Victor Haydin
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FinTech in Automotive: How to Implement Payment Systems in Connected Cars

Connected car commerce is a $230 billion opportunity. Learn how to unlock it with new-generation payment solutions

February 07, 2019

8 mins read

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Forget the cash and coins. Soon you may be able to pay for gas and drive-through purchases without reaching for any payment method. Automotive industry leaders are exploring how connected cars and payment apps can be used to create a new touchpoint with customers that we can call as commuter commerce. Here’s why you should look into that niche as well.

What you’ll learn in this post:

  • What’s the business value of in-car payments?
  • Popular use cases for connected car payments: Pay at the pump, Parking, Repairs, Drive-through, Tolls
  • How to implement connected car payments
  • Intellias’ experience linking payments and automotive

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What’s the business value of in-car payments?

Five days a week, 135 million Americans spend 51 minutes in their cars, commuting to work. According to the Digital Drive Report 2019, 73% of them connect to the internet while driving. This habit of staying connected presents a new touchpoint for brands.

Integration of payment technologies into automotive products is a $230 billion opportunity for businesses. Drivers already do a lot of things on-the-drive from their smartphones.

Digital Drive Report 2019

Commuter activities while driving to work

FinTech in Automotive: How to Implement Payment Systems in Connected Cars

Source: Digital Drive Report 2019

Texting and driving is bad enough. Shopping and driving is even worse safety-wise. In-car payment integration can address these safety issues and offer both drivers and passengers a better way to manage their daily routine. As the automotive industry gravitates toward fully autonomous vehicles, even more engagement opportunities arise.

Read more: Learn about in-demand entertainment options for drivers in self-driving cars

According to Digital Drive data, so far only 16.7% of commuters use in-dash automobile systems. The majority (56.3%) prefer to handle their tasks with their smartphones (which already offer a great payment experience through Apple Pay and Android Pay) or in-app credit card payments. In-car payment customer experience ownership (and its two key components, commissions and customer data) is becoming the central battlefield for automotive companies.

When considering in-car payment implementation, you’ll need to decide whether you’ll leverage in-car connectivity, smartphone-based connectivity, or a hybrid model. Each of these options has its merits. So it’s important to determine which will result in a more consistent, driver-centric customer experience (CX).

To win over your customers with dashboard systems, think about how you can address their current struggles in common real-life scenarios.

Popular use cases for connected car payments

FinTech in Automotive: How to Implement Payment Systems in Connected Cars

Pay at the pump

Paying for fuel at the gas station without reaching for a card or phone is the most in-demand feature among consumers. Drivers can be automatically notified whenever their fuel is running low and get directed to the nearest gas station. Once in the geofence of a connected fuel pump, the driver can pass the command through the digital dashboard, see the payment amount displayed on the screen, and confirm the transaction by voice or by pressing a button.

Voice commands, in fact, present another ripe opportunity for innovation. The Digital Drive study mentioned above indicates that 64.9% of commuters choose to use a voice assistant provided by the auto manufacturer. Additionally, integrating popular apps such as Siri and Google Assistant into auto dashboards could lead to even more profits. Commuter spending with Google Assistant, integrated in the digital dashboard, is expected to increase by 31.9% in the next few years.

Parking

In a similar fashion, drivers can pay for connected parking – a cashless, ticketless, and stress-free experience. IoT-powered parking stations can transmit data about space availability and pricing to an onboard vehicle system using over-the-air (OTA) technology. The driver can then be immediately notified about all available spots nearby and navigate toward one. Payment can happen automatically as the driver leaves the lot.

Read more: Get to know how OTA technology can give you a competitive edge

For drivers, this can eliminate the hassle of finding a parking place in a crowded location. Cities can benefit from improved traffic management, less pollution, and reduced operational costs for parking spaces, as fewer meters will be needed.

Benefits of smart parking

FinTech in Automotive: How to Implement Payment Systems in Connected Cars

Source: GSMA: Smart parking: A guide to ensuring a successful mobile IoT deployment

Visa and Honda have already released a demo version of an in-car payment system at CES 2017. The proposed solution uses Visa Token Service technology for securely processing payments to connected devices. So far, users can pay for parking and fuel using this service, but the companies have plans for expansion.

Read more: Discover the best practices and tech solutions for battling contactless payment fraud

Nokia, Hertz, and Concur plan to leverage SAP’s vehicle network solution for parking and fueling with the Nokia IMPACT IoT Platform to create a better customer experience for Hertz business customers. The proposed system will enable users to reserve a vehicle and pay for parking and fuel online, then automatically track and submit expense claims.

For many commuters and business travelers, cars can be a home away from home. As long as cars need to consume services, like fuel and parking, users will want a way to automate these tasks. Once they get used to the convenience of managing these services from their car, they will likely want to extend that capability.

Heino Kantimm, Chief Expert on Connected Cars at SAP

So what other smart car payment integrations are users interested in?

Repair payments

Predictive maintenance is one of the most promising IoT use cases in the automotive industry. By analyzing real-time data, preventive systems can dispatch timely updates about possible hardware or software malfunctions to vehicle owners. Owners could then be prompted to schedule maintenance or drive to the closest dealership for an inspection.

Through a connected dashboard, drivers can also estimate the costs of repairs in advance, gather quotes from different service providers, or order the needed parts. Integrating payment technology into a car allows drivers to seamlessly pay for those repairs when picking up their car. Automated repair payments will likely become even more in-demand once self-driving cars hit the road. Autonomous vehicles (with their owner’s permission) could be programmed to dispatch themselves for maintenance (when the need arises), pay for the job done, and drive back to the owner, who would receive a digital repair summary and an invoice.

Automatic payments for drive-through orders

Using voice commands, drivers and passengers could place their orders on the go and click a button to confirm payment. This would eliminate the awkward situation of having a fast food employee handing you a POS device through the car window when you pick up your order.

Similar initiatives can be developed by food retailers as part of their drive-through shopping experiences. Customers could place grocery orders straight from their dashboards and approve payments when picking up their bags at a designated area.

Paying tolls

Using long-range radio frequency identification (RFID), license plates and windshield labels can be transformed into electronically readable secure documents that support authentication. Such augmented parts can be read at a 10- to 15-meter range. Whenever a driver approached a toll road, the stationary gates could register the car and securely deduct funds from the driver’s account connected to the car.

How to implement connected car and payment functionality

A connected car payment system consists of the following key elements:

New-gen in-vehicle infotainment (IVI) systems. Most modern cars already come with built-in IVI systems. They require an operating system to run. But instead of developing a custom operating system, automotive manufacturers and Tier 1 suppliers adopt licensed operating systems such as Linux, Windows, or QNX. The problem, however, is that porting existing mobile apps (such as Amazon Fresh or PayPal) can present a number of challenges. Some functionality may not be available directly (NFC, encryption or DSP hosted algorithms). Further, when porting existing applications, OEMs have to carefully consider their safety requirements, input methods, display geometry, and other factors.

Payment functionality. There are several ways to transform a car into a payment device:

  • Use long-range radio frequency identification (RFID) tags to transmit payment data over the air. You can use different ISO/IEC standards for cryptographically protecting the recorded and transmitted data and specify digital signature structures for authentication.
  • BLE (Bluetooth Low Energy) hardware is another method for enabling payment connectivity. Unlike NFC protocols used by most mobile payment apps, BLE can transmit data at a range greater than 20 cm with higher accuracy.
  • Third-party APIs. Google has recently released Android Auto, a new platform that allows you to port existing Android apps to IVI systems. It can also enable connectivity between smartphone apps and the Android Auto projected experience.

In-car digital wallet. Customers will need a secure place to store their payment information in a connected vehicle. For faster adoption and better CX, consider building a system that can support different payment gateways (apart from the standard Mastercard/Visa combo). Users should be able to quickly add different payment options to their wallet.

Read more: Learn how Intellias developed an integrated payment processing platform with 100 localized payment options available via a single integration

Visa and SiriusXM have just announced their partnership on a new in-vehicle payment solution. The eWallet solution, currently in the works, will integrate into a car’s dashboard and enable drivers to pay for a wide range of goods and services. It’s also said to feature biometric authentication for payments and the standard stack of security tech from the Visa Token Service.

Branded marketplace. Instead of building a bunch of apps from scratch, consider establishing strategic partnerships with other businesses. This way you can offer drivers a selection of apps to pick and choose from depending on their needs. GM recently partnered with retailers including Starbucks and Dunkin’ Donuts to enable contactless advance orders and payments for a range of goods and services including fuel, parking, hotels, food, and dinner reservations. It’s a win-win for all parties:

  • Drivers have access to their favorite services in one tap
  • Partnering brands drive more traffic to their locations
  • GM receives a commission from every in-dashboard transaction and increases customer satisfaction

FinTech in Automotive: How to Implement Payment Systems in Connected Cars

As IVI systems become more mature, we should expect more third-party developers to offer innovative apps and services for connected cars. In the future, customer loyalty will lie with OEMs offering in-vehicle operating systems with the best functionality.

Intellias’ experience in payments and automotive industry innovations

In-car payments present an interesting overlap of the automotive and FinTech sectors – two niches where Intellias excels.

Our team has developed an innovative mobile banking app for a German client. This app won several industry awards and is a favorite among users, with a 4.5-star rating in the App Store. We’ve also developed an end-to-end Banking as a Service solution that includes:

  • a secure digital wallet;
  • 60-second P2P transfers;
  • functionality for making in-app payments and processing repeat orders;
  • a selection of other personal financial services.

Using a similar approach, we can design and develop secure and robust payment systems for connected cars.

Our FinTech expertise is backed by experience developing software for IVI car systems. As part of an ongoing partnership, we’ve developed an innovative human machine interface (HMI) for a luxury auto manufacturer in the UK. The system combines mobile devices, vehicle head units, heads-up displays, and rear-seat displays into one delightful cross-linked system.


Contact us to receive more information about in-car payment integrations and our software development services for the automotive industry.

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