made available to companies who wish to offer their services.
The city has to have some sort of backend system that integrates all these companies' efforts so the city knows what's going on.
by MLD on Oct 26, 2012 9:46 am • link • report
by ontarioroader on Oct 26, 2012 9:55 am • link • report
If the city undertakes that investment in the first place those costs are "hidden" in the form of taxes or other revenue generated indirectly. True, as Goldfish notes these costs arguably *should* be borne by DC directly as part of their parking enforcement program, but the reality of our political system is that people seem much more resentful of increased taxes and spending by government than they do in Europe.
Of course, this pattern has been repeated elsewhere - for example, EZPass users typically get hit for a monthly fee even thought EZPass was advertised as a mechanism to reduce the costs of toll collection by human collectors while increasing the speed of toll collection (no stops). So, how/why should EZPass users pay more than cash payers? Same here - DDOT should reduce parking fees for those using Parkmobile, as it saves DDOT the costs noted by Goldfish. I suggest either a 25c discount off of any meter fee, or reducing rates by 25c/hour.
by ah on Oct 26, 2012 10:25 am • link • report
Contracts that extend long than a single year without renewal are extraordinary and rare.
by goldfish on Oct 26, 2012 10:25 am • link • report
Those aren't mutually exclusive. Industry is going to respond to regulation, in this instance for a rule that was estimated to cut revenue by $7 billion.
by Fitz on Oct 26, 2012 10:46 am • link • report
Before:
32c fee from PM
6c fee from CC processor
26c gross revenue (inferred)
After:
45c fee from PM
30c fee from CC processor
15c gross revenue (inferred)
This also means that they receive 30c in gross revenue from your "Wallet" payment, although that's reduced by whatever CC fees they paid for the initial transaction processing, which is presumably ~50c for a $25 transaction (fee is apparently typically the greater of 30c or 2% of transaction). So that means for them the Wallet transaction is likely more profitable--with a $25 refill that's a minimum of 6 parking events (assuming 2 hour max of $4 plus fees), which means they are paying at most 8.25c per parking transaction in the CC fee spread over those transactions, and thus receiving adjusted gross revenue of at least 21.75c for each parking event--more than they appear to be receiving from a single-use transaction.
No wonder they want to encourage the wallet - it's a win for them, but, as it turns out, a win for you as well.
by ah on Oct 26, 2012 11:03 am • link • report
So as some others have said, in a monopoly PM will try to raise as much fees as possible....with competition or an opensource data/system im sure other companies will offer better payment plans or discounts like the Dutch example
Btw..i got an autoreply to my email from PM saying they opened a "case" and they will reply in 8 hours...that hasnt happened
by re on Oct 26, 2012 11:28 am • link • report
It's penny wise and dollar foolish though. And it leads to anti-free-market de-facto monopolies.
Of course, this pattern has been repeated elsewhere - for example, EZPass users typically get hit for a monthly fee even thought EZPass was advertised as a mechanism to reduce the costs of toll collection by human collectors while increasing the speed of toll collection (no stops).
Very good comparison. Tourmobile is another example of the same problem. Cable companies.
Same here - DDOT should reduce parking fees for those using Parkmobile, as it saves DDOT the costs noted by Goldfish. I suggest either a 25c discount off of any meter fee, or reducing rates by 25c/hour.
No, the city should just behave like a good stewart of tax payer money and American values, built (or buy) a(n open source system) for the data exchange and then let different companies compete for the customer. For parking, it can't be hard. It's location data, a car tag and a start and finish time. It's so little data you could tweet it.
Currently, the government imposes monopolies. Honestly, it is one of the things I get the least about this country.
by Jasper on Oct 26, 2012 11:59 am • link • report
I'm not sure we're worse off this way . . . indeed the link to Holland's system suggests per use fees quite in line with those here.
by ah on Oct 26, 2012 12:50 pm • link • report
The cost of what? Putting a numbered sticker on parking meters and maintaining a table relating those numbers to a geographical position? The government still needs to maintain a server that links to all the hand-helds of the parking cops.
What you propose is to have the city pay for the entire infrastructure and then let some number of competitors (which hopefully is at least 1, with no guarantee it is greater than 1) offer the variable service, as none of them individually would have the incentive to help fund the infrastructure.
