Connected Cars: How Are They Helping Drive the Payment Revolution?

Modern vehicles continue advancing at an impressive pace and are becoming increasingly more connected. Just a few decades ago, it was unimaginable that a car would be not only a convenient means of transportation but also a wallet on wheels, featuring embedded payments and enabling consumers to buy services on the go.

As the demand for omnichannel commerce keeps growing, so does the interest in the “car as a wallet” concept. Read ahead to find out how exactly connected cars work in the payment context and what to expect from this trend in the future.

Reasons Behind the Car Wallets’ Popularity Being on the Rise

In-car payment systems have been around for a while - for instance, Hyundai’s luxury Genesis brand has been offering the CarPay function that enables users to pay with the navigation screen in affiliated parking lots and gas stations since 2020.

But what are the reasons behind such accelerated growth in popularity? Three key factors that play a major role in the car wallets’ rapid evolution are:

• Convenience for consumers. First and foremost, connected cars with embedded payments are an extremely convenient solution for consumers, enabling them to conduct purchases in a fast, secure, and flexible manner in their vehicles without the need for additional devices.
• Data monetization potential. Payment data collected from in-car transactions can be monetized not only by auto manufacturers but also by players from ancillary industries, such as insurance, oil & gas, and retail. Businesses in these niches can use the data to offer more personalized experiences and generate new revenue streams.
• Opportunities for innovation. Connected cars have the power to transform how people transact, create new business models, and offer innovative solutions to further boost commerce.

While a digital wallet embedded in a car is not as essential as a brake pedal or steering wheel, it certainly can boost the consumer experience significantly. It is also a versatile tool with a variety of potential use cases and more and more stakeholders are beginning to take interest in it.

Where Can Connected Vehicle Payments Be Used?

Connected cars offer plenty of payment opportunities both in the B2C and B2B fields:

• In the B2C model, a mobile wallet integrated into a connected vehicle can enable users to conduct seamless transactions, like when paying for a parking space or covering their monthly car loan installment. A car wallet can also be helpful for manufacturers and dealerships to collect payments, such as electrical charging deposits.
• From the B2B perspective, car wallets can be implemented by businesses to pay for their employees’ travel costs. Not only does this spare the need to report the expenses separately but also helps to minimize the likelihood of fraud by providing control over the types of merchants that can receive payments.

The examples listed above are some of the most common use cases of car wallets today. However, as this technology continues to advance and become more widespread, we are sure to see plenty of innovative solutions involving in-car transactions.

What Is the Future of Car Wallets?

Statistical data demonstrates that this shift is already actively happening and we can expect the size of the global connected car fleet to increase more than threefold in the upcoming years, surpassing 305 million vehicles in 2035 in the US alone.

Alongside the growth of connectivity among vehicles, their embedded payment features are sure to keep advancing. Thus, in addition to making purchases at gas stations and parking lots, there is strong potential for cars with smart apps to act as digital wallets with more diverse capabilities, allowing people to pay for restaurants, do grocery shopping, and conduct bank transactions.

Bottom Line: Cars With Embedded Payments Are Going Places

Undoubtedly, there are still plenty of challenges to be dealt with on the way to smooth in-car payments, such as the lack of interoperability between banks and car manufacturers. Thus, it is hardly possible to predict the exact timing when car wallets will become mundane for the majority of vehicle owners.

However, what we can be sure of is the fact that as long as cars need to consume services, such as fuel, insurance, and parking, users will want to have a way to automate these tasks and payments for them, which makes the future of the “car as a wallet” concept very promising.