Connected Car Commerce Picks Up Speed

The connected car is fast becoming the transactional car. New moves from automakers and credit card companies are pushing vehicle commerce — or v-commerce — forward with new data showing it could reach critical mass by the end of the decade.

According to new research from Ptolemus Consulting Group, 600 million vehicles will generate in-car transactions of $500 billion by the end of the decade. Ptolemus expects the v-commerce market to be dominated by fuel and parking payments. However, it says future growth will also be generated by content subscriptions, EV charging, food and beverage and grocery purchases.

One of the reasons behind the bullish attitude is the Tesla Autopilot system. Reports have circulated this week that Elon Musk is going to roll out the Full-Self Driving (FSD) automated driving technology via subscription, which would open the door for more payments and digital transactions from the car’s dashboard.

“I think we will offer Full Self-Driving as a subscription service, but it will be probably toward the end of this year,” said Musk during Tesla’s last quarterly conference call. Musk went on to say that customers who bought Tesla’s Full Self-Driving package outright wouldn’t regret it, even if a subscription package is launched in the future. This implies, says The Motley Fool, that Tesla’s upcoming subscription service won’t be cheap.

The category has also been moved by the late August announcement that Discover and Car IQ, a California FinTech, have partnered to create a payment platform for v-commerce payments beginning with automotive fleets. Fleet vehicles connected to the Car IQ platform will be able to transact autonomously to pay for services through Discover’s payments rails.

Car IQ says it has developed a contactless machine payment platform that turns the vehicle into a payment mechanism and enables it to complete payments for repairs, tolls, fuel, insurance, parking and more. According to Car IQ, once the service is complete, the vehicle generates a payment file for Discover to be paid via a virtual card transaction over the Discover Commercial Payments Network.

“This collaboration represents a new method for payment authentication that will simplify the payment management of any vehicle. This method enables payments to have regulatory and security elements, creating a comprehensive banking and risk management solution specifically designed for vehicles,” the company said in a statement. “Car IQ’s capabilities enable data governance at the vehicle level using vehicle data to help create trust and certainty.”

Discover sees the move as part of its Internet of Things (IoT) strategy.

“Discover is continually exploring new ways to connect cars and all types of IoT machines directly to the Discover Global Network,” said Bill Dulin, vice president of network solutions at Discover. “Machine-initiated payments is an expanding frontier that will increase volume over our network and simplify the payment management and accounting processes for fleet customers. Car IQ’s perspective on machine identity will support an emerging payment category in machine-to-machine or IoT payments, and coupled with the Discover payment and blockchain expertise, we are creating solutions with emerging technology that will redefine the customer’s expectations.”