It wasn't so long ago that cars were simply a means of getting us from point A to point B. But as with all things, innovation has driven change as the interconnected digital devices that we use in our everyday lives have been built into our vehicles.
Today, connected cars are surging in popularity. By 2030, it's predicted that almost all new vehicles (96 percent) will have built-in connectivity. But alongside new infotainment systems, digital displays and interconnectivity -- one of the opportunities that digital vehicles open up is the potential for in-car payments.
Our mobile devices have already begun to replace physical cards, so why should our cars be any different?
Software is expected in just about every vehicle that rolls off the production line, so it's no surprise to see manufacturers stepping up their game when it comes to in-car payments.
Technological developments have turned cars into connected devices -- just like a computer or mobile phone. This means that car manufacturers can now collaborate with technology companies to embed payments into their in-car systems and accompanying mobile apps.
Ford, Hyundai, BMW and Mercedes-Benz are just some of the brands to have recently launched their own in-car systems -- joining the embedded payments movement that is sweeping across every area of our interconnected society.
The fintech-automotive intersection isn't a passing trend; it's a fundamental shift that can reshape how customers and manufacturers view vehicles.
Kerrigan Advisors’ proprietary annual OEM Survey of over 100 executives reveals that the majority of respondents are worried about the financial impact of Chinese automakers’ growing global market share, and most expect that the EV transition to be slower than expected. The survey also queried executives on their outlooks for dealership valuations and profitability, as well as their expectations for the future of dealer networks and facility requirements.
Connecting customers
Given that the typical British driver spends a total of four years of their life in their vehicle, the impact of in-car payments on customers is huge.
Imagine paying for just the right amount of fuel as you approach the fuel station. This is a real possibility that in-vehicle payments open up.
Beyond that, the sky is the limit. Whether it's paying for highways, parking spaces or even customizing and upgrading the in-car infotainment system -- soon drivers will be able to pay for just about anything without ever leaving their seats.
For manufacturers that make this process as seamless and intuitive as possible, it can pay dividends. Not only by increasing brand loyalty but by providing carmakers with a key source of competitive difference.
Multiple opportunities
In a sector as competitive as the automotive industry, manufacturers can get ahead by embracing embedded payments. It's the No. 1 reason nearly half of non-financial companies (48 percent) have already embedded payments into their products. Others are embedding payments to gain greater control and open the door to profit from new revenue streams.
In-car payments would also allow consumers to order and pay for goods and services without ever leaving a central interface. Embedded payments would mean that customers would no longer have to be routed through a third-party payment provider but instead, remain within the manufacturer's ecosystem.
That could open up a whole new world of efficiency for drivers and manufacturers when it comes to the add-ons and aftersales services that come with car ownership.
Whether it's essentials like system upgrades and maintenance, or customization options -- these could all be handled directly through the vehicle's embedded systems.
With the market value expected to reach £2.1 trillion ($2.6 trillion) by 2026, embedded payments could transform the driver's seat into a valuable piece of commercial real estate, enabling manufacturers and third-party brands to target consumers like never before.
The road ahead
Embedded payments offer an exciting frontier for automakers. Not only do they open up new revenue streams for manufacturers but they also improve the customer experience and add convenience to drivers' lives, speeding up their journeys. It's a seamless solution that will keep vehicles at the very heart of our interconnected society.
