Hitting the Accelerator

Talk about mobile payments. Card companies, automakers, and merchants are readying technology to make cars a payment method as familiar as plastic—and phones.

An informal consortium of payments companies, car makers, automotive suppliers, and merchants is trying to make it easier, and safer, for consumers to buy fuel, order meals, make a dinner reservation, and pay for parking and tolls while sitting at the wheel using the infotainment systems built into their dashboards.

Doing so requires surmounting a number of daunting challenges, among them forging new business relationships, making automobiles secure payment environments, and developing transaction processes that don’t interfere with driver safety and create more distracted-driving issues.

Enabling in-car commerce is more than adding fuel-station icons to a GPS map or cautioning motorists not to use their phones to order a pizza for pickup. It’s about making the car a Web-connected device that acts as a channel for moving payments from the consumer to the merchant. If anything, it’s the ultimate in mobile payments.

The potential value of such transactions is an enticing prospect. By 2022, there could be as much as $4.2 billion in payments made via car dashboards, Visa Inc. says. On a larger scale, the global potential could be as much as $253 billion by 2025, according to Machina Research, a unit of Gartner Inc., a Stamford, Conn.-based research firm. Telco operator AT&T Corp. said in October that 24 million cars were connected to its network and that it has relationships with 29 global car brands.

Some key steps already have been taken. More than a year ago, General Motors Co. launched Marketplace, its in-car app store that includes brands like Dunkin’ Donuts, Shell, and ExxonMobil. Once a consumer links her account for any of the brands to the in-car app, she can then select purchase options using the dashboard infotainment screen.

GM is not alone. Hyundai announced in May that development had started on an in-car wallet that could be used for payments. Xevo Inc., the Bellevue, Wash.-based developer of GM Marketplace, also is helping Hyundai with its digital wallet.

Hyundai said it expects initially to offer in-car fuel payment at Chevron and Texaco stations, as well as the ability to order and pay for Applebee’s to go and to find, reserve, and pay for ParkWhiz-enabled parking.

In 2017, Jaguar and Shell launched an in-car payment service for fuel using PayPal or Apple Pay via the car’s touchscreen.

‘The Post-Plastic World’

Drivers are not only a captive audience, many spend a lot of time behind the wheel, especially those that face 45-minute commutes or road trips. Part of the reason for the escalation of interest in in-car commerce is to let consumers choose ways to make purchases during their time in cars.

“The potential is significant, as it could simplify and accelerate transactions that either take place in the car or are adjacent to the vehicle, like fuel or quick-serve restaurants,” says Thad Peterson, senior analyst at Aite Group LLC. “The rate of growth depends on how the payments ecosystem is implemented in vehicles.”

Figuring out how the payments ecosystem intersects with automobiles and driving is exactly where much work remains to be done.

Visa took a big step in that direction when in 2017 it hired Olabisi Boyle away from Fiat Chrysler Automobiles. At Visa, Boyle’s title is vice president for the Internet of Things platforms. Boyle’s last position at FCA, where she worked for 12 years, was director for engineering, planning, and technical cost reduction. She worked eight years at Ford Motor Co. prior to FCA.

Visa sees its role as an enabler for in-car commerce, Boyle says. “We want to partner with companies that know how to deliver technology to the OEMs,” Boyle says, referring to the original-equipment manufacturers that supply components to automakers. Suppliers to Detroit automakers and startups developing alternative-fuel vehicles are among those being eyed.

“In the post-plastic world, basically anything can be a point of sale,” Boyle says. That means one of the critical payments technologies making in-car commerce possible is tokenization, which masks the actual card number with a randomized string of digits that if stolen would yield no connection to the underlying credit or debit card.

Though tokenization has been available for many years, it began to get widespread adoption only after the card brands began tokenizing cards in 2014.

‘Conversions Are Great’

At GM, Scott Goddard, Marketplace senior manager, has had about a year to learn how consumers interact with the in-car commerce available in their dashboards. “Some people will never do this,” says Goddard, but it’s important that they know the capability exists. Marketplace use is an opt-in choice for motorists.

While highlighting the convenience and service for the consumer, Goddard says merchants also reap rewards. “The opportunity, being about 4 million cars, may not be as big as others they’ve had, but the merchants who have [participated] have said the conversions are great,” he says.

The Marketplace app is embedded in the dash. Hence, the vehicle is its own device, Goddard says. There is no need to link a cellphone, and no separate data plan is needed. GM has offered 4G LTE connectivity in its cars for four years, Goddard says.

No payment information is stored in the telematics—the term for vehicle systems that meld telecommunications and vehicle data—or in the SIM card in the car. “All we’ve done is give the ability to link that existing account to the in-dash experience,” Goddard says. The car passes a secure token to the merchant. “The merchant has the ability to say, ‘I know that secure token is associated with that user and this password.’”

There essentially are two types of transactions within the Marketplace, though they may look the same to the consumer. Goddard labels them deep transactions and lighter ones. Deep transactions extend beyond the payment and enable loyalty and offers between the brand and its consumers.

Merchants want ways to bring their loyalty programs to consumers wherever they may be, he says. “We’re not necessarily interested in reinventing the wheel when it comes to transactions,” Goddard says. “We learned it was easier for GM to stay out of that relationship.”

As an example, consumers with a Dunkin’ Donuts account would tap the donut shop’s icon on the Marketplace screen to authenticate themselves and link their account to the Marketplace Dunkin’ Donuts app. Preferences, such as saved payment methods and favorite foods and beverages, are shown on the vehicle’s dashboard screen instead of on the smart-phone display.

“We give the driver a few options,” Goddard says. “You find that consumers are creatures of habit. They have their coffee in the morning or their favorite Friday night restaurant.”

The lighter transactions might be simply filling the tank or paying for parking, which could happen anywhere and with any parking provider. “How can we make it so when you pull up to any gas station you can activate a pump, not just at your Shell or ExxonMobil station?” Goddard says.

Xevo, developer of the Marketplace technology, said 71% of surveyed drivers said it would be useful if their car’s in-dash system allowed them to order food or coffee so they could pick it up when they arrive. Sixty-nine percent said paying for fuel the same way would be beneficial.

The GM Marketplace, now a year old, validates this demand, says Dan Gittleman, Xevo chief executive. “GM Marketplace has experienced above-average user engagement and click-through rates for merchant-partner experience,” Gittleman says. “As more and more merchant brands join platforms like GM Marketplace, there are even more opportunities to engage with potential customers and grow the in-car commerce market.”

Taking the Initiative

The global market could be worth as much as $63 billion in transaction value in 2021, says Juniper Research, a United Kingdom-based advisory firm. “It’s primarily limited by the refresh rate of cars, as well as specific partnerships,” says analyst James Moar. “It’s tied to specific deals at the moment, and will need a more universal set of payment mechanisms before it can become more widely adopted.”

That’s why Visa is taking the initiative, Boyle says. “All the technology supporting a seamless experience that works for the consumer currently exists today,” Boyle says. “It’s not like it’s new technology that has to be invented. To make this work for the consumer, all of this has to be integrated for the consumer.” Visa, she says, wants to use its leadership position to form one system.

A likely approach is to adapt the digital wallet to the car experience, Boyle says. Consumers would store multiple payment methods or accounts in a single digital account that would be accessed by the in-car commerce system.

But just exactly which payment model or models will become dominant is uncertain for now. One prospect is that the automakers or their commerce-technology suppliers would levy fees for providing in-car payment services.

“With the advent of OEM pay solutions, if cars can be another way to extend those, then Apple, Google, Samsung and the rest can charge transaction fees from cars in the same way as they do for other channels, which benefits simply from an increased transaction volume,” Juniper’s Moar says. For now, GM does not charge any fees to consumers to use the service, which is being funded by merchants, Goddard says.

One vision that Visa shares in a video shows a motorist authenticating herself by looking into the rearview mirror to complete an iris scan. As she drives to pick up her friends to attend a concert, the car alerts her to low fuel and asks if she wants to fill up. A “yes” reply routes her to the nearest station, where the car authorizes the pump and completes the payment.

After picking up a friend, the motorist and her passenger decide to get coffee for themselves and two other friends. Again, the driver is routed to a coffee shop and pays for the beverages using a digital wallet attached to the car.

Such a concept, and Boyle stressed this is just that for now, would involve OEM suppliers, carmakers, merchants, and payment companies. It would tap into artificial intelligence and use application programming interface code to issue alerts about low fuel or when passing a favorite merchant, she says.

Relying on the Visa Token Service to secure the card data, the system sends a token to the merchant once the transaction authorization is received. There would be another API to alert the consumer when rewards are available. “The consumer just wants this convenience while in the car,” Boyle says.

Gentex Corp., an OEM supplier based in Zeeland, Mich., could have a key role in this scenario. It offers a rearview mirror that has a built-in toll module. As the car passes through a toll booth, the module can verify payment. In the future, it could be used for paying for parking, fueling, and food purchases, Gentex says. Audi is the first customer to offer the integrated toll module in its vehicles.

“It allows automakers to offer yet another connected-car feature to their customers and benefit from an ideal, high-performance transponder location,” says Craig Piersma, Gentex director of marketing and corporate communications. “Motorists benefit by convenient, unfettered access to the country’s toll roads while eliminating toll-tag windscreen clutter and the need to manage multiple toll accounts.”

‘We’re Really Motivated’

As a carmaker, GM wants to enable convenience, but it must do so in a safe and distraction-less way, Goddard says. GM is “very conscious” of this digital transformation, evident not only with the burgeoning in-car commerce market, but also in how smart-phone use has become a daily interaction for many, he says.

“We think it’s just what we have to do,” he says. “It’s a big decision factor when buying new cars. There’s also the drive for safety and security. You start to see people get into accidents because they’re fumbling with their phones. The question always is, how does in-car commerce get enabled that adds to the consumer’s productivity in a safe manner?”

That’s where a company like Xevo can play a vital role. “Payment transactions from motor vehicles are designed to reduce driver distraction and simplify the payment process,” Gittleman says. “The interface is designed with large buttons and minimal text, so it is easy for drivers to see without having to take their attention off the road. Drivers are able to complete transactions with a few simple taps on their in-vehicle touchscreens.”

Motorists are acutely aware of the potential for distracted driving in general. Forty-nine percent of those surveyed by the AAA Foundation for Traffic Safety this year said they recently talked on a hand-held phone while driving, and 35% sent a text or email.

Gittleman says the technology for in-car commerce strictly adheres to national safety guidelines for vehicle technology. In 2015, the National Highway Traffic Safety Administration proposed guidelines for in-car commerce systems, such as limiting actions to one hand only and disabling social-media browsing while the car is in motion.

All this work, of course, is done with the potential in mind to increase the volume of electronic payments and to further personalize a consumer’s interaction with her vehicle. It’s going to take time, though.

“There are a lot of different players and ecosystems to penetrate this space,” says Aite’s Peterson, and “I’m unclear on what [the payment companies’] role will be beyond providing basic payment functionality to other parties.”

Visa sees its role as an enabler for in-car commerce. “There are a lot of revenue-generating touchpoints,” Boyle says, such as parking, ordering food, and paying for fuel. The technology must offer a unique selling proposition, she says.

Carmakers are interested, too, not only because of the convenience such embedded systems offer, but also because it could be a way to earn more revenue, such as from more car sales.

That’s a large reason for GM’s enthusiasm for the technology. “We’re really motivated to be the first to market with a lot of this technology,” Goddard says.

If consumers want this experience, the only way to get it, at least for now, is to drive a new GM vehicle. GM says it wants other carmakers to join the effort to change how consumers interact with their cars. “We have to work together to change that behavior,” Goddard says.