Digital commerce is moving to a new frontier, and it's located inside the internet-connected car.
According to industry experts, consumers will soon be able to pay for things like parking, gas and food right from their dashboards with built-in payment technology.
In-car purchasing could be a financial windfall for merchants, as well as a convenient shopping experience for consumers. With billions of dollars to be captured, the race is on to equip vehicles with digital payment technology – and companies are positioning themselves to get a piece of the action.
Capturing commuter commerce
Simple, safe and secure in-vehicle payments are a crucial part of the transformation from today's connected cars to a future where commuter commerce could be revved into overdrive. The commute has always been a time for drivers to engage with brands via billboards or the radio, but in-car payment integration means that consumers will soon be able to use their drive time quite differently, and the car as we know it will become a commerce engine.
By 2021, it is estimated that 82% of new cars will be connected, according to a Business Insider study. That presents an attractive opportunity to drive commerce inside cars and capture consumer dollars.
Mastercard has partnered with General Motors and IBM. Jaguar has aligned with Shell. Amazon has collaborated with Ford Motor Company and Google is working with Hyundai. Other smaller players are gaining traction too, like Gentex, a leading supplier of connected-car technologies, and WEX Inc., which recently launched DriverDash, an in-vehicle payment solution for commercial fleet drivers that's now offered at 25,000 gas stations across the country.
"In-car payments is certainly an area where Visa is focused," says Olabisi Boyle, senior director of the internet of things, Connected Car, at Visa. "The idea is to develop a seamless payment experience that a consumer will adopt in a car. Visa is working with partners to develop this technology."
Some of Visa's partners include automotive manufacturers, parking companies, fuel firms, quick-service restaurants and toll services.
The digital dashboard
Last year, Visa and Honda demonstrated an in-vehicle payment system that lets consumers pay for parking and gas from their dashboards. Drivers are notified that they can pay for fuel or parking when they are near a connected parking meter or fuel pump. The purchase amount is displayed on the dashboard screen, and drivers confirm payment by voice or with the touch of a button.
"This is a seamless experience in a car for drivers, and they don't even have to reach for their wallet or phone," says Boyle, who spent 20 years in the automotive industry before joining Visa.
Boyle says the Visa-Honda partnership is just one of several initiatives that the card payment company is engaged in to develop payment technology inside vehicles. She predicts all car manufacturers will introduce some form of in-car payment technology in the next two years.
"The car manufacturers want to bring this technology to vehicles. It's another service they can provide and another revenue stream for them," she says.
What's at stake? More than $210 billion in annual commuter commerce, according to a recent study conducted by Visa and PYMNTS.com. The research report – The Digital Drive – examined the current state and future of payments in connected cars. Some of the findings include:
- 89.6 million people use the internet while they commute in a car
- 69.1 million car commuters use the internet to purchase items
"What surprised us was the amount of commerce that already goes on inside a car," says Karen Webster, CEO of PYMNTS.com. "There's 135 million commuters, and most of them are trying to multitask. What technology and apps and connected devices can make things more convenient for them?"
Mobile shopping revs up
The study, which surveyed more than 2,000 commuters, showed more than half currently use a mobile phone or tablet to order ahead and pay for things as part of their commute. About 40 percent of those who use their phone or tablet to buy items like a morning cup of coffee use an app and in-app payments to place their orders. And nearly 75 percent of all commuters surveyed said they would shop more if the ability to shop and pay were integrated into their car.
"Would a connected experience built into the car enhance the commute and increase usage and commerce? Most people don't have this technology, so they use their smartphones," says Webster. "The connected dash is an opportunity to engage the consumer. It's a natural and more convenient way to do it."
The average commute in the United States is around 30 minutes, according to the study, which is plenty of time for drivers to add to the grocery list or order ahead for dinner.
"You have a captive audience inside a car willing to spend money," says Webster. "The issuers, merchants and auto manufacturers are interested in capturing this audience. This is one of the next frontiers in payments, and certainly a frontier where there's a big, critical mass of people."