While a mobile phone is the current go-to payment method for users while inside of a car, Visa and Daimler are hoping to change that by embedding payment capabilities into the car itself.
The payment network operator and automotive giant announced a partnership earlier this month that will offer users the ability to make payments using a biometric fingerprint sensor inside the car, thereby eliminating the need to use a cellphone to authenticate a transaction.
“What you do on the road [is the same as] what you do at home on a mobile phone,” Juergen Schuebel, head of merchant solutions in Central Europe for Visa, told Auto Finance News. “If you turn the car into a huge mobile phone on wheels, and you do everything from there.”
This technology eliminates the multiple one-to-one relationships a user might rely on with a fuel-station application, a restaurant or a service station, and instead embeds them all into the car’s infotainment unit, Schuebel noted.
Daimler plans to start offering this service to customers in the United Kingdom and Germany in spring 2022, and further expand it in Europe following the launch. The technology is also headed for “19 other European countries, including Italy, France and Portugal,” Martin Schou, a spokesperson for Daimler, told AFN. “Implementation in markets outside Europe is also planned, although the timeframe is yet to be confirmed.”
The technology uses Visa’s cloud token framework, which essentially scrubs sensitive payment information by converting it into tokenized cryptograms and securely storing the underlying data.
“What happens in the background is that the [personal account number] will be exchanged to a token to make it more secure,” Niels Lohmuller, Visa’s head of acceptance development in Central Europe, told AFN. “And then the cloud token framework is adding a unique card information to that token and communicates this to your bank.”
The tokenization also ensures that the payment flow is compliant with European regulations governing payments authentication as the Payment Services Directive Two (PSD2) norms.
While the market for in-vehicle payments is still relatively nascent, it’s part of the growing tribe of the internet of things (IoT), enabling devices like automobiles to communicate using the internet and initiate technology like payment requests.
“By the end of this year, we’ll have about 87 million payments made in 2021 via vehicles,” Nick Maynard, head of research at Juniper Research, told AFN.
While the volume seems like a drop in the ocean compared to overall payments activity, the in-vehicle payments technology is likely to grow significantly as activities such a electric vehicle charging increases, he added.
Although the partnership currently only allows customers to use Visa cards to make payments, Maynard said that interoperability among card networks will be important going forward.
“We’ll have to see, at the very least, some sort of card network interoperability,” he said, noting that “If you’ve got the wrong card in your pocket, you can’t use it.”
The in-vehicle payments technology is likely to escalate in affluent areas where people purchase premium vehicles, including Europe, North America and China, Maynard said. While work on in-vehicle payments is largely concentrated around passenger vehicles, fleet operators or commercial vehicles could also present a strong business case.
“This is especially interesting for fleet and [business-to-business] use cases but is not yet there. But we’re looking into that to really build other cases where you have a card maybe linked to a company where different drivers use the same vehicle, or in-car sharing,” Lohmuller said.
While there might be utility to expanding such offerings to commercial vehicles, it will also require that their infotainment systems — which tend to be basic in features — are improved to add such ability, Maynard added.