When thinking about the car of the future, most people probably think first and foremost of climate-friendly e-drives. Perhaps also autonomous vehicles. The car as an e-commerce platform probably comes to mind less often. But thanks to in-car payment, the vehicle will also become a transaction platform, perhaps even a wallet.
The many monetary transactions around the car are so deeply anchored in everyday life that hardly anyone really thinks about them. Only when it becomes a nuisance because the parking machine unfortunately does not accept card payments and the search for small change begins. A typical situation that In-Car-Payment wants to solve by having the car itself pay the fees due. But the concepts that some companies are working on go far beyond parking fees.
The term in-car payment summarises various concepts that have in common that a payment is made directly from inside the vehicle. This can, but does not have to be initiated by the driver. Those who talk about in-car payment often mean the direct processing of payments between two technical systems, i.e. machine-to-machine payments (M2M payment).
There are already a number of very obvious application scenarios and use cases for in-car payment:
Payment of parking fees: certainly one of the most obvious scenarios. It works similarly to contactless payment. When leaving the car park, the payment is automatically triggered and presented to the driver on the dashboard for authorisation.
Contactless (electricity) refuelling: In-car payment could also make things much more convenient at the pump or charging station.
Toll payments: Road or bridge tolls are the exception in Germany. Abroad, things are different. And here, too, a transaction is necessary that could be handled by the car.
Once a direct payment option is integrated into the vehicle, additional options for monetising offers and developing new business models arise from the perspective of manufacturers and service providers. Whether this will ultimately appeal to the drivers is another question entirely. In any case, in-car payment can form the basis for "pay-per-use" services. Ideas already exist, for example:
Activation of additional functions within the vehicle, such as things that were previously purchased as a one-time "extra".
Booking of infotainment packages, as with streaming services on the internet.
Upgrading map material for navigation or simply adding a navigation system for individual journeys.
Driving a car can therefore become more expensive (or cheaper if various things only have to be paid for during use). And if the car becomes a wallet anyway, so to speak, it could also take over paying at the rest stop or fast food chain.
Refuelling or charging, parking and toll charges are incurred regardless of whether the vehicle is used privately or commercially. These charges are also regularly incurred by the cars of logistics, parcel and courier services, but entail an enormous administrative and accounting burden. This is so great that "fleet management" is a central task in the companies.
In-car payment offers logistics companies the opportunity to have transactions carried out by the vehicle end up directly in billing systems and fleet management solutions without any major time delay. This explains why these companies are interested in the approach.
Are these all pious wishes and ideas of the industry and companies? MasterCard wanted to find out and commissioned GfK to conduct a survey. 46 percent of drivers in Germany can imagine making purchases and payments directly via the display in the vehicle. Those in favour of in-car payments would also welcome the application scenarios mentioned. For the majority, parking fees (74 percent) and the refuelling of cars or charging of electric vehicles (72 percent) are at the top of the wish list. Many can imagine paying for car washes (61 percent) or tolls (58 percent) by car.
For in-car payment to become an everyday mass phenomenon, paying with and from the car must become just as natural as paying by card and smartphone at the checkout. Many technical components are already in place, but a few detailed questions still need to be clarified.
For example, in order to check the authorisation for a subscription or to be able to quickly upgrade a card, the car must be able to go online at any time. And since there would be a lot of data to transfer here, it would have to be a fast connection. This is exactly what the 5G mobile radio standard promises, but it is not yet available nationwide.
We are all familiar with wireless transmission technologies for payment information from everyday life. However, the NFC technology used in smartphones only bridges short distances. But with Bluetooth Low Energy (BLE) or Long-Range RFID, there are already alternatives.
In addition, it should of course be avoided that every petrol station chain cooks its own soup. Here, however, the large schemes and also PSP will certainly play an important role in ensuring compatible systems. Not to be forgotten is the aspect of security, after all, the car should only pay what the driver wants.
The effort and energy that companies are putting into this topic should be worthwhile. After all, in-car payments are expected to generate a turnover of 537 billion euros per year by 2030. At least that is what the analysts of the Belgian Ptolemus Group predict.
The topic of in-car payments is still in its infancy: Mercedes-Benz Mobility and VISA have entered into a partnership to promote in-vehicle payments. Hyundai has created a payment for the Ioniq 5 model that allows drivers to pay not only for parking, but also for food. And Škoda has launched a "Pay to Park" service.
So if car manufacturers, infrastructure providers (such as petrol stations) and payment providers can get together at one table, then the car will also take care of payment.
Even though in-car payment offers many possibilities for more comfort and convenience, it is a bet if and when it can be used by the masses. After all, it takes almost a decade for a new technology to have mass penetration, as people own their cars on average between 7 and 9 years. Moreover, there are doubts about whether the car will actually be used as a wallet for refuelling, parking fees and road tolls. Instead, the future of in-car payment may look more like vehicle commerce, the provision of value-added services such as insurance, roadside assistance, fleet management and financing.
Maik Klotz is a consultant, speaker and author specializing in banking, payment, digital identity, e-commerce and retail. He was profiled by the Süddeutsche Zeitung in the industry's "Influencer" series and moderates and speaks at many industry events. Maik is co-founder of Payment & Banking.
