Payment Processing Buyer’s Guide
Integrating payments with your operations
Customer satisfaction combined with operational efficiency is the holy grail of parking operations. Today’s technology makes this elusive balance possible. Technology can be used to manage rates, easily access accurate customer data for better customer service, and present robust dashboards to inform decision-making, all the while maintaining compliance and building customer confidence. Municipalities are looking for ways to use technology to improve payment processing for their parking environments, and now they have more options than ever before.
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With all of the available technology options, finding the right payment processor for your needs is challenging. This guide shares what to look for in a processor to ensure that your system operates efficiently and allows you to provide top-rated customer service.
Lower Processing Costs
Many cities and municipalities are facing mandates to lower costs while improving service, and payment processing is one area where they can cut costs without a negative impact. It’s important to understand the different types of fees that processors charge and identify the opportunities for cost reduction. A processor that focuses on parking environments will understand the challenges associated with managing margins on small payment transaction sizes and can offer alternative pricing options to accommodate these challenges.
Understanding the Various Types of Fees
In order to evaluate the options presented by prospective processors, it’s essential to understand the various types of fees involved.
Interchange Fees — When a customer makes a credit or debit card transaction, the card network (Visa, Mastercard, American Express, Discover) assigns interchange fees by the card type (credit, debit, business cards, rewards cards, etc.) and environment (card-present or card-not-present). The card network credits these fees to the card-issuing bank to support their costs related to issuing cards and debits the fees from the merchant acquiring bank. Interchange fees are made up of two parts: a percentage of the transaction amount (such as 1.70% – 2.70%) and a per-transaction fee (such as $0.10 – $0.21).
Card Network Fees, Dues, and Assessments — These costs are paid by the merchant acquiring bank and the card-issuing bank to the card networks for the use of their brands and processing on their networks.
Gateway Fees — Gateway providers interact with point-of -ale devices (such as a credit card terminal, website, or mobile app), and route credit card authorization requests to the merchant processors for approval. Gateway providers charge fees based on transaction type and may also charge fees for additional services.
Merchant Processing Fees — Merchant processing providers provide credit and debit card acceptance service to the merchant. Merchant processors typically charge a percentage of each transaction amount (such as 2.75%) and a per-transaction fee (such as $0.20) to the merchant in exchange for handling their credit and debit card sales. While this structure is typical, how merchant processors assess these fees varies significantly. Some assess transaction fees per authorization, while some assess per settlement, and some assess for both. They also sometimes charge higher fees for certain types of cards, such as business cards or rewards cards. And many charge additional fees for chargebacks, statement fees, PCI fees, etc.
Considerations for Lowering Processing Costs
Typical parking transaction sizes are small, so credit and debit card fees add up to substantial amounts. Additionally, many processors charge transaction fees on every authorization type rather than on each settled transaction. Look for a processor that charges per settlement and offers special rates for small transaction amounts in the parking segment. Parking environments present a special challenge due to the fact that payments are typically made in advance and vary by hour. Managing the associated complexities and reconciling between business management systems and financial management systems is difficult. Your payment processor should have functionality in place to help streamline these tasks to reduce your costs.
Another factor to consider is settlement and funding timing. Daily settlement will provide better cash flow, which is important to many cities.
Finally, if you’re trying to integrate and manage a variety of vendors, such as gateways, merchant processors, mobile apps, and parking management platforms, you will experience redundant or unnecessary costs. You will be best served by an end-to-end payment processor that includes all the pieces you need to operate your parking system efficiently.
The more vendors and systems that must be integrated, the more challenging it will be to streamline operations. By reducing the number of disparate systems and vendors you’re using, you reduce the number of handoffs and touchpoints necessary. Ultimately, having fewer systems and vendors will result in improved speed, efficiency, reporting, and visibility.
By nature, operational systems made up of multiple vendors are clunky. Without having each part of the system seamlessly integrated, you’ll encounter unnecessary bottlenecks. Beyond bottlenecks, you expose yourself to a variety of risks, including security vulnerabilities and opportunities for technical failures. Using multiple vendors at the beginning stages of the process (such as the various gateways and point-of-sale devices) is especially problematic, as there are so many opportunities for negative impacts in these areas. Using a quality, end-to-end payments processor will improve speed.
Parking operations are made up of many parts and pieces. Cities and municipalities need to quickly adapt to new challenges and take advantage of new developments that will allow them to meet mandates. But they can’t do these things if vendors are inflexible or if parts of their current systems aren’t adaptable. For example, you should be able to easily add a mobile app or wallet to make paying for parking easier for customers. An ideal end-to-end payment processor will provide you with the freedom and flexibility you need.
Access Robust Reporting
Being able to see management and financial reports in one place allows decision-makers to gain the precise insights they need to run a better operation. Specifically, you’ll want to look for reporting functionality that offers the following capabilities.
Pulls in Card Source Data — You need to see card source data, not only the product data, which is often incomplete, manipulated, or historically inconsistent. In order to reconcile your accounts and have access to accurate reporting, you need raw data.
Accurately Displays Revenue and Associated Fees — When funds are deposited into your account, you need confidence that the revenue amounts and fee amounts are accurate. With thousands of small-ticket transactions, reconciliation is vital.
