Forgot your wallet? Don’t worry your car can pay for your expenses
Gone are the days when you needed to carry your wallets when stepping out on the road. Using your car as your new credit card is an innovation that is gaining a lot of attention in the automotive sector. It is essentially creating synergies between automotive, e-commerce and payments industry with some help from telco and semiconductor industry. The in-car digital wallets will revolutionize how people transact, create new business models and revenue opportunities for all stakeholders in the ecosystem.
According to Vijay Rao, Genesis Motor America’s director-connected operations, “It’s not about making payments in the car as much as improving the customer experience.” In-car digital wallets allow drivers to use an infotainment system platform to buy fuel, pay for toll, purchase groceries (for pickup or delivery), place to-go orders, pay for parking and perform various other transactions.
With COVD pandemic accelerating the in-vehicle payments, a research estimates that by 2026, global transaction volume of in-vehicle payments will exceed 4.7 billion by 2026, up from just 87 million in 2021. The industry is abuzz various stakeholders in the car ecosystem making inroads with this technology. Daimler partnered up with Visa to provide in-car payment facilities for its customers in the UK and Germany. Blackberry partnered with CarIQ, a tech start-up in California, create a “digital fingerprint” for the vehicle, allowing it to securely connect to a bank’s payment network, validate, and autonomously pay for a wide range of frequently used services.
Hyundai and Kia Motors last year introduced “Car Pay” which allows drivers to pay for gas and parking by tapping on a touchpad in their vehicles in Korea. Hyundai also launched its in-car payment system for its electric Ioniq 5 crossover models to pay for EV charging, food and parking. Renault Samsung Motors unveiled an in-car payment system in its new XM3 SUV in Korea, jointly developed with mobility e-commerce platform start-up Owin to order food and drinks, pay for and receive them.
Although some features currently being piloted or launched seem to be in a limited capacity, the technology has the potential to develop previously untapped revenue streams for many.
Reshaping e-commerce experience
With COVID travel restrictions being lifted, consumers are increasingly spending more time on the road. According to an estimate, average consumer now spends 13 hours per week in their vehicle, representing a 27 percent increase over 2021. This increase in time spent travelling can be utilized for potential economic activity. Cars can become one of the channel for marketplaces and e-commerce activity. Thanks to 5G connectivity, people can access a broad range of products and services to browse, choose and pay for their shopping in the car.
Making strides with in-vehicle digital wallet is Ford Motors. It announced a five-year partnership with Stripe - online payment platform provider, to facilitate a “seamless digital and eCommerce experience” for Ford drivers in early 2022. The partnership will allow for the integration of Stripe products into new Ford cars, allowing for a fast and frictionless purchasing experience from the road. Many OEMs are expected to follow suit in the not too distant future.
Personalizing content
Learning from real-time customer interaction, traffic pattern and journey duration, content providers like music streaming services, podcast services and OTT platforms can recommend music, TV shows, video content and audio books to the driver. Also, based on customer preference and location-based data, concerts, live shows and events can be marketed to the driver.
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Monetizing the vehicle
Drivers can pay for advisory services to dealerships and repair shops, helping them to curate a personalized experience based on real-time car data. For example, pay for services like car wash and tire change via the dashboard.
Also, drivers can pay insurance companies, based on this data, as per preferred pay-as-a-go insurance coverage scheme and in accordance to personalized pricing options, thereby allowing improved claims process, and overall deliver a better overall experience.
Scaling mobility services
With the economic fallout of the pandemic and the looming threat of climate change, mobility will continue to evolve. The predicted shift is away from personally owned, driver-driven vehicles and towards a future mobility system that focuses on seamless, multimodal travel facilitated by driverless cars and shared mobility. Fleet managers, shared vehicle operators and individual vehicle owners will embrace the in-car payment technology as it gives the consumers the ability to pay for their on-demand mobility services efficiently and safely. Thereby, eliminating the standard practice of drivers using company credit cards or paying out of pocket when filling up or getting a vehicle serviced. In the near future, the companies in mobility space will partner with in-vehicle payment providers to provide frictionless and convenient experience for users.
Reeling under the Russia-Ukraine war effects
The world auto industry is not untouched by the effects of the Russia’s invasion of Ukraine. The supply chain blockages and raw material shortage are impacting the suppliers and OEMs alike. With respect to raw materials, Ukraine supplies more than 70% of the world’s neon gas – used in semiconductor manufacturing, while Russia is the world’s largest producer of palladium, which is required for auto parts (e.g., catalytic converters) and semiconductor production and is used to reduce the effects of toxic gases like carbon monoxide and nitrogen dioxide from vehicles. Russia is also the third-largest supplier of nickel which is a critical ingredient in the lithium-ion battery cells used in most electric vehicles. Hence, the supply and production of semiconductor chips, EV batteries and catalytic converters is challenged, thereby causing production delays and longer waiting time. The rising oil prices and precious metals price increase (by 10 to 30 percent) when passed down to the consumers would eventually raise the car prices. This is bound to affect the car sales in general, let alone connected cars or electric vehicles (EV).
Going forward, the customer interaction with the car and its surroundings whilst in the vehicle is set to undergo a significant transformation. However, the in-car payment technology proliferation could be delayed by the dampened spirits of the potential car buyers as car prices rise and with the OEMs scrambling to address the semiconductor shortage and supply chain issues. Hopefully, the car won’t have to pay for the conflict as well.