Connected Cars to Lead IoT Payments Market – Juniper

Connected Cars to Lead IoT Payments Market – Juniper

In order for the in-car payment market to grow, automakers will need to let third-party developers gain access to vehicle telematics, a new industry survey finds.

The Internet of Things (IoT) payments market is projected to reach $410 billion by 2023, with the strongest growth coming from in-vehicle payments, according to a November 13 Juniper Research report. The study concluded the automotive sector would become the most lucrative IoT platform by 2021, accounting for $63 billion in transactions that year — 55% of the overall market. That compares with just over $50 billion for connected home devices, such as smart speakers and TVs.

However, the research noted car‑based IoT payments would mostly be for items such as food and tolls.

“We believe initial services of in-auto payments will be firmly rooted in the automotive industry, including fuel payments, tolling and parking,” Juniper Senior Analyst Sam Barker told TU-Automotive. “To gauge which industries will invest into developing connected car commerce capabilities, we need to look at who will own the in-auto payments ecosystem and how they can encourage development.”

Barker explained the owners of the ecosystem will be the developer of the vehicle’s operating system, either the automotive OEM or a third-party developer such as Google. So far, automakers have only tentatively explored these sorts of in-commerce apps, and with decidedly mixed results.

GM’s Marketplace, for example, lets drivers order and pay for goods and services – like their morning coffee – with a simple tap on the dash.

Barker noted that advertising could play a key role for in-vehicle payments, but warned the existing digital advertising ecosystem used for advertising over apps in mobile devices would need reworking. “The automotive industry will introduce a form of location-based advertising within five years, however interest from brands themselves is likely to be largest stumbling block,” he said.

Barker explained such a service would note the location of the vehicle, allowing a brand to advertise a nearby location knowing that the driver is within a suitable driving distance. He noted payment capabilities in an app would be achieved by releasing APIs that allow developers to create payment-capable apps.

“While third parties like Google are likely to do this swiftly, automotive OEMs will be far more cautious in who they allow into their operating system,” Barker said. “In the future, consumer loyalty will lie with the in-vehicle operating system that can offer the best functionality.”

The report also found a significant opportunity for players in the IoT-enabled insurance market, which will exceed $334 billion by 2023, primarily through telematics-based motor policies. However, this will reduce premiums, impacting insurers’ gross revenues, but this decline in premiums could be offset by improved overall profitability due to reduced costs per claim.

By 2023, 775 million vehicles will be connected through telematics or by in-vehicle apps, which means that spending on connected car commerce platforms could reach $265 billion, according to a Juniper study released in October. The firm recommended that automakers allow a range of APIs and development platforms into their vehicles, and urged partnerships between OEMs, network operators and payment solutions providers.

— Nathan Eddy is a filmmaker and freelance journalist based in Berlin. Follow him on Twitter @dropdeaded209.

Leave a comment

Your email address will not be published. Required fields are marked *