Easily Manage Disputes — An integrated end-to-end payment processing system that allows you to see all information in one place provides the ability to manage and respond to cardholder disputes efficiently. When you’re relying on a collection of third-party vendors, merchants must review and respond in a different system than they used to obtain evidence, slowing down the process.
The full visibility you enjoy in an end-to-end system that consolidates parking and payments allows you to increase your service levels while reducing costs. Customer inquiries and issues can be addressed quickly because you can access information immediately. This efficiency reduces staff time spent hunting down information and communicating with multiple vendors.
A Reliable Solution that Takes Responsibility
It will be impossible to truly streamline operations without a payment processing provider that takes responsibility so you’re not left to deal with gaps. A quality end-to-end payments processor should have a product specifically built for the needs of cities and municipalities, particularly related to the parking environment. The processor should provide service and take responsibility for the entire process, from parking session through settlement. You’ll have significantly fewer issues to address if you choose an all-in-one processor. When you do have a need or an issue, you want to be able to contact one provider and get a response — rather than going to various providers trying to find who is responsible for which issues.
Ensure Your Environment is Secure
With stories of organizations experiencing data hacks appearing in the news almost daily, no one needs to be told that security must be a top-level priority. You need confidence that your payments processor is well-armed and has a history of quickly adapting to new security issues on an ongoing basis. Additionally, your processor must comply with government and payment industry regulations, requiring a higher level of security than many processors offer. Knowing the following fundamentals will help you evaluate the security that prospective processors are using.
Hosting Your payments processor should be able to demonstrate that their hosting environment meets government security and compliance requirements, including the requirements of FedRamp, FISMA, etc. AWS GovCloud is an example of a hosting environment that meets these requirements. There are over 400 security measures required for the FedRAMP High baseline alone, and many processors do not have the infrastructure or policies in place to meet these requirements.
Another important set of compliance measures is the Payment Card Industry Data Security Standard. The PCI DSS is made up of 12 requirements that apply to all companies and organizations that accept card payments. Your processor must demonstrate that they meet all these requirements
SOC Certifications and SSAE18
SOC certifications are voluntary certifications that show a cloud vendor’s next-level commitment to security. SOC 1 is a report generated by the vendor that outlines their policies and procedures for ensuring that SOC Trust Factor criteria will be met. SOC 2 involves an audit process that proves these policies and procedures are being followed, with hard evidence, in a 6-month reporting period. SSAE18 is an audit standard that dictates the specifications of the SOC reports. High-quality payments processors will have these certifications (or have SOC 1 and be engaged in obtaining SOC 2) and will be operating under SSAE18.
Use of Tokenization
Tokenization helps ensure data security by replacing sensitive data with unique identification symbols (called tokens) that retain all the essential information about the data without allowing it to be interpreted. Specifically related to payment processing, tokenization replaces the primary account number (PAN) with a surrogate value. Detokenization is the reverse process, where the tokens are replaced with the original data. Tokenization ensures that if data is intercepted or stolen, it’s not able to be used.
While every payments processor will use tokenization, not all processors ensure that tokenization starts at the point-of-sale device and continues through the entire process. End-to-end encryption is vital because you are open to a breach if there are holes in the process where tokenization isn’t being used. If you’re relying on multiple vendors for various parts of your payments environment, it’s challenging to ensure end-to-end encryption. This is another reason why it’s beneficial to work with a robust end-to-end payments processor.
Integrate With Back Office Systems and Strategic Partners
To truly streamline operations and optimize cost reductions, your payments processor should work with your back office systems and strategic partners. Without this ability, you’ll need to handle data in disparate systems, and you’ll be vulnerable to data discrepancies.
Connect to Back Office Systems
From an electronic data and reporting perspective, you must be able to accomplish several things for a streamlined operation.
Map Proceeds to Your Accounting System — When your daily or monthly settlement comes in for your parking operations, you need to record that data in your accounting system. Leveraging parking and payments source data directly from a single source improves access, reliability and data integrity with your back office.
Reconcile Accounts — When your systems are fully integrated, you can also automatically reconcile your accounts, reducing the amount of staff time required even further.
Report on Activity — When your raw data, including disputes and chargebacks, is integrated with your internal reporting and reconciliation, you have full visibility and ensure that all data everywhere is accurate.
Connect to Strategic Partners
Easy integration allows you to optimize your operations, as we have shared. You must be able to integrate seamlessly with your back-office systems. However, you also need the ability to connect with strategic partners in order to provide a best-in-class customer experience. For example, your customers are using connected cars and mobile apps. Your payments processor should make it possible for you to utilize these tools for a next-level customer experience.
Passport processes digital payments for municipalities
As your payments partner, we can help you lower processing costs, give you faster access to your funds, and provide the highest level of security.
Working with Passport, you can expect:
- An end-to-end system that handles your entire parking environment, from parking session to settlement.
- Best-in-class customer support for you and your parking customers.
- Deep experience with the needs of municipalities — we serve 1,000 cities, universities, and operators.
- The highest levels of security and demonstrated compliance with all requirements and recommendations by government and other regulatory bodies.
- A cost-efficient system that includes negotiated rates to lower your processing fees.
- Robust reporting that gives you full visibility for better decision-making.
- Full integration with back office systems and strategic partners.
Passport has been working with municipalities and transportation authorities for several decades, helping them to solve complex challenges. From mobile pay parking applications to digital parking enforcement systems, Passport provides the right technology for municipality leaders to better manage their operations.