I guess it all depends on what you think the role of the government and parkmobile is. I see parkmobile as a payment service. Not as an infrastructure builder - that's the role of the government. I'd also argue that the cost of the mobile payment infrastructure is marginal compared to the cost of the existing parking infrastructure, including the building and maintenance of the physical parking spots and parking meters. I am not sure why you would suddenly want to outsource that. It's not like parkmobile built the parking spots.
Outsourcing all parking payments and maintenance happens in Chicago, and we can all see how happy Chicagoans are with that deal.
I'm not sure we're worse off this way . . . indeed the link to Holland's system suggests per use fees quite in line with those here.
This must be the first time that I hear an American say that a monopoly is the better option.
BTW: Parking rates are much higher in the Netherlands than in DC. In Rotterdam it's €3/h 7 days a week between 9am and 11pm in most of downtown. In downtown Amterdam it goes up to €5/h between 9-midnight.
by Jasper on Oct 26, 2012 1:42 pm • link • report
by re on Oct 26, 2012 1:49 pm • link • report
If your point is that DDOT cut a bad deal, well, what's new with DC contracting? They've got two fully loaded Navigators as Exhibits 1 and 2.
by ah on Oct 26, 2012 2:53 pm • link • report
Well, he vendors are around. Otherwise cities in Europe would not have several companies to work with.
If your point is that DDOT cut a bad deal, well, what's new with DC contracting?
Well, the concept of an exclusive contract setting up a monopoly is a bad idea.
two fully loaded Navigators as Exhibits 1 and 2.
Cheers to that :-D
by Jasper on Oct 26, 2012 2:59 pm • link • report
The more equitable alternative, I suppose, would be to add a surcharge per minute, with variable rates for wallet vs. per session customers. But that doesn't seem like it's in anyone's best interest except Parkmobile's.
I have to say, as a consumer/parker I love ParkMobile. No carrying around coins, no dealing with DC's notoriously unreliable meters, and, at least for now, ParkMobile gives you the ability to extend parking sessions after time runs out (instead of running back to the car to pump a meter and get a new dashboard ticket). That in turn seems like a good deal for DC -- it makes it possible to park on a city street for 4 or 5 hours, with revenue going directly to the city, rather than to a parking garage.
And, as others have suggested, if you don't like Parkmobile's business model, you can still pay with coin. My recollection is the pay stations (which spit out receipts you put on the dash) take credit cards and don't charge transaction fees. With plenty of alternatives of available, seems like the free market can decide this.
by mvm on Oct 26, 2012 3:36 pm • link • report
I have no opinion on Parkmobile's business model. I hate that DDOT forces me to use Parkmobile and denies me the choice to use another mobile payment provider.
by Jasper on Oct 27, 2012 1:16 pm • link • report
That said, why are these contracts exclusive. This just makes it harder for drivers to access. Think about it, imagine if you had to set up a eWallet for every mobile service you signed up for. This makes no sense.
Parking entities should create an API that allows multiple payment companies to authenticate payments. This would solve the problem.
by Parking Expert on Nov 1, 2012 8:08 am • link • report
The Durbin amendment doesn't charge anybody anything. Federal Reserve rules limited debit card transaction fees to $.24. The banks raised the fees to that limit in response to losing revenue in other areas. You make it sound as though the government put a tax on these transactions and then processors have fees on top of that - this is untrue.
by MLD on Nov 1, 2012 8:30 am • link • report
Dear Valued Member,
Last week in a press release and email announcement introducing the Parkmobile Wallet, a simpler, lower cost way to pay for parking in the District of Columbia, the company made an overly simplistic statement about the underlying cause of increasing card transaction fees. In an attempt to explain why costs have increased the company left the potentially confusing impression that Federal legislation is to blame. The company apologizes for any confusion caused by this statement.
Sincerely,
Laurens Eckelboom
Executive Vice- President Marketing & Channels
Parkmobile USA, Inc.
So, what exactly is the non-simplistic explanation that you failed to offer?
by ah on Nov 1, 2012 3:05 pm • link • report
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