It is quite amazing to think about how much we can do with modern smartphones — browsing the web, reading emails and shopping for groceries and clothes can all be done on our phones.
Smartphones have even evolved into digital wallets that allow us to pay for purchases or public transport rides.
For the average consumer, being able to pay for purchases and services with phones has made our lives so much easier. With all the time people spend in their cars, imagine how convenient it would be for drivers to pay or purchase items without leaving their cars.
Cars are no longer simply vehicles
The pandemic and the last few years of social distancing measures have left some commuters hesitant to travel via public transport. Interestingly, despite the reduced time spent on the roads during the pandemic, the demand for cars in Singapore remained high.
High inflation has also led to rising ride-hailing and car rental service costs, resulting in a 4% drop in global public and shared mobility journeys. This shift in mindset regarding public and shared mobility will likely drive car sales, especially with global car sales in 2023 projected to hit 69 million.
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The electric vehicles (EV) segment is also growing as consumers become more conscious of the impact internal combustion engine vehicles have on the environment, prompting traditional car-makers to shift towards producing EVs. For the past two years, EV sales in Asia Pacific have accounted for nearly two-thirds of global auto sales, showing growing consumer demand and driving the need for more charging stations across the region.
New in-car features and connectivity solutions will also continue to grow in popularity as drivers demand more from their cars. McKinsey predicts that core connectivity use cases, including gaming and over-the-air upgrades, could deliver US$250 billion ($335 billion) to US$400 billion in annual incremental value for players across the mobility ecosystem. It makes perfect business sense for organisations to capitalise on the expected rise of EVs and the growing demand for convenience and connectivity.
Cars will connect and transact in the future
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We live in a hyperconnected world as the number of Internet of Things (IoT) devices grows exponentially. With new connections and technology come new payment possibilities. According to Vodafone’s Fit for the Future Report, 26% of Asia Pacific organisations plan to adopt IoT solutions, such as sensors in cars and machines, to enable them to communicate.
The “Economy of Things” is the future, where physical goods like cars can be assigned digital identities and used to trade with other devices.
Mercedes-Benz has already started taking steps to transform its cars into payment devices. Its customers in Germany can now pay their fuel bills at petrol kiosks directly from their car without having to enter a PIN or authenticate the payment with a mobile device. Hyundai is also exploring using its vehicles’ touchscreens to allow customers in the US to pay for items with securely stored credit card information.
EVs face different challenges in the Economy of Things, including locating compatible charging points and paying for these charging services. If left unsolved, these hurdles may be strong barriers to EV adoption. Vodafone’s Pairpoint platform seeks to solve these stumbling blocks. It allows motorists to receive real-time information on the status and compatibility of the nearest available charging point and authorises their vehicle to recharge effortlessly.
With blockchain technology, the platform provides a streamlined one-stop shop for in-car payments with its single application and integrated wallet. This allows EVs to transact directly with charging points and many other devices over encrypted connections using digital wallets and other payment technology, reducing the pain points in today’s cashless society. Through Pairpoint, connected devices, vehicles and machines can transact seamlessly and securely.
Paying at electric charging points in the future could be as easy as pulling up, opening the app and choosing to connect. According to Juniper Research, the growth of in-car payments will reach EUR$86 billion (about $126 billion) by 2025.
Connectivity at the heart of next-gen vehicles
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While the possibilities of in-vehicle payments are exciting, some technical challenges must be addressed before we truly see in-car payments being adopted by the entire automotive industry. Integrating payment methods into the vehicle will require all cars to be cellular-enabled, unlocking many new features.
Like our smartphones, which can access various services and apps, these features and capabilities can enhance the driving experience and make some aspects more convenient.
This level of connectivity requires a communications service provider with a high-performance network that is stable and highly reliable. However, relying on a physical SIM card can be challenging as streaming video content will be costlier, while data-intensive features like assisted driving may suffer from the lag with a physical SIM card. An eSIM can eliminate the pitfalls of a physical SIM card and avoid the need to change SIM cards when travelling to another country.
The right connectivity partner will manage and harmonise the different eSIM and connectivity platforms, ensuring all these components are interoperable regardless of the system operator, reducing device and ecosystem complexity.
This will allow car-makers and communications service providers to drive innovation within the automotive industry by enabling cars to connect and transact seamlessly with other devices in the environment in today’s hyperconnected world.
Bhupinder Singh is the president for Asia Pacific and Middle East at Vodafone Business
