So far, the use cases for digital payments from connected cars seem too specific to spark a widespread shift in consumer habits. But connected cars may yet prove to be drivers of change.
The current use cases are fuel payments, parking payments and ordering ahead for coffee. These may seem like small categories, but they also represent some of the lingering examples where technology has struggled to replace cash.
“We expect cash to continue to decline, but it will not go away in 5-10 years," said Dominic Venturo, chief innovation officer at U.S. Bank.
In the short term, the payments industry can keep chipping away at these niche use cases.
"While digital transactions are becoming increasingly mainstream, and the more devices can securely communicate with each other – such as a car to a gas pump or a dishwasher to a computer when the detergent is low – the more we will see cash use subside," Venturo said. “There a number of reasons why we need cash less than in the past."
One such example is Jaguar's pact with Shell to support digital fuel payments from within the car. Shell announced in February that Jaguar will be rolling out 2018 models armed with a new app,“Fill Up & Go,” that interacts with Shell gas pumps. U.K. drivers have been using the app since July 2015, and drivers in the U.S. will have the opportunity to use the app in the manufacturer's 2018 F-PACE, XE and XF models.
“As the world slowly moves towards becoming a cashless, autonomous society, retailers like Shell need to accommodate those customers who no longer use cash,” said Stuart Blyde, Shell’s senior innovation manager.
However, these changes won't be happening at full speed, due in part to concerns about safety and driver distractions.
With the new models, drivers can install the Shell app and drive up to any pump at a Shell service station, then use the vehicle’s touchscreen to decide how much gas to buy with Apple Pay or PayPal.
This entire process must take place while the car is parked, said Peter Virk, Jaguar Land Rover’s director of connected car and future technology. Virk emphasizes that this restriction makes the process safer than if it were handled through a smartphone app.
“Our technology allows users to put their phone away out of sight and use it via the touchscreen in the car, because as the car becomes more connected to the Internet of Things we will always be guided by what is appropriate and safe to do while driving,” Virk said.
Apple Pay and PayPal use tokenization to keep driver’s financial information secure, so that a stolen car doesn't automatically equate to a stolen credit or debit card, U.S. Bank's Venturo noted.
But does this mean in the future, the U.S. will be completely cashless?
According to a 2016 Pew Research study, 24% of Americans said they don’t use cash during a typical week. Separately, 24% stick strictly to cash in a given week and 51% use both.
Retailers now want be part of an environment where they can tell what customers want, Virk wrote in an email.
“In a connected world the customer is making decisions and transacting in a different way, so retailers have to join this connected world and ensure their services are offered digitally,” he said.