Can things Pay?


Payment convenience is not limited to shop counters, it has entered in the automotive space. You may wonder, Can things pay? 

Internet of Things or IoT has generated tremendous excitement and unprecedented opportunities for many industries, it is here to stay. Especially, there are many reasons for the banking and payment industries to seriously consider IoT. 

As per eMarketer’s estimation, the US proximity mobile payment transactions will grow by 31.8% in 2020, compared to 2019, reaching a total of $130.36 billion. By 2021, the total transaction value will reach $161.41 billion.

Today, when you book a cab on an app, you simply get in the car, enjoy the ride, and then get out at your destination. There is no need to take care of the payment in the cab as this step disappears into the background. Using tokenization, payment credentials are stored and the usage of this data is being explored, automated payments is one of them. 
Imagine, a smart "sales hunter" who is able to search a specific product and close the deal automatically at the given permissible price on behalf of the consumer. What if Alexa does it in the future?
Corporations are exploring ways to connect payment credentials to cars which can make payments for pay per business use models, like electric charging, gas or parking. 

There are indeed many other potential use cases that will drive new growth for both the banking and payment industries that merit further exploration. 
With the rapid and inevitable spread of IoT infrastructures, we can say contactless is primitive and most successful for of IoT payment. We will see payments shifting from automatic (i.e. with some level of automation like contactless payment) to fully autonomous (i.e. payments conducted by an agent hosted in a device).

4 Levels of autonomy are being currently considered within the Payments IoT space. 
Levels of Autonomy - Worldline

Level 1 (Informational) - The device/software agent has permission to access a user’s bank account only to provide information regarding the data available in this bank account.

Level 2 (Permissioned) - The device/software agent must ask the explicit consent of the user before triggering a payment. The user can grant this permission by any digital (biometric or non-biometric) mean.

Level 3 (Conditional) - The device/software agent triggers payment only under certain conditions set previously by a human agent.

Level 4 (Full Autonomous) - The device/software agent triggers a payment without human intervention. The user could be optionally informed or not informed at all, in real-time, about the payment being made.

In the Fintech industry, innovation happens fast but adoption takes time. Contactless payment took almost a decade to achieve the current level of market penetration. The adoption speed of innovative payment solutions depends not only on proven technology but also on the ecosystem. So, maybe we just need to wait and watch how these promising trends develop into payment solutions that bring the best convenience and make payments frictionless.  


Excerpts: Worldwide Web.