While the world is excited about driverless cars, the payment industry is knocking on the door of the automobile sector with a new line of service called in-vehicle payment. This payment method is majorly influenced by the increasing trends of contactless payments post Covid-19 pandemic.
Grand View Research estimated the global in-vehicle payment market size at $1.96 billion in 2019, which accounts around 23% of the total contactless payment market. The research also predicted that the market will grow at a CAGR (Compound Annual Growth Rate) of 19.9% between 2020 and 2027.
The market growth is triggered by a growing customer base that wants convenience in vehicles and growing technological advancement in the payment industry. Currently, payment solution providers including PayPal, Visa, Mastercard are partnering with automakers to bring new payment solutions to the market.
Why Automakers are in a Rush to Implement In-Vehicle Payment?
With 99 million connected commuters in the United States spending around $62.3 billion on gas and $5.8 billion on parking, automakers are eager to find ways to reserve their share of revenues. With a comprehensive payment solution in place, in-vehicle payment integration can bring $230 billion in revenue for the automotive industry.
The in-vehicle payment solutions can be built easily with help of RFID and BLE technologies. The long-range RFID tags are able to send payment data over the air, whereas BLE modules have a higher range. With the right development partner, you can build these systems much faster than anticipated.
Some Real-World Implementation Attempts
Recently, General Motors announced its partnership with MasterCard to build an in-vehicle payment solution. Another collaboration between SiriusXM and Visa launched a vehicle-based payment platform to enable in-vehicle payments.
On the other hand, several automobile manufacturers including Volkswagen, Honda, and Ford have built their in-vehicle payment platforms, which will allow them to equip their vehicles with payment functionality. Some other automobile manufacturers are building systems that allow users to pay via voice-control.
The following are some of the real-world use cases of in-vehicle payment solutions:
Hyundai, Jaguar, and GM are among the automotive manufacturers that have successfully partnered with gas stations to provide their customers with more convenient ways to pay at fuel stations.
A real-life scenario can be – Drivers receiving notification about low fuel levels. Right after the geofencing notifying them about fuel pumps nearby. Based on the price analysis, the driver can decide which pump to head for. The driver makes payment via the vehicle dashboard and is then on his way to the pump! Technically, the driver’s in-vehicle payment system will communicate (to gather payment requests and make payment) with the connected fuel station over a secure wireless connection.
2. Smart Parking
People love their cars and the freedom that they give. Be it for work or any event, people need to find paid parking in most urban areas. However, with IoT-powered parking lots and vehicles, the vehicles can automatically pay for parking fees. These parking lots can easily ‘broadcast’ the available parking spaces to the vehicles nearby, which makes it easy for the drivers to navigate to the empty parking spaces and pay automatically – hasslefree parking experience with no tickets or cash/cards in place.
3. Smart Tolls
Paying at toll booths has always been cumbersome. However, the process can be improved by embedding payment methods in the vehicle’s windshield lable or license plate. The toll fee can automatically be deducted from the driver/vehicle’s account as soon as the driver crosses the toll booth.
4. Automated Repair Payments
With rumors claiming Tesla cars will self analyze the need for a repair/maintenance or part replacement, and will pay for it automatically, this use case of in-vehicle payment system seems a near reality. An advanced version of this system will allow drivers to check repair costs before they choose a service venue.
5. Hasslefree Drive-Thru’s
Drive thrus are very popular to buy food, prescription pick-ups, dry clearing, and more. Imagine your smart car can order for these services in advance, and alert the pharmacy or dry cleaner, so that they can be ready with the food or service before you arrive. Isn’t it cool? Well all of this can be possible with in-vehicle payments.
How In-Vehicle Payment Systems Are Built
The share of consumers who have their smartphone connected to their car is very low (16.7% to be precise). This connectivity allows them to make voice calls and access maps via their car dashboards. However, as automobile manufacturers plan to leverage FinTech, they’ll have to keep in mind that most of the users will still want to keep using their smartphones to make payments.
This challenge seeks for an innovative approach to implementation. In order to make drivers completely abandon their phones, automobile manufacturers can use the following strategies:
- Provide comprehensive in-vehicle connectivity
- Offer smartphone-based payment solutions
- Build a hybrid solution using both these approaches
Regardless of the approach that you plan to go with. There will be a need for the following essential elements to develop a comprehensive payment experience:
- A new breed of infotainment systems. As most of the modern vehicles (especially cars) are equipped with infotainment systems and cellular capability, it is feasible for automobile manufacturers to upgrade these systems for payment capability.
- Transforming vehicles into a payment device. A vehicle can be a payment device with the use of IoT devices such as RFID tags and Bluetooth hardware, along with third-party APIs that can facilitate the porting of payment systems to vehicle’s infotainment systems.
- A digital wallet for the vehicle. The vehicle digital wallet can provide the users with payment convenience with multiple options to pay from.
How to Ensure Data Privacy and Security for In-Vehicle Payments?
The increasing popularity of FinTech solutions brings more challenges in terms of data privacy and security. The security concern arises with the implementation of IoT technology. A survey by Business Wire found that almost half of the US firms using IoT suffered security breaches.
The use of sophisticated authentication technologies like 2-factor authentication and biometrics will be critical for in-vehicle payment solution development companies to eliminate such issues. The following are the best practices to improve security for your in-vehicle payment solution.
- Blockchain is a robust technology for data storage and security. Blockchain has been successful in terms of managing IoT device data. Given the vulnerability of IoT-powered FinTech solutions, Blockchain is the perfect solution to ensure safe data storage and exchange.
- Tokenization of customer payment information is among the most utilized methods of data security in the FinTech space. The users’ IoT enabled payment methods can be codified into unique tokens which are safely stored in a vault solution based on a cloud environment.
- Native Intrusion and Detection System. Enabled by modern technologies including big data and machine learning, a native system to improve cyber security of your in-vehicle payment system is among the best choices. These systems are capable of examining activities and detecting abnormal behaviors and patterns that can be an indicator of a breach or intrusion. Not any software development company can build such systems, you needa company with expert proficiency in FinTech app development. Only experts can build you a reliable native intrusion and detection system.
The merger of the automotive industry and FinTech has already begun, as big cats of the automotive industry have already started investing in such solutions. New generation cars are equipped with more sophisticated infotainment systems, which provide their customers with better connectivity and convenience.
If you’re looking for a FinTech development company that can help you build the most secure and robust in-vehicle payment solutions, your hunt ends here. We, at Nimble appGenie are experts in developing FinTech applications that range from modern-day e-wallets to banking apps.
Madhukar is marketing communication specialist at Nimble AppGenie. A writer by day and reader by night, he specializes in technical blogging. Throughout the time, he has been helping businesses by writing valuable business guides and articles. Nimble AppGenie is a renounced fintech and healthtech development service provider that is helping small-large scale enterprises.