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e-Payments in Cars


As consumers increasingly pay for goods and services through smartphone-based mobile wallets rather than physical credit cards or cash, automakers and their technology partners are working to turn infotainment screens into the hot new payment portal.

The effort gained momentum at CES last year, when Honda and Visa demonstrated paying for parking and fuel through a dashboard interface. And it accelerated in the months since, when Jaguar Land Rover (JLR) launched a feature around this concept. Now, experts say e-payments in cars can go even further. They envision it tying into other advances in car tech, including artificial intelligence and autonomy, as well as related new business models. But first, work is underway to establish automotive industry platforms for e-payment systems.

Abundant Opportunities

According to recent research from ACI Worldwide, an e-payments processing company based in Naples, FL, 17 percent of U.S. consumers now regularly use smartphone-based mobile wallets for transactions, up from six percent in 2014. Overseas, usage is even higher. In Sweden, the figure is 23 percent, in Italy it’s 24 percent and in Spain it’s 25 percent. However, the UK lags at 14 percent, ACI reports.

Meanwhile, consulting firm Frost & Sullivan predicts in its 2017 Global Automotive Industry Outlook that automotive industry revenues from new business models and technologies will reach $1.3 trillion in 2030. And this will encompass automakers’ diversification into financial technologies (such as e-payments), Frost & Sullivan says.

“From an innovation perspective, we’re seeing a future that looks very different from today,” says Avin Arumugam, senior vice president for Internet of Things at Visa in San Francisco. Payments will be at the core of a new commerce experience enabled by connected devices, centered on “the new services that these devices will be able to offer the consumer.”

“Right now most of the cars that are connected are using [their connectivity] purely for telematics,” Arumugam says. On top of that, “commerce opportunities” can be added on. For example, a coffee shop or convenience store 10 miles away along a driver’s route could send a coupon to the dashboard. So, Visa is aiming to “determine the fundamental payment construct of how that could work,” with the goal of making e-payments in cars as simple as paying with a credit card at a store’s point-of-sale terminal, he explains.

“There are a lot of opportunities to make the experience more streamlined and more integrated into the cockpit,” Arumugam says, suggesting that biometric technology like an iris scanner in the rearview mirror or a fingerprint sensor in the steering wheel could be used to ensure that the driver is an authorized cardholder — and not, for instance, the cardholder’s child.

Automakers concur with this view. “In a world where cash is no longer king, customers are increasingly using electronic payments and contactless cards,” says Peter Virk, director of connected car and future technology at JLR in Gaydon, UK. In response, JLR is developing “a range of collaborations” and “other cashless payment systems” that facilitate cashless motoring via a car’s touchscreen. “Whether it’s paying for fuel, parking, tolls, or even at a drive-thru restaurant, the aim for cashless motoring is to make life more convenient for our customers,” he adds.

JLR-Shell e-payment leverages a smartphone app from the gas station that taps Apple Pay or PayPal mobile wallets through the touchscreen in Jaguar cars.

The JLR-Shell e-payment structure leverages a dedicated smartphone app from the gas station that taps Apple Pay or PayPal mobile wallets and is accessed through the touchscreen in particular Jaguar cars — the 2018 F-PACE SUV, and XF and XE sedans. Geolocation technology identifies the fueling station and allows the user to choose a pump on screen, then select how much fuel to buy. An electronic receipt will be displayed on the touchscreen and sent from the pump directly to the user’s email address. The e-payment system was initially rolled out in the UK, and locations in the U.S. and other markets will be added through the end of this year, along with Android Pay integration. Paying for parking and for food at drive-thru restaurants is on JLR’s e-payments roadmap, too. Ultimately, the e-payment system will be available in all Jaguar and Land Rover vehicles equipped with the automaker’s InControl Apps feature.

