The commercial debut of in-car payments in Hyundai’s all-electric Ioniq 5 passenger vehicle later this year[i] illustrates how some car manufacturers are developing systems that could either compete with or complement smartphone-based electronic wallets (eWallets) in the future.
The features are embedded into Bluelink – Hyundai’s own brand connected car infotainment system – developed in partnership with Xevo, an Android-based automotive commerce and services platform that allows drivers to order food or other products and pay for parking and road tolls from their dashboards. Initial merchant partners on launch are Dominoes, ParkWhiz and Chargehub, and like an eWallet, the service relies on secure storage of customer credit card or PayPal account information.
Nicknamed the “Hyundai Mobile Wallet, Bluelink’s in-car payment capability is the result of a three-year testing and development programme, which began in 2017. It first appeared in Hyundai’s Genesis GV80 luxury SUV launched in South Korea last year[ii], requiring users to sign up through an associated smartphone application – carpay – which links to one of six South Korean credit card companies (Hyundai, Shinhan, Samsung, Hana, BC, and Lotte). Initial merchant partners at the launch included fuel company SK Energy and parking firm Parking Cloud, with transactions certified by inputting a six-digit PIN into the dashboard display.
Ford, Jaguar Land Rover, Honda and Chevrolet in front
Several other car manufacturers have developed similar in-car payment systems. Ford entered the market with FordPay – a virtual wallet that stores payment details on their mobile phone – in partnership with ParkWhiz and Parkopedia as far back as 2016. Jaguar Land Rover worked with Shell to enable drivers to pay for fuel via PayPal, Apple Pay and Android Pay (since rebranded Google Pay) using in-car touchscreens in 2017.
Honda partnered with Visa to trial in-car payments back in 2017, integrating its system with fuel pumps from Gilbarco Veeder-Root and smart parking meters from the IPS group. Proximity sensors and locational information inform drivers they could pay for their fuel once the car is parked close enough to the pump. The carmaker later unveiled partnerships with several retailers, including movie reservation platform Atom Tickets, food delivery company GrubHub, iHeartRadio and Phillips 66. Shell collaborated with Chevrolet on a similar system in 2018, again limited to fuel purchases at the oil companies retail outlets.
That Hyundai has earmarked its launch for the US later this year illustrates carmakers’ focus