In touting the benefits of its plans to acquire Zipcar last week, Avis Budget Group said the $500 million deal will help it increase revenue and better manage its fleet of vehicles. The technology that powers the self-service hourly car rental service could also help Avis build critical mass for greater mobile payments adoption.
Billed as a "car sharing" service, Cambridge, Mass.-based Zipcar provides its members with keyless entry cards to access its fleet of more than 10,000 vehicles located throughout 20 cities and 300 college campuses. The RFID-equipped "Zipcard" interfaces with the company's fleet management system that tracks the location and use of its vehicles. Users hold the card over a reader located on the car's front windshield to start and end a reservation and unlock and lock the car between stops. The car's key is stored inside, but it won't start without the driver first scanning a Zipcard.
Consumers can use the Zipcar mobile app to make reservations and search for the locations of available cars. In addition, the app can be used to unlock and lock the car's doors and honk its horn, but users must still scan a Zipcard, as the smartphone app doesn't currently utilize Near Field Communication or RFID to interact with the car.
A possible next step for the Zipcar technology would be to use NFC chips in smartphones, particularly if the feature were provided as a value-add service for loyalty program customers, says Aaron McPherson, research manager of payments at IDC Financial Insights. Similarly, new payments options could bolster more self-service options for traditional car renting.
"From a payments perspective, this points out something important about NFC that people sometimes forget about: it can be used for a lot more than payments," he says. "People focus on the point of sale, but they're ignoring the fact that there are all these other uses for it."
Today, the Zipcar app communicates with Zipcar's fleet management system, which sends a signal to unlock the car. The technology that's used to manage the fleet also charges hourly use, membership fees and additional expenses like tolls to renters' linked credit cards.
Gas is included in the rental cost. When a vehicle is running low on fuel, drivers use a card that's kept in the car's sun visor. When a renter uses the card at the pump, the terminal asks for the member's account number and the car's odometer reading, which is transmitted to the system.
Zipcar also markets its platform to other companies as a software-as-a-service offering called FastFleet. The technology is sold to municipalities, private companies and other organizations that maintain vehicle fleets, providing the same keyless entry, analytics and management features that Zipcar uses in its car rental operation.
Parsippany, N.J.-based Avis Budget also has mobile apps for its two car rental brands, but the apps don't interact with the car the way Zipcar's does. And rental car companies have long been plagued with fleet management issues that Zipcar's technology could be used to help, McPherson says.
"They might have bought Zipcar possibly for the technology that they use to maintain their fleet because that's always a big headache for rental car companies," he says. "They can't promise you a specific make; it's just midsize or economy class. This provides them with the technology to provide more direct control of what their fleet's doing."
Avis Budget CEO Ronald Nelson intimated just such an opportunity. "We expect to apply Avis Budget's experience and efficiencies of fleet management with Zipcar's proven, customer-friendly technology to accelerate the growth of the Zipcar brand…We also expect to leverage Zipcar's technology to expand mobility solutions under the Avis and Budget brands," he said in a press release announcing the acquisition.
An Avis Budget spokesperson declined to comment, citing the acquisition's pending status.
If Avis expands Zipcar's technology for payments, wouldn't be the first time that the mobile and NFC technology crossed paths in the payments and car industries. General Motors' OnStar service experimented with an NFC-enabled mobile payments app for consumers to pay for electricity at public car charging stations and BMW built an NFC-enabled car key. The key not only unlocks the car but also connects to a vehicle's navigation system to show drivers the location of nearby hotels.
"It will take a long time for payments to get to where it needs to be. In the meantime, all those NFC phones aren't going to be left with nothing to do," McPherson says. "They're going to be used for stuff like this."
"I think it helps keep NFC active while you're waiting for the point of sale and the banks and everybody to catch up," he adds.