Cash Handling – It costs, too
When parking businesses look at the use of credit cards, they are immediately concerned with the cost of processing the card. The business pays anywhere from 2-5% to the clearing house and the bank for the privilege of getting the money moved from a person’s credit card account to their bank account. If you are processing say $10 million a year that’s between $200 and $500 thousand dollars. Not chump change. In some cases, the numbers are even higher when charges for back office processing and reporting are added in.
Some cities see these numbers and say “hell no.” But are they looking at the true cost of handling cash.
Many of my friends in the private sector embrace credit cards. They understand the cost of handling, counting, auditing, and accounting for cash. They know that banks charge to take cash, particularly coin. It can be a problem. When they get 60 or 70% of their revenue in credit cards, they know that these issues disappear.
There is another problem cities in particular have, weight. Chad Lynn at the city of Beverly Hills gave me a tour of his counting vault. Now they are a relatively small city, but they have pallet jacks, counting machines, and other tools they use to move and account for tons of nickels, dimes and quarters they process every day. It’s a big deal.
Cities need to take all these factors into consideration before dropping credit cards in their parking system. Sometimes the hidden costs outweigh the ones on that credit card statement from the bank.