Payment technologies in cars have gained a lot of momentum in the past few months. From the recent successes of Uber, GetTaxi, and Lyft, to the prospective idea of a fleet of driverless Tesla-Uber vehicles, financial technology companies have been able to enter into the taxi world through providing payment services. However, the establishment of strategic partnerships in the last year has given insight into a new, and bigger, concept: Turning the personal automobile into a credit card.
MasterCard and the payment key fob
Mobile payment companies have entered the personal automotive market in two distinct ways. The first is turning the key fob into an Internet of Things (IoT) item. By embedding physical objects with network connectivity in order to exchange data, normal objects are transformed into payment devices. MasterCard, using its Digital Enablement Service, has partnered with General Motors to release an IoT key fob in 2016. In this alliance, MasterCard has partnered with a multitude of companies in various sectors, including fashion (Adam Selman), wearables (Ringly and Nymi), auto (GM) and tech (Qualcomm, NXP, and TrackR). Through this partnership, MasterCard has broadened its Digital Enablement Service product line, allowing customers to pick a more specific wearable that fits their needs and desires.
MasterCard’s partnership with GM is an excellent way to capitalize on current products and technologies. However, it’s more focused on providing customers with “another” way to use payment services on the go, not turning the car into a credit card. With that in mind, we move to the second way mobile payment companies are entering into the automotive world: Turning the car itself into an IoT object.
Turning the car into a payment device
Visa unveiled a new partnership with Honda and ParkWhiz at the Mobile World Congress in Barcelona earlier this year. Visa is providing accessibility to its Token and Checkout services to Honda, integrating one-touch payments into the car dashboard/head unit.
While both the Visa dash unit and MasterCard key fob allow payments on the go, that’s where the comparisons end. Honda has developed two apps, allowing consumers to purchase gas, convenience items, and public parking time while remaining seated in their car. Due to the full-dash integration, the apps/Visa have seamless access to the consumer’s car. When low on fuel, the car provides an alert and GPS guidance to the closest gas station, the precise amount of fuel needed to fill the tank, and automatically pre-pays the exact fuel cost at the pump. Instead of waving an IoT device at a hotspot on the pump, the whole transaction takes place on the car dashboard, turning the vehicle itself into a mobile payment platform. The three companies are aiming to start product testing later this year.
Apple’s a dark horse
There is another company that may be attempting to accomplish the goal of turning the car into an IoT object: Apple. There have been countless reports about Apple’s “Project Titan,” including hiring employees from Tesla, strange noises coming from Apple’s Sunnyvale complex, and even a “secret car lab” in Germany. Although there is no confirmation that the project even exists, it can be assumed that Apple will integrate its Apple Pay system into the car’s dashboard. Unlike Honda, Apple would be able to work straight with app developers in order to maximize the potential of an IoT car. With Apple’s already established mobile payment system, the transition into the car dashboard seems like a smooth and easy concept.
Although nothing tangible has been released for public use, the concept of an integrated payment system in the dashboard of the car is enticing for both consumers and business alike. Once the integration into the car dashboard has been smoothed out, the opportunities for strategic partnerships are vast. Companies will have to make strategic alliances similar to Visa and Honda, leading to opportunities for financial technology companies to link as many services together and to become assets to car manufacturers.
Sky’s the limit
Other than the gas and parking examples, which companies are already working on, other use cases include:
- Purchasing food from a restaurant while driving there, and the kitchen being informed of when to cook the food in accordance with traffic and arrival time
- Purchasing groceries while driving to the supermarket, while the supermarket knows when you will be arriving to allow curbside delivery
- Emergency mechanical situations, where the car guides the driver to the nearest mechanic, with the part needed to be fixed already waiting and paid for before the car arrives
Although these examples seem incredible, some people may not be comfortable with having a fully integrated IoT car. For those who don’t embrace this concept, they can still use products like MasterCard’s key fob to pay on the go. However, an IoT car may be essential for many purchasers in coming years. This level of connectivity may be a deal-breaker for millennials, the next generation of car buyers. Especially with connected cars, the integration of in-dash payment processing may be a requirement for car companies to maintain market share. The next “most popular car” may be the one that best turns the car into an IoT object, providing the best services for on-the-go payments. However, if companies continue to team up and innovate together, we may see some truly remarkable features in the next generation of IoT automobiles.