There are a couple of benefits for the parking permit card. You have to buy the card, so the city gets a little money up front. There are no meters that need to be emptied and maintained. The driver doesn't need pocket change or a credit card(new meters). And there is no need to paint the pavement for parking stalls. Two Smart Cars will take up much less room without having spaced meters.
If you "cheat" for 5 minutes, you probably won't get bothered. More than that is a real gamble. Remember, a clock that is mis-set into the future is a very expensive fine!
Europeans use the "honor system" effectively in all areas of life. Compliance is quite high as is the fine for those who get caught cheating. Of course, people will cheat any system, but most people are honest and that is why it works.

Klaus
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I still miss my 164 and my 854T. Just driving a V70R :)