FX International Payments
By Samuel Greengard
For small and midsize enterprises (SMEs), in-car payments technologies could mean new opportunities but also new infrastructure challenges and costs.
A rundown of recent developments includes the introduction by Honda Motor Corp. of Honda Dream Drive, which uses a vehicle’s onboard infotainment display to enable payments at gas stations, smart parking lots, and drive-through restaurants.1 It includes partnerships with Chevron, Phillips 66 and GrubHub. Meanwhile, General Motors has developed an in-car payment system called Marketplace that works with Shell, ExxonMobil, Starbucks, and Dunkin’ Donuts.2 Still another system from Jaguar uses Apple Pay, AndroidPay and PayPal. And Hyundai, BMW, Volkswagen, and Ford Motor Co. have also promised in-car payment technology.
Research and Markets reports that in-car payment technology is projected to grow at an annual rate of 195 percent from 2017 to 2021.3 It noted that manufacturers are increasingly partnering with card networks to equip vehicles with digital payment technology while major tech firms such as Amazon, Apple, and Google are accelerating efforts to place their voice and payment technologies on wheels.4
Nevertheless, questions remain about the safety, security, usability, and consumer acceptance of future payments technologies like in-car payments. There’s also an infrastructure obstacle to any new payment tech in the need to equip restaurants, parking facilities, car washes and other merchants with the hardware and software to make payments operate seamlessly and securely.
The idea of tapping a button or instructing Siri or Alexa to pay for takeout food or other items without reaching for a wallet or purse can be appealing. At present, mobile payment technologies require a motorist to hold a phone or watch outside a car window while an employee positions a payment terminal near the mobile device. The process can be awkward and inconvenient, especially at a drive-through window.
Like virtually all digital platforms, in-car payment systems require the right combination of tools, technologies and human factors engineering to gain widespread acceptance. In the U.S., this includes software that can hold credit card and debit card information. Moreover, the interface must be easy to use, avoid distraction, and include an authentication mechanism to ensure that it’s not being misused or abused.
For example, a PIN or passcode can present a real danger while the vehicle is in motion, yet such a system would likely face steep resistance if motorists are forced to pull over to the side of the road to complete a transaction. Meanwhile, merchants must retrofit point of sale terminals to use beacons or similar technology so that they can connect to in-car payment systems. This makes it possible to initiate a transaction with a secure and encrypted wireless technology such as Bluetooth or Near-Field Communication (NFC).
"The path that we’ve taken is around ‘tokenizing’ the payment method for the customer so that can then be used for a variety of different merchants that we’ve integrated into our platform," noted John Moon, managing director, strategic partnerships at Honda, in a January 2019 article at the Mobile Payments Today website.5 He also pointed out that a key to success in the in-car payment space is a unified platform that ties together merchants and delivers flexible payment options to users.
Despite the inevitable technical and practical challenges, innovative payment technologies are moving from the research lab into vehicles. Jaguar was the first to introduce an in-car payment system in 2017.6 Over the next few years, most major automobile producers will incorporate onboard payment technology in at least some vehicles. They will rely on their own informatics systems or tap outside frameworks such as Apple CarPlay or Android Auto. Amazon has also made in-roads into the space with its Echo Auto, a device that introduces Alexa to a vehicle through an audio jack or Bluetooth connection.7 Amazon is also reportedly in discussions with auto manufacturers to have its technology incorporated into vehicle infotainment systems.
In all likelihood, infotainment systems will support multiple formats and payment options, and may also tie into loyalty programs. If auto makers can convince users to enter their payment cards into the system and activate the feature it could transform the way people pay for things while in vehicles, and potentially add features and capabilities that currently do not exist such as ordering a pizza or purchasing groceries on the way home from work. No longer would motorists need to dig for cash or a card while behind the wheel. They could use voice and payment technology to transact with a merchant instantly and seamlessly.
The move toward digital future payment technology in vehicles will likely accelerate over the next few years, introducing opportunities for businesses to simplify some transactions and support new types of interactions that weren’t possible in the past. As major auto manufacturers steer toward more robust functionality in informatics systems, in-car payments appear to be emerging as an important piece of the puzzle.
Samuel Greengard is a veteran journalist who has contributed to many business and technology publications. He is also the author of two books: The Internet of Things (MIT Press, 2015) and the AARP Crash Course in Finding the Work You Love: The Essential Guide to Reinventing Your Life (Sterling, 2008).
1. “Introducing Honda Dream Drive,” Honda Innovations; https://developer.hondainnovations.com
2. “Marketplace” GM Marketplace; https://gmmarketplace.gm.com
3. “Global In-vehicle Payment Services Market 2017-2021,” Research and Markets; https://www.researchandmarkets.com/research/fsxw6r/global_invehicle?w=5
5. “Automakers expand connected car ecosystem with payment technologies,” Mobile PaymentsToday; https://www.mobilepaymentstoday.com/articles/automakers-expand-connected-car-ecosystem-with-payment-technologies/
6. “Jaguar launches in-car payments at Shell gas stations,” TechCrunch; https://techcrunch.com/2017/02/14/jaguar-launches-in-car-payments-at-shell-gas-stations/
7. “Introducing Echo Auto - The first Echo for your car,” Amazon.com; https://www.amazon.com/Introducing-Echo-Auto-first-your/dp/B0753K4CWG