Autonomy Could Turn the Cabin Into a Marketplace

There has been a huge rise of in-car payments over the past half-decade. It’s now a $230Bn opportunity with 73% of American commuters connecting to the internet in some form while driving.

Transactions which once took place outside the car, such as paying for fuel, a parking space or a coffee, are now taking place in the driver’s seat, either via a driver’s smartphone or, increasingly, through the car itself.

Devin Patel, vice-president of business development at Passport, a mobility management company, spoke to TU-Automotive about the huge opportunity for both fintech and automotive companies. “In-car payments are a major factor in getting automakers to understand they can make money from developing connected cars and that they can expand their services into this space. It took a while for them to understand that their business models had to be ready for this but now they’re looking into multiple avenues of connected car revenue,” he said.

It’s clear this is an opportunity which both industries cannot afford to ignore. Roger Lanctot, director of automotive at Strategy Analytics, said: “The commercial collaborations are mostly in place between key organizations such as automakers and payment companies like Visa, Mastercard, Citi or PayPal. It’s imperative these are in place now because we’re in the phase of educating consumers, refining user interfaces, and trying to be more creative with in-vehicle payments.”

However, there’s another collaboration which has to happen if cars are to be able to process payments: technological partnerships. Jonas Rönnkvist, head of software business and strategy at Volvo, explained why the company is embedding the market leading mobile OS inside its cars. He said: “We hope embedding Android inside the car will be the basis for our partners to provide services that should be managed within the car, such as payments and entertainment. We’ve partnered with Google on Android because we feel customers want to use the apps they recognize and an operating system they are familiar with.”

Nonetheless, using Android running natively inside the car is still a way off. “Lately, more and more drivers have been adopting Apple CarPlay and Android Auto to mirror their phone to the car’s head unit, meaning they can use apps or services while driving. This is the beginning of applications running natively inside the car and having the vehicle process the payment, not the smartphone,” said Rönnkvist.

Having the car process a payment brings up multiple issues, namely who is paying for an item? With a phone, there is generally one user, with a password or biometric authentication typically needed to advance the payment. In a car, though, there may be multiple users within a family or multiple passengers. This means the car needs to recognize the voice, or alternatively the face, of who is paying.

Auto fintech one factor in enabling consumer individuality in the car, Patel said. “Personalization is another huge driver in creating a better user and driver experience in the car when paying for items because, obviously, the car needs to be able to identify who is paying for an item. Right now that’s with the fingerprint reader on a smartphone but the ideal solution is voice recognition embedded into the car, so it knows I’ve asked instead of my wife, or another passenger. However, some form of authentication is always going to be needed because the car needs to make sure it is charging the correct account.”

 

As with smartphones, biometrics is one of the key factors in making in-car payments seamless and as easy as possible, so customers want to pay for more items. Patel continued: “Payments need to be seamless. It’ll get to the point where the car will know if you’ve moved into a congestion zone, for example, and will automate the payment, just asking for confirmation. Everything is working towards getting this as frictionless as possible.”

However, voice recognition for payments has to overcome a major legislative hurdle, Conny Bergstrom, CEO of Volvofinans Bank, said. “Currently we have no solution to the issue of processing payments using voice authentication, because it isn’t approved by the authorities. The technology might be there but the legislative and legal issues remain and there’s no solution for that in Sweden yet.”

Generally, in-car payments work the same way as on smartphones or computers, with e-wallets storing the user’s payment details. Many automakers, and others in the auto industry, are now working on their own e-wallets, enabling payments for fuel, washing, servicing, and loans and leases to be processed in a smartphone app.

Bergstrom explained why these are necessary for automakers. “A system like this increases engagement and satisfaction, therefore increasing loyalty. It also gives us the ability to see where and how customers are spending their money, which we can use to improve the service further and build on the payments the app is already able to process.”

He continued: “Let’s say you want to rent a ski chalet for the weekend. You have to fill up your car, wash it, get special insurance, and so on. An e-wallet can make paying for these various items seamless, which is what the customer wants. They don’t want to be bothered by the various payments when they’re trying to plan their trip.”

With the rise of decentralized blockchain technology and cryptocurrency, it’s possible these may replace e-wallets because, from both security and payment perspectives, there are distinct advantages. However, opinion was divided, with Rönnkvist the most skeptical. “Blockchain is a technical solution that could be built but we haven’t seen the value in it yet,” he said.

Patel, though, was more positive towards the emerging technology. “On the security side blockchain’s kind of the way to go, since it’s processed directly, no bank accounts involved. On the payment side, the cost of processing a payment is significantly reduced because there’s no middle man. Both of those make it a value add for any company.”

Lanctot voiced similar thoughts. “Blockchain is perceived as offering a higher degree of security and is already implicated in multiple vehicle-based transaction platforms.  Connected cars are vulnerable and carmakers are exploring ways that blockchain can mitigate that vulnerability – along with the added value of trace-ability and validation,” he said.

While paying for fuel or tolls is commonplace among connected car owners today, there’s a lot of room for growth. In particular, branded marketplaces will be deployed, as Patel explained. “Let’s say you’re in the back seat of an autonomous vehicle from a mobility service. Often this is just dead, wasted time but if the car had a branded marketplace on a screen you could do your shopping while waiting, meaning the mobility service makes a skim off the items you buy. Therefore, it’s vital auto companies understand how they can upsell items to consumers using this screen and how important are partnerships with ecommerce vendors and payment processors.”