Honda’s and Visa’s joint CES demonstration didn’t showcase any particular fuel supplier, but did incorporate pumps from Gilbarco Veeder-Root, based in Greensboro, NC. That’s the market leader in fuel dispensers, point-of-sale and payment systems used by gas stations worldwide, says John Moon, managing director of strategic partnerships at the Honda Innovations in Mountain View, CA. Similar to JLR’s offering, it uses Bluetooth beacons to identify a fuel pump, then lets the user choose how much fuel to purchase and completes the transaction via the vehicle’s touchscreen.

“As easy as it is to put a fuel dispenser nozzle in your car, we’d like to do the same with payments,” Moon says. Yet Honda also is not limiting its ambitions to fuel-ups. “We’re looking at all of the payment interactions that may occur in the car,” Moon adds.

At CES and in July at the Formula E electric car race in Brooklyn, NY, the automaker and Visa demonstrated in-vehicle e-payments with smart parking meters from San Diego’s IPS Group. Nonetheless, Moon says, there is no timeline for when Honda may commercialize e-payments in cars.

Visa’s Arumugam mentioned another potential e-payment application: temporarily installing a mobile wallet in a shared vehicle. This is possible using the Visa-developed secure token technology, which underlies established mobile wallets including Apple Pay and Android Pay in addition to the JLR and Honda implementations.

Use cases are one matter, but the handling of credit card information by automakers is another entirely, asserts Oliver Rumpf-Steppat, who helps shape BMW’s ConnectedDrive telematics system, as department head for product requirements, component development and verification at the automaker’s North America headquarters in Woodcliff Lake, NJ. “There’s a lot of discussion going around this topic right now,” he says, but with e-payment technology still quickly evolving, automakers shouldn’t rush to embed a “fixed implementation” into vehicles they’ll have to support for a decade or longer. And that’s why an easily updatable smartphone app is still the best implementation, he says.

As for keeping customer data private, BMW has already taken a step in this direction, Rumpf-Steppat says. Its BMW car data project gives BMW owners the choice of sharing vehicle data with third party companies — such as insurance providers and even radio stations — in a secure manner after prior consent. BMW CarData was available first in Germany, and will roll out to U.S. customers in 2018 or 2019.

Volvo has acquired Luxe, a San Francisco-based irm that sends a personal valet to a customer’s location, on request, to park, refuel or clean his or her vehicle.

At least one automaker is building its own mobile wallet, which functions similar to PayPal Inc.’s. Mercedes Pay S.A., based in Luxembourg, was founded as Paycash five years ago and acquired by Daimler AG last year. The reason, says CEO Juergen Wolff, Mercedes wanted both the technical ability and the license to operate as a payment platform. Now, like the MyTaxi cab hailing and Car2Go car sharing businesses, it is part of the Daimler Mobility Group.

“We are supposed to be the payment engine and the wallet behind those services,” Wolff explains, “and of course one of the next steps is to also connect the cars on the Mercedes pay solution. So no matter if you ride in a cab, if you’re sitting in a rideshare or if you’re sitting in your own car and you want to pay for car-related services — which can be parking, fueling, tolling, whatever use case — you would be able to pay with this solution. Our core aim is to make a better, nicer user experience for our customers.”

The interface for Mercedes Pay is the automaker’s COMAND telematics system. “We could imagine partnering up with companies that fit our brand values and that our users like,” Wolff adds. And the range of those possible partners is wide, he says, because the underlying Mercedes Pay technology is flexible enough to connect even with retail point-of-sale systems, such as a cash register at a supermarket.

Besides the technology, though, Mercedes also has the financial license to meet regulatory requirements and operate a payment platform itself (rather than process payments through a third party), Wolff says. “The more complex the use cases get, the more important this issue becomes.”

A simple use case example is paying for gasoline, while a more complex one is paying for parking at multiple garages around town throughout a day and in parallel paying for coffee, all via the same mobile wallet account, he says. There still is no timeline for Mercedes Pay to be commercialized, but it will launch in Europe first, Wolff projects.

Biometric Security

Security is a big deal for e-payments, and not just when they’re traveling as digital bits online. It’s crucial that only an approved user can access a mobile wallet, to prevent unauthorized purchases. But how would a vehicle know who’s in the driver’s seat and allowed to make an e-payment via the dashboard? Gentex Corp., a supplier of mirrors and electronics to the automotive industry, has an answer: a biometric system built into the rearview mirror.

The mirror, announced earlier this year, features an iris scanning camera and software that identifies the driver and provides the authentication needed to secure and enhance e-payments, as well as vehicle-to-infrastructure transactions and vehicle-to-home automation services. It incorporates technology from a Gentex partner, Delta ID, which also supplies iris-recognition software and hardware used in smartphones, tablets and other mobile devices.

BMW CarData gives BMW owners the choice of sharing vehicle data with third party companies — such as insurance providers — in a secure manner.

According to Gentex, iris recognition is more secure than any other form of biometric identification, including facial, voice and fingerprint recognition. The false acceptance rate for iris recognition is as low as one in 10 million, Gentex says.

Besides enabling e-payments, Gentex’s future plans for the mirror include integration with the company’s HomeLink car-to-home automation product, which uses RF and wireless cloud-based connectivity to operate garage doors, security systems, thermostats and home lighting. This biometric system will enable multiple drivers to activate unique home automation presets for themselves.

“Once you start doing that, though — unlocking houses, adjusting thermostats or making payments from the car — you really need to know who the driver is,” says Craig Piersma, director of marketing at Gentex, based in Zeeland, MI.

Additionally, the biometric identification system could be used to personalize the vehicle’s cabin for a particular driver — automatically adjusting the sideview mirrors, steering wheel, driver’s seat position and audio system presets, for instance.

Expect to see the first vehicles equipped with Gentex’s biometric mirror in two to three years, Piersma says.

Business Models in Flux

“By and large it’s still early days” for e-payments in cars, says Dominique Bonte, managing director and vice president at ABI Research in Brussels, Belgium. “We have all the technology in place” for seamless e-payment transactions, as exemplified by the Amazon Go retail operation, which employs cameras, sensors and artificial intelligence to detect a purchase and activate a payment, he notes. A similar scheme could be used with a vehicle with “proximity services.” For example, a Starbucks coffee shop ahead could detect a user’s car approaching, alert the barista to make the driver’s favorite brew, complete the payment transaction and have the beverage ready for pick up when the car arrives, Bonte says. “It’s more a business model, financial discussion than anything else,” he adds.

But paying discrete amounts for single transactions is only one possibility. A “lot more interesting” option involves “micropayments, or payments that will happen at the matter scale,” Bonte explains. These would include continuous payments that could be applied for wireless charging of electric vehicles while they’re stopped at traffic lights along a route. “For these massive number of micropayments, the current technology is not suitable,” Bonte says.

Instead, he suggests “blockchain” technology could be key. In simple terms, it involves a distributed database that keeps an encrypted trail of information that is inherently tamperproof and can be used in real time — thus enabling a micropayment to be completed while an electric car is charging at a stoplight rather than after it has been driven away.

“I don’t know how this country escapes a vehicle miles traveled tax to pay for the infrastructure improvements and maintenance that we have to do, and this is especially important in the context of electric vehicles and the fact that they don’t have to stop at gas stations,” says Roger Lanctot, director of automotive connected mobility in the global automotive practice at Strategy Analytics in Newton, MA. So, e-payment technology in a car could help realize this, he says.

Consumer sentiment, too, is likely to push automakers into new directions with e-payments, particularly in the partnership realm. “It all comes down to taking the friction out of these awkward experiences, whether it’s paying a toll, paying for your gas or paying for your parking,” Lanctot proclaims. “The really significant opportunity is getting people accustomed to the concept.”

Robert E. Calem

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