The driving force behind in-car payments

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Tech companies are scrambling to get into the dashboard to embed everything from voice assistants to payments. But the end goal — an in-car shopping experience as seamless as shopping online — remains elusive.

It's still unclear what the turning point will be. Some say the rise of autonomous vehicles will make it possible for drivers to safely take their eyes off the road to instead shop from their vehicles. Others view the purpose of in-car payments as a catering to the needs drivers already have today, such as paying for gas and parking.

And as with any new technology, there are competing standards. Should in-car payments rely on a hands-free voice assistant such as Amazon's Alexa? Or should they be wallets designed by the car manufacturers themselves? Should payments be handled through a wireless internet connection or or via the same sort of devices that handle electronic toll payments?

And most important: Is in-car commerce simply an add-on, or should the entire vehicle be designed around this concept?

As with many innovations, sometimes the key is to scrap the platform itself and start anew, just as Apple did when ditching its iconic iPod click wheel when designing the iPhone.

Mercedes-Benz’s new autonomous concept car, Vision Urbanetic, is a car that changes its fundamental structure based on its use case. The modular design can serve both ride-hailing and order ahead/delivery; the owner would swap out the car's cabin based on the intended use case, which could vary from hour to hour.

While Mercedes did not return a request for comment beyond providing PR materials, it’s easy to see Urbanetic serving the app economy’s stress on diversifying revenue streams. It's also clear that other modules could come about based on new use cases.

A less extreme approach comes in the form of Visa's new pact with SiriusXM, the premium radio service that comes built into many vehicles today. Their planned e-wallet combines geographic searches, mobile ordering, payments and tolls. Separately, Visa is working with Honda to develop in-car payments as part of the Honda Dream Drive prototype.

For the gig economy, there's GM’s Cruise venture, which will eventually pair driverless deliveries, food ordering and a ride-hailing app.

These new releases are a next step toward automaker and card brand goals of driverless cars serving as on-the-road catalogs from which to shop.

“We expect an increase in announcements that combine the computers deployed in cars and other signals from the mobile device that will enable retailers to create new innovations,” said Tim Sloane, vice president of payments innovation at Mercator Advisory Group.

Order ahead, a feature of early gas station payment apps, has become a staple of mobile commerce over the past two years with Amazon, LevelUp, Square and others using the feature to tie into their core businesses with a line-busting option. The same technology can also benefit automakers, card networks and apps that wish to attract drivers to on-board payments that serve both passenger shopping and monetizing the actual car.

“Car manufacturers continue to perfect their strategies relative to establishing marketplaces and controlling payments,” Sloane said. “Currently order ahead is the fastest growing innovation and has started to spread to new merchant categories such as grocery.”

Blockchain is also an option to power in-car payments. For example, IBM and ZF have partnered with UBS for the Car E-Wallet. The wallet uses the Hyperledger fabric to power the blockchain, which creates potential tie-ins with Hyperledger members from fintech, financial services and nonfinancial companies such as Airbus and Daimler.

“Many of technologies needed to deliver in-car commerce are already available — such as tokenization, biometrics, cloud payments, etc. — but putting them together to deliver a great customer experience across a broad range of use cases and shopping scenarios is not easy, especially given the diversity of different car makes and manufacturers,” said Zil Bareisis, a senior analyst at Celent. Partnerships such as Honda and Visa, Mastercard and PayPal, and the Visa/SiriusXM deal will help determine the best way forward, he added.

Tying mobile commerce and financial services to ride-sharing apps makes sense, since the rider would have already provided payment credentials. Asia's Grab has already branched out from ride-sharing to offer numerous financial services.

Automakers are pressured to diversify how they add payments to onboard systems, since many of the early in-car payment services are already easily available via other means. People obviously can use their mobile phones in cars as easily as in their homes to shop, order and make payments.

“Consumers won’t make significant investments in auto technology to replace something that already works,” said Rick Oglesby, president of AZ Payments Group, though adoption of in-car payments will still take time, he said. “Within-auto payments have competition and solutions that are fully integrated into the automobile itself are just at the beginning stages.”

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