The Connected Car


The Connected Car

 Wearables such as fitness trackers and smart watches are capturing a growing share of the mobile payments market, and the payments industry is starting to focus on the tremendous potential of the “largest wearable” — the so-called connected car. 
By 2020, an estimated 250 million vehicles globally will be “connected” — meaning they will be equipped with hardware platforms and Internet connectivity necessary to enable consumers to stream music from a favorite provider, navigate efficiently based on real-time traffic and road conditions, book restaurant reservations, and pay for fuel and fast food.
Payments will undoubtedly play a significant role in the future of connected cars.
“Innovation around connected vehicles is exploding, fueled by rapid technological advances, coupled with an acceleration in the rate that consumers adopt new technologies,” said Todd Ablowitz, President of Double Diamond Consulting. 
“Payments innovation is exploding as well. While it took more than 13 years for the television industry to reach 50 million viewers, Apple CEO Tim Cook has reported that iPhone 6 owners registered more than 1 million debit and credit cards with Apple Pay in the first three days the service was available,” Ablowitz said. 
“Connected car platforms provide an ideal opportunity for payments providers to leverage the emerging ‘Internet of Things’ to provide a driver-centric and frictionless payments experience across a variety of consumer-use cases.”
With about 100 million lines of programming code, the average modern high-end car today has approximately double the code base of Microsoft Office 2013. While the early generations of connected car platforms focused on telematics services, such as remote diagnostics systems, hands-free calling, turn-by-turn navigation, and stolen vehicle tracking, next-generation platforms are literally transforming the automotive sector, with major implications for both industry participants and consumers. 
Original equipment manufacturers (OEMs) are partnering with hardware, software, insurance, telecom and other service aggregators and service providers to create a connected car ecosystem focused on new services that differentiate their automobiles and generate incremental revenue.  Until recently, payments providers have not been active participants in the evolving connected car ecosystems, with initiatives being limited to proofs of concept around payments for parking, fuel and fast food. 
The payments industry is beginning to focus on the opportunity to incorporate an array of payments into connected car initiatives. 
For example, the Jacksonville, FL-based FIS banking and payment technology company recently announced that its San Francisco Digital Innovation Lab is exploring the role of in-car payments and is actively working with a fuel retailer to initiate the pump authorization and fueling process while the consumer is still in the car. 
And VeriFone is working with Toyota and SAP on a service that initiates fuel payments directly from cars. This solution is designed to notify drivers when gas is low, provide turn-by-turn navigation to a fuel provider that accepts wireless payments, and will even present offers from the gas station, such as discounts on food and carwashes. 
“An integrated consumer experience around fuel will definitely represent an improvement over existing paradigms, whether initiated through a stand-alone in-car app or one that is tethered to a smartphone,” Ablowitz said. “However, providers must remain cognizant of the need to solve difficult issues relating to safety and data security, as well as consumer fears regarding the use and theft of their personal information, in order for such services to gain widespread consumer adoption.” 
The need for integrated payment solutions is generally present regardless of the nature of the in-car service being provided. Connected car offerings must address the entire customer experience, including seamless enrollment, payment credential management, and broad-based transaction processing capabilities necessary to satisfy the unique requirements of ecosystem participants, such as telecom, entertainment, insurance, electric vehicle charging, fuel and fast food providers. Integrated payment platforms also must support credential management, payment processing, settlement and reporting of transactions initiated from connected cars built on different technology platforms and accessing the Internet directly or through a tethered phone architecture, while maintaining a focus on driver safety and data security. 
 As more and more cars become connected, so does the ability to offer secure online commerce to consumers through connected car platforms. Currently, the industry is focused on specific use cases such as paying for parking and fuel. However, we at Parkmobile envision a world in which consumers can safely and seamlessly initiate a myriad of everyday purchases directly through connected car platforms. 
The real benefits to both OEMs and consumers will become apparent when innovation delivers truly vehicle-centric solutions, and not just offerings that are an extension of features consumers already have on their smartphones or watches.
“The development of vehicle-centric solutions will require collaboration between connected car players and payments providers,” Ablowitz said. “OEMs, telecom and platform providers leverage relationships with payment specialists to navigate the complexity of ecommerce transaction processing and settlement, and to ‘architect’ solutions designed to minimize the costs of payment processing and mitigate the pervasive risk of breach.” 
The announcement at Mobile World Congress 2015 in Barcelona by Visa, Pizza Hut and Accenture represents one such collaboration, as the three companies leverage their respective areas of expertise to jointly develop a solution that will let customers order a pizza from the dashboard of a connected car. The connected car concept, led by Visa, combines leading-edge payment security, cellular and wireless technologies to test connected car payment experiences focused on busy consumers. Visa has indicated that while the technology is being deployed initially for fast food purchases, the platform can also be support many other types of daily consumer purchases including gasoline, transit, parking and drive-through retail opportunities.
I would love to pay for coffee with my connected car automatically as I drive through a pickup window. Connected car platforms will transform our lives – extending well beyond the ability to pay for coffee and parking. Integrated payments solutions are an essential ingredient in that transformation. I can’t wait to see what the future has in store for us.
Article contributed by:
Cherie Fuzzell
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