Parking Apps Look to Upshift

When the pandemic ends, demand for parking places is likely to skyrocket. That augurs well for apps that find just the right spot—and let you pay for it.

“There’s an app for that” has become a cliché, but most users and experts agree mobile apps have drained the difficulty and frustration out of scores of everyday tasks. And perhaps none have done this in a more mundane market than have parking apps.

These gizmos will let you find a space, tell you how to get to it, reserve it, and pay for it. And after you’ve parked your car and are off attending to business, they’ll let you reserve more time if you need it.

Even parking garages, with their entry and exit gates and multiple levels, are susceptible to this technology. Last month, Atlanta-based ParkMobile LLC announced an integration with a major provider of garage parking systems to let ParkMobile app users scan a paper ticket to pay for their time and lift the exit gate. No muss, no fuss—and no touching of any equipment outside of the driver’s control.

These apps aren’t new. ParkMobile, owned by the German luxury-car giant BMW, started up in 2008. One of the largest parking-app developers, it now claims 21 million active users. PayByPhone Technologies, based in Vancouver, British Columbia, is close to 20 years old, and since 2017 has been part of Volkswagen Financial Services AG. PayByPhone is used by more than 35 million drivers.

Two other big app developers for parking are Arrive Mobility Inc. and SpotHero Inc., both based in Chicago. The former is 14 years old; the latter, nearly 10.

These standalone mobile wallets charge transactions to a card embedded by the user. They make money typically by levying a “convenience fee” on top of the cost of parking. With ParkMobile, for example, the fee is 35 cents, a sum sources say is fairly standard across the board.

‘Zilch’ Demand

But while the apps aren’t new, current conditions are. On the one hand, the pandemic has put a premium on contactless transactions, something mobile payment apps offer across a wide variety of markets. That appeals to drivers already struggling to find the closest—and, perhaps, cheapest—place to park.

On the other hand, many companies have sent their workers home, depressing parking demand in city centers and suburban metroplexes. “The appetite for downtown parking garages is zilch because of Covid,” observes Raymond Pucci, director for merchant services at Mercator Advisory Group Inc., a Marlborough, Mass.-based consulting firm.

“Transaction volume writ large is still down due to the lack of people going in to work,” agrees Jon Ziglar, ParkMobile’s chief executive. But the mix has changed, he adds, with the app accounting now for more than 50% of users’ transactions rather than about 35% pre-Covid.

“We’ve seen Covid massively accelerate adoption,” Ziglar says, adding that “volumes are coming back rapidly.” Cities are bagging or removing parking meters, he says, leaving drivers no choice but to use a mobile app. And such commuters as there are would rather drive than mingle on mass transit with other straphangers. In New York City, “when they do come in [to work], they drive, so demand for parking has increased,” says Ziglar.

At PayByPhone, transactions have been rebounding since they tanked at the start of the pandemic last March, says North American chief executive Roamy Valera. The app went live in 13 new cities in the summer, bringing new transaction volume. And, as with ParkMobile, the contactless feature has shifted more transactions to the app.

It’s also brought in more users. “Contactless has increased adoption,” Valera says. “Once [drivers] use the app, they find it’s a significant reduction in friction.” As an example, drivers don’t have to return to the meter to buy more time. “They can extend their stay with the app,” Valera says.

‘Critical Mass’

But payments analysts warn against over-optimism. Thad Peterson, a senior analyst who follows mobile payments at the Boston-based consultancy Aite Group, estimates that, for all the new users adopting these apps, the Covid setback means it will be three to five years before all the apps collectively reach what he calls “critical mass”—a state in which at least half of all parking transactions occur within the app.

“The evolution is going to be bumpy, but it is starting to happen,” Peterson notes.

Much now depends on the course of the pandemic. As vaccines reach more people, lockdowns and other restrictions will begin to be lifted and regular routines will start to reassert themselves. That will help parking apps because more people will use them, Pucci says. “When people do go back to the office, there will be more people driving than taking public transit,” he notes.

And these drivers will return to a limited supply of parking lots and garages, making it harder to find spaces and underscoring the utility of the parking apps, Pucci adds.

But he agrees with Peterson on the timing for this rebound. “I wouldn’t be optimistic this year,” he says. “We’re talking about three to five years.”

‘Achieving Ubiquity’

In the meantime, the parking apps are finding niches where their utility and convenience can command usage and loyalty. “Colleges have been a very strong market,” notes PayByPhone’s Valera. ParkMobile, meanwhile, has moved into concert and event venues, such as sports stadiums, as well as parking garages. It also enjoys the advantage of geographic spread with availability in more than 500 cities,

“Achieving ubiquity is one of our goals,” says Ziglar, formerly an executive with the merchant processor Elavon Inc., part of U.S. Bancorp. “Our vision is we want to be like the Visa and Mastercard for transactions for the vehicle.”

But if the full flowering of parking apps will take another three to five years, one big question some experts pose is whether the apps will continue to function as independent mobile utilities, rather than become features within general-purpose mobile wallets like Apple Pay. In November, for example, ParkMobile, while remaining a standalone app, announced an integration with Alphabet Inc.’s Google Pay wallet. That’s just the start, experts say.

The parking apps “will get absorbed into the wallets,” says Aite’s Peterson. “The worst open system will always defeat the best closed system.”