Henry David Thoreau once said, “If you have built IoT castles in the cloud, your work need not be lost — that is where they should be. Now put foundations under them.” Or something like that.

TSYS Director of Innovation Russell Moore’s two-year-old daughter already knows how to get Alexa to play her favorite Katy Perry song 17 times a day. The toddler, he observed, will never know a life without virtual assistants and artificial intelligence (AI).

If Moore could get inside her head, how would she see those things? Is Alexa like a person? Does his daughter imagine a face attached to that voice? Or does she perhaps see Amazon’s virtual assistant the same way she sees the family’s Yorkie?

The world may never know, but what the world does know is that connected devices have worked their way inextricably into everyday life, and this is likely just the advent of a whole new connected world.

In an interview with Karen Webster, Moore imagined how the Internet of Things (IoT) will evolve over the next few years. One does not have to go deep into the future to see how this technology — today, still fragmented and standing on wobbly newborn legs — could scale.

The future is nigh, but you can’t get there from here, Moore said. The IoT network must sit on a common infrastructure so that all consumer devices can interact safely, securely and easily with others. Whether they are transacting payments or data, the underlying rails must support that and must be able to scale — since IoT is going to be huge, with 8.4 billion devices already available in 2017.

“It won’t be one ‘system of the future,’” Moore said, “but [a] seamless interaction of all these systems — what we have today and what we’ll have tomorrow. The scale will be unfathomable. It’s getting bigger, faster, stronger every day.”


The Three Ps

In marketing, noted Webster, there are four Ps: price, product, promotion and place. In IoT, Moore said there are just three: people, products and payments.

Marrying the first two Ps to payments will take more letters: M2M, or machine-to-machine — what he calls “the mother of IoT.” That will be built on a hybrid foundation, he said, starting with the traditional infrastructure that’s already in place today — i.e., the credit card transaction rails that are scalable, global and compliant.

Alongside that, Moore said that a new foundation must, and inevitably will, also be built: a foundation of fourth-wave technologies such as AI, blockchain and deep learning to enable devices to trust and talk to one another in a meaningful manner.

One day, perhaps, the fourth-wave technology foundation will be enough and the current rails will fade out of relevance, but during the transitional period, he said, both will be needed.


Driving Adoption

Perceived efficiency is one of the reasons people love connected devices and what they enable. Moore said the efficiency factor isn’t quite there yet, but it will be, and that’s when IoT will really start to stick.

At present, Moore said he has five eWallets and seven cryptocurrency wallets. That’s because no single wallet delivers everything he needs. For him, as a tech-lover and early adopter, that friction is fine, but for the average consumer, a better user experience (UX) must be created to improve the value proposition.

“People don’t like it when their stuff doesn’t work,” Moore said — and the bar for consumer expectations keeps rising.

If it’s not efficient and easy, Webster added, why would consumers make the tradeoff and accept the friction of adopting something new? The apps and devices they use today have groomed them to expect nothing but the most seamless UX.

Moore believes that experience is on its way in the IoT space. Combined with AI, the new technology is going to solve problems consumers don’t even know they have, he said. They won’t have to order milk; they won’t have to remember calendar dates; they will be able to see ahead of time when they’re likely to go Christmas shopping and how much they’ll likely spend so they can start saving early.

There will, of course, be a line between experiences that are helpful and ones that cross the line into being creepy, but Moore’s point is that all those capabilities will be there. Consumers will have the luxury of choosing which nudges and prompts are serving them and which ones go too far.

“The UX on our phones, computers and tablets is starting to get a little cleaner, a little smoother,” Moore said. “More rails are opening up for you to be able to use them in different places. To me, that’s what it’s going to take: this really nice — if I may [say] ‘sexy’ — user interface that’s super simple to use. If my 87-year-old grandmother can use it and my 10-year-old daughter can use it intuitively, that’s the one.”


Security: The Elephant in the IoT Room

Consumers’ trust is at an all-time low when it comes to their personal identifying information and private credentials. Their caution may be too little, too late, since that data is likely already on the dark web, thanks to the Equifax breach and countless others — but it’s there nonetheless, and IoT innovators will need to prove to consumers that their information is safe and protected when it comes to  IoT.

Moore said that, similar to card-not-present (CNP) transactions in eCommerce, sharing sensitive data over the IoT can get “sketchy,” since it’s hard to know who’s truly on the other side. Fraud, he said, will always be a concern. More than that, it will always be a war.

“You can always count on fraudsters looking for new ways to hack and cause havoc, and IoT will be no different,” Moore said. “Vulnerabilities will be found.”

He said the solution will once again require a hybrid approach, leveraging technologies that are known today and ones that are still being developed in programmers’ basements somewhere.

Moore believes that new technologies like blockchain are going to become not only accepted, but necessary for consumer protection. Complex cryptography and hashing make blockchain extremely difficult to break, he said, and people will eventually become comfortable relying on those technologies.

That last one — blockchain and cryptocurrencies, which Webster says have gotten a bad rap thanks to bitcoin and the 999 offspring it created — seems to be a tough sell. But Moore believes that, with time, living with cryptocurrency and the blockchain may be just as natural as living with Alexa.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.