The move to credit cards with computer chips rather than magnetic strips could cost the city around $1 million, the price tag for new card reading mechanisms in all city parking meters.
Currently it would cost around $500 per meter for equipment that will read the new credit cards, said Wayne Mixdorf, the city’s parking manager. The city has 2,400 metered parking spaces, though only 1,300 are credit card-enabled meters, he said.
Mixdorf said the city likely will not have to begin changing the equipment for five to six years because the credit card industry will be making the switch to the new technology over several years.
The credit card issue came up during City Council budget discussions this week when Councilman Roy Christensen said a company told him he will be getting a new machine that will read credit cards with chips by Oct. 2, 2015, for his audiology and hearing aid business.
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Christensen asked how the technology change will affect the new parking meters the city bought a year ago that accept credit card payments.
The new cards are often called chip and PIN, because the card contains a chip that is read, and consumers must put in a four-digit personal identification number, or PIN, to authorize the transaction. They are also called EMV smart cards.
The microprocessor chip that encodes the information transferred to a merchant makes it much harder for thieves to steal credit card data, and the microchip cards are harder to counterfeit.
Mixdorf said he expects credit cards to have both a chip and a magnetic strip for several years as the country moves from swipe to chip cards.
Though the equipment to read chips is available for regular retailers, similar mechanisms for parking meters are not yet available in the United States, he said.
No money for new meter mechanisms is built into the mayor’s proposed two-year budget, for 2014-15 and 2015-16. The city will likely replace the card reading mechanisms in parking meters over four years during the next two two-year budget cycles, Mixdorf said.
“We’ll probably be tackling it in phases,†he said.
The city spent about $650,000 for credit-card reading meters installed last year. The equipment has a seven- to 10-year life cycle, and city leaders believed the change to chip and PIN cards would probably take at least that long.
The Target breach, the hacking of 40 million credit and debit card numbers in 2013, has accelerated the move in the U.S., Mixdorf said.
Two of the major credit card companies, Visa and MasterCard, have announced they will be moving to the new chip and PIN card technology in October 2015. The companies have said they will require retailers to accept liability for losses if they don’t use chip and PIN readers.
Mixdorf said he doesn’t see that liability shift happening. But if it does, it will make everyone move to the new equipment faster, he said.
Currently about 30 percent of Lincoln motorists using credit card-enabled meters pay with a credit card, Mixdorf said. About 22 percent used credit cards when the meters were first installed, and "it gets a little bit bigger each month," he said.
Parking meters generate about $1.8 million annually in revenue, most coming from the credit-card enabled meters that were placed in the most heavily used parking spots.
The good news is that the city does have the parking meter revenue to put in chip and PIN mechanisms as long as the city doesn’t spend it on other things, Christensen said.
The Downtown Lincoln Association and some council members have criticized officials for pulling money out of the parking fund to use for other city programs.
In his two-year budget plan Mayor Chris Beutler has proposed using $800,000 from parking revenue for the city's contingency fund, to be used for emergencies. If the money isn’t spent it would be returned to the parking fund after the two years.