Visa Steers In-Car Payments Down a Challenging Road
Visa has created a prototype of a car designed to initiate payments, the first step in a five-year plan of changing the way motorists pay for gas and other needs while in transit.
The in-car payments mechanism is not intended to be a portal to e-commerce; drivers would not, for example, shop on Amazon.com while cruising down the highway. But the concurrent development of the driverless car, which makes it possible for a single occupant to focus on other tasks, suggests Visa is at least on a parallel course with other in-car tech efforts.
Surprisingly, the biggest speed bumps for this project are on the business side, not the technological side.
"For this to happen, there are lots of people that need to get along,” said Derek Colfer, the head of digital innovation at Visa Canada. "There are auto manufacturers, operating system companies, banks, payment networks and others."
The project's initial focus is on fuel and food sales, Colfer said. However, these types of interactions may force a change to how card-present and card-not-present rules are handled, he added.
If a motorist purchases fuel before arriving at the gas station, it's not clear which category the sale would fall under. If the motorist buys fuel before crossing into another region to receive the fuel, there is a question of which location's taxes apply.
"The (car transactions) we demoed were all card-not-present. But there could be use cases otherwise, such as when using an NFC antennae for a card-present," Colfer said. "There's every reason to believe that, even under today's rules, there could be a use case where contactless-enabled" might be card present, such as detecting the car's payment mechanism when the car pulls up.
Despite these concerns, there would be many advantages to having an integrated gas payment system, he said. The car knows its own fuel level and can calculate how far that amount of fuel will take it. The system can also calculate the nearest fuel station and alter its route to find a closer one.
And when the car prepays for its fuel, it could also notify the station's attendant of the motorist's expected arrival.
Similar systems are already available to commercial drivers using smartphone apps such as WEX Connect, developed by the fleet card provider WEX. The app calculates the most cost-effective gas station by factoring in both price and distance; if a driver can save money overall by going to a closer gas station that charges more per gallon, the app will recommend that one. WEX Connect obtains real-time pricing data from the fuel purchases made by users of its fleet cards.
Under Visa's model, drivers could also pick a restaurant on the route ahead of time, and pre-purchase food that they would want to take on the road. Colfer envisioned that the car-based payment system (called the Visa Connected Car) might be removable—"like a tablet in the car," he said—to facilitate the final payment confirmation with restaurants and other merchants.
Visa last week demoed the payments-car at the Toronto International Film Festival.
"The excitement, imagination and momentum that flourish at the Toronto International Film Festival create the perfect setting to tell the story of how Visa is changing the way we pay," said Brenda Woods, head of marketing for Visa Canada, in a news release.