“Feeding coins in the parking meter” may become a phrase associated with days of payments past, especially if PayByPhone Inc. continues to develop a mobile-payment method for consumers using parking spaces.

Equally as important, the Vancouver-based parking mobile-payment provider offers a method that illustrates another use for Near Field Communication technology as an aid in payments.

PayByPhone places stickers with imbedded NFC computer chips on parking meters to enable consumers using an NFC-enabled phone to quickly charge their parking meter fees to a credit or debit card associated with a PayByPhone account.

PayByPhone, a subsidiary of London-based PayPoint PLC, targets the end of March to complete a project in which more than 30,000 parking meters in San Francisco will have the NFC stickers attached to support mobile payments.

When consumers with a PayByPhone account wave their NFC-enabled phone near the NFC sticker, it automatically launches the PayByPhone application on Apple Inc. iPhones, phones that use Google Inc.’s Android operating system or Research in Motion Ltd.’s Blackberry devices. After the consumer enters his PayByPhone PIN to access his account, the sticker’s electronic chip transmits the eight-digit number of the meter and corresponding parking space through the software application, which enters that code into the consumer’s phone, Neil Podmore, vice president of business development for PayByPhone, tells PaymentsSource.

The software communicates with PayByPhone’s central data center, where the accountholder’s credit or debit card data and mobile-phone number are securely stored and kept compliant with Payment Card Industry data-security standards, Podmore adds.

“The only remaining step for the driver is to select, through his phone keypad or the mobile application, the amount of time that he wants his vehicle parked,” Podmore says.

When the transaction is completed, the PayByPhone data center automatically sends a text message alert to the consumer’s phone five minutes before parking expires, with a link allowing the consumer to extend time with more payment without going back to the car, Podmore adds.

For those with NFC-enabled phones who do not have the PayByPhone application already installed, the NFC sticker transmits information about the website where the consumer can download the software, Podmore notes. Those with PayByPhone accounts, but without NFC smartphones, can use the service by dialing an 800-number posted on the meter and using an automated response service to manually enter the eight-digit parking spot location, he adds.

In San Francisco, PayByPhone thus far has placed stickers on nearly half of the 30,000 meters, which all continue to accept coins as well, Podmore says.

If the meter shows an expired time on it, the parking officers are trained to enter the eight-digit parking number on a hand-held personal digital assistant, which will communicate with the PayByPhone data center to confirm that meter was paid via phone, Podmore explains.

The NFC parking-meter process illustrates how the technology will continue to grow, Brian Riley, senior research director and analyst with Needham, Mass.-based TowerGroup, tells PaymentsSource.

“I see 2012 as a breakthrough year for NFC on a lot of different stuff,” Riley says. “Having it on parking meters is a clever way to expose more people to NFC, but also as a way to beat the meter maid by being able to increase your payment.”

As NFC becomes more intertwined with payments, Riley anticipates that interchange rates on debit cards will continue to be a key factor in light of the reduced rate cap that became law through the Durbin amendment of the Dodd-Frank law (see story).

“Are you going to jump up the cost of parking because you have to pay for card transaction fees? It could easily happen,” Riley suggests.

If a consumer pays 25 cents at a parking meter on a debit card payment through the phone service, the interchange rate knocks any profit out of that transaction, Riley contends.

Currently, PayByPhone authorizes and settles each transaction as it occurs, but the company continues to investigate transaction aggregation to reduce the impact of applying interchange separately for each payment, Podmore says.

PayByPhone begins a similar meter-sticker project in Ottawa, Ontario, this month. The company spends about three weeks installing stickers and training transportation employees about how the process works during a new launch, Podmore says.

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