The Pandemic Proves to Be the Catalyst in the Automotive Sector
For the past 10 years, the automotive industry has been undergoing a most significant technological transformation. Car manufacturers are focusing on more eco-friendly and technologically advanced solutions, in order to sustain sales levels. The driving factors for automotive sales have been passenger comfort, vehicle safety features, improved emissions, fuel efficiency and car infotainment for some time.
The pandemic has had an impact on automotive sales, generally due to changing economic conditions, but this did not affect the development process of technological advances which were commenced several years ago. On the contrary, the pandemic has proven to be a catalyst in the growth of software-centric technological advances like in-vehicle payments solutions, as cashless society is now a significant part of the payments ecosystem.
The rise of the IoT has resulted in the formulation of connected cars. The IoT refers to physical items that are equipped with sensors, processing power, software, and other technologies, and that connect to and exchange data with other devices and systems over the Internet or other communications networks.
Fragmentation: One of the Biggest Challenges
Merchant and marketplace fragmentation as a result of payment platform relationships may be a stumbling block to growth. As the market is still in its early stages, automakers and payment providers must solve dependability and interoperability concerns induced by partnerships, in order for in-vehicle payments to reach as many consumers as possible. To achieve scale quickly and deliver desired advantages, automakers should collaborate with current infrastructure, service, and data suppliers. Instead, they frequently labour in isolation to develop or just reinvent difficult-to-scale island solutions between an OEM and a single other party. Lacking dependable partners, they have little time to focus on core competencies and differentiators.
Security Is Paramount
There is also the issue of security and whether the automaker or payment platform would be responsible for hacks or data leaks. Both parties would share responsibilities, and this is an issue that OEMs are already grappling with as their infotainment systems become more advanced. Payment companies are involved as their experience in areas such as tokenisation can go a long way to securing the overall market, which is highly important.
Automobile manufacturers would need to collaborate with payment providers which have security and compliance infrastructure in place to stay ahead of cybercriminals. Along with adhering to payments regulations like PCI DSS, payment providers also need to meet the challenges that can arise in future, as cybercriminals are primarily targeting vulnerable areas like payment platforms.
► Download Free Whitepaper
Our latest whitepaper, In-vehicle Payments ~ Resolving Fragmentation
- Key In-vehicle Payments Use Cases
- In-vehicle Payments Challenges
► In-vehicle Payments Market Research
Our latest research found:
FIND OUT MORE: IN-VEHICLE PAYMENTS: OPPORTUNITIES, CHALLENGES & MARKET FORECASTS 2021-2026
- The global transaction volume of in-vehicle payments will exceed 4.7 billion by 2026, up from just 87 million in 2021.
- This extraordinary growth of over 5,300% in the next 5 years will be driven by increasing industry collaboration and initiatives from vehicle manufacturers.
- North America will have the largest in-vehicle payments share of transactions by volume; accounting for 42% of all transactions globally by 2026.
- Vehicle fuelling will be the most common use case over the next 5 years; accounting for around 48% of total in-vehicle payment transactions by volume.