Credit Cards and Revenue Control
By Pierre Koudelka and Fabien Pesenti
Equipment suppliers are asked for credit card systems to be part of the overall parking system. However, they often think only in terms of front-end equipment and don’t necessarily know what all has to happen in the background before such systems can be put in place and activated.
When you insert your credit card in a reader, multiple entities across the country come into play within seconds, a true miracle of technology. Complicating things even more are the ever-changing PCI DSS requirements (Payment Card Industry Data Security Standard). Ultimately, compliance is about how credit card information is used, formatted, stored and transmitted.
Parking operators can expose themselves to substantial fines if they do not comply with these security requirements. These standards apply to not only the front-end equipment that you see as you enter the garage, but also to the manner in which the management firm operates their parking operation and how they maintain their books and manage such information in the office.
In particular, how they store and handle credit card information in their back office must conform with PCI standards, otherwise they can be subject to severe financial penalties. I can’t impress upon you the difficulties and expense various operations have already experienced in our industry in this regard.
Fortunately, all this can be made easier if you start off by choosing a PCI-compliant parking and revenue control system that allows you to selectively interface with any of the hundreds of clearinghouses (also called merchant service providers).
To put all your eggs in just a single clearing house solution may not always be to your benefit. With a Gateway Provider you’ll have access to any clearing house in the country so your bargaining position is augmented. Plus you’ll enhance your ability to customize a solution to meet your needs. Such firms can assist in meeting your technical, financial or informational criteria associated with credit card processing.
Clearing Houses and Gateway Providers work together for you along with Interchange systems, Issuers, Banks within the overall credit card process. All play an important role not only relative to rates they charged for the service, but equipment needed on premises, transaction speeds, back ups, customizability, reports and the way the information is formulated.
For example, from a reporting stand point, daily and monthly summary reports, revenue summary by cashier or groups of cashier booths, individual transactions details, or functionalities for transaction queries, etc. So make it a point to talk to different clearing houses and gateway providers on all aspects of services when choosing your partners.
We all know how important credit card payments are today to retailers, parking operators and virtually all businesses that deal with payment transactions. But the concept of things such as service providers, clearinghouses, issuers, real-time processing vs. batching, reconciliation, charge-backs, BINs, authorization, settlement and interchange systems always surface and may not be understood by most users.
Let’s start by explaining these terms and what you as a parking operator need to know and do to handle credit card transactions correctly.
1. Merchant: company accepting credit card payments.
2. Clearinghouse: a generic term, used mostly in the parking industry, to identify a Merchant Service Provider (MSP).
3. Merchant Service Provider: organization the merchant has contracted with to accept credit card payments and handle the processing and send deposits to the merchant’s bank account.
4. Issuers: companies that issue the card; they control the cardholder accounts and authorize or decline authorization requests.
5. Real-time processing: high-speed authorization (yes or no) while the parker is on-site.
6. Batch processing: all transactions are accepted offline without authorizations, which are completed when the batch file is processed.
7. Reconciliation: comparing revenue data to ensure that all systems along the way between the parking payment application and the bank accounts show the same data.
8. Charge-backs: official dispute by the cardholder to his issuer received by the merchant from his MSP (see above).
9. BINs: The first six digits of a credit card number; these identify the issuer (see above).
10. Authorization request: first in the two-step credit card process.
11. Settlement: “a confirmation of payment” that is the second step of a lengthy process confirming that the authorized amount can be processed for payment.
12. Interchange systems: Visa and MasterCard systems connecting to the MSPs and the issuers (see above).
When buying equipment, make sure to ask whether the manufacturer is compliant with payment card industry security standards. Visit Visa’s website (http://usa.visa.com/merchants/risk_
management/cisp_payment_applications.html) to see who is both certified and current.
That said, lets look at the back end of these systems, how they work and what you as owner/operator should be prepared to do if you’re not already accepting credit cards as a settlement.
As stated above, credit card processing involves two steps. The first is an authorization request, where an electronic request is sent through multiple parties to either approve or decline the transaction. The second is a settlement, a confirmation of payment where all parties settle their accounts and the merchant receives deposits in their bank account and the cardholder’s account is charged.
Your equipment supplier can help make this process easier. All clearinghouses (MSPs) have their particular requirements for equipment standards, but a good distributor will put the system together according to your choices, so you need not concern yourself with the mechanics other than selecting the right partner for your needs.
All we generally want to know is will the equipment accept the credit card and will it do it fast, since we don’t want backup lines in the lane or at the pay-on-foot station. The answer is that the credit card process is faster than conventional pay systems. These real-time systems are both fast and accurate these days.
In fact, from the owner’s perspective, credit card processing is so accepted by the patrons that at most parking facilities, credit card users will account for 80% of all transactions made within a few months after installation. Not only do these systems speed things up within the parking structure, they also eliminate fumbling around for cash and they virtually guarantee revenues collected, so using the credit card is a win-win for everyone.
The next question usually asked is what if the card is bad or what if communication goes down in a parking structure. The answer in both cases is relatively simple. If a card is bad it will be declined and the patron will generally use another card to get out, assuming they don’t want to use cash. If communication is interrupted one must be prepared. Most operators will generally select the acceptance of all cards when communications goes down and when restored all cards accepted during that period will then be sent for authorization.
This does two things: it keeps traffic flow uninterrupted within the parking facility (an important service to patrons) and ensures collection for the most part because operators know that most of the transactions will be approved as good cards.
Now that high speed Internet connections are so affordable, parking operators can cost-justify real-time authorization credit card processing. Credit cards are a wonderful and essential tool to improve operations and secure revenue.
Credit Card acceptance can be part of your original parking purchase or purchased after the fact, if you wish. They can be used at cashier booths, Pay On Foot stations or even as a form of entry known as “credit card in and credit card out operations”.
These CCIO devices can stand alone in parking operations anywhere within the parking structure to facilitate patrons quick exiting of the facility.
If and when you elect to go to a Credit Cards system, do it well. Know your options. We’re always willing to assist. Remember, Credit Card systems operate 24/7 and no hard currency changes hands. Therefore, revenue control is optimum, are less likely to be vandalized and as a customer convenience, they can’t be beat!
Pierre Koudelka is Skidata’s Midwest Regional Manager and Fabien Pesenti is 3C’s Country Manager North America.
Article Abstract from January, 2009