It was bound to happen. Sooner or later, cars would join the pantheon of mobile payment technologies — a list that already includes smartphones, tablets and an entire range of wearables.
Although in-car payments are still relatively new, this technology allows users to fill their gas tanks, pay for parking, or drive through highway tolls — all from the comfort of their vehicles.
Some herald this move as the next big thing in mobile payments. But how revolutionary is this emerging technology?
Are In-Car Payments Really Groundbreaking?
Honda is currently at the vanguard of this new push. In fact, the car manufacturer demonstrated a working prototype of its in-vehicle payment technology at the most recent Consumer Electronics Show.
But what makes in-car payments different from other mobile payment options?
For starters, Honda’s solution uses Bluetooth technology instead of the near field communication (NFC) approach that most phones and wearables use. Both options permit users to make contactless payments, but Bluetooth allows for wireless connections across larger distances (which is a prerequisite for in-car payments).
Although this move is hardly earth-shattering, it is very useful in certain cases:
- When it’s super cold or hot outside, drivers don’t have to open their windows to make a purchase. With in-car payments, they can remain in their climate-controlled cabs instead.
- Paying through phones and other mobile devices involves a lot of “fumbling.” Users have to unlock their phones, open the correct app, and input a PIN (or fingerprint). In theory, in-car payments will only require a simple tap of a dashboard button for transactions to go through.
These features are pretty convenient, and they may be enough to convert early adopters. However, the successful rollout of in-car payments requires that Honda and other pioneers overcome certain hurdles.
In-Car Payments — a Classic Chicken-and-Egg Dilemma
Honda is currently working with Visa to integrate in-car payments. General Motors has decided to ally with Mastercard for its competing solutions. Separately, these partnerships aren’t enough.
Auto manufacturers must also ensure that there is sufficient infrastructure to accept these payments. This is why Honda is also working closely with:
- Fuel pump producer Gilbarco Veeder-Root, to make sure gas stations are equipped for the new technology.
- Parking products firm IPS Group, to ensure that parking lots have the infrastructure they need.
Without this early buy-in from key stakeholders, there will be little incentive for other businesses to embrace in-vehicle payment technology.
After all, no parking managers or gas station owners would rip out their current terminals to make room for payment options that haven’t caught on yet. And drivers won’t be sold on the convenience of in-car payments if there aren’t enough businesses that can accept those payments.
Even if these issues get resolved, there are other potential obstacles on the horizon.
The Danger of Leapfrogging Technology
Making wireless payments from your car’s dashboard is a cool concept, but Google and Amazon are already looking for ways to make the payment process even more streamlined and hands-off.
Both companies are developing payment solutions that work with their branded voice assistants. If deployed correctly, these competing technologies could render “smart dashboards” obsolete overnight.
Why click on a dashboard button when you can just speak your payment preferences instead.
Another approach involves extending the range of mobile technologies that are already in common use. Most phones and wearables, for example, already come with Bluetooth capabilities. You’d still need buy-in from parking lots and gas stations, but you can completely cut out car manufacturers as unnecessary middlemen.
Will In-Car Payments Eventually Become a Thing?
The short answer is yes. In-car payments will almost certainly become mainstream, but widespread adoption might not initially be linked directly to the vehicles themselves.
As mentioned before, mobile payments (via smartphone devices) will likely pave the way first — helping to raise awareness, establish standards and attract users.
Amazon, for example, has already developed an in-person shopping experience that very closely mirrors what Honda and General Motors are trying to achieve. The online retailer has launched a series of physical grocery stores that allow users to walk in, add items to their cart, and walk out — all without going through any type of checkout.
The entire process is managed through the customer’s phone, which automatically deducts payments from the user’s connected credit card or banking account.
If this style of shopping becomes common, it could help pave the way for in-car payments — whether users rely on dashboards, phones or other Bluetooth-enabled technologies.
None of the above is 100 percent certain. But as society continues to embrace the “Internet of Things,” the general trend does seem to point toward interconnected technologies that allow for seamless payments across all situations.
Even when driving down the highway.
Should You Prepare for In-Car Payments?
Although in-car payments show a lot of promise, it probably makes sense to wait until the technology fully matures.
- As a consumer, you should evaluate future car purchases based on features you can use here and now. In-vehicle payments aren’t truly mainstream yet, and you’ll end up paying a premium for bells and whistles that offer little benefit.
- As a merchant, you should continue using whatever payment environment you have in place — even if you own a gas station or parking lot. Don’t make any drastic changes until customers signal to you that there’s a burning need for in-car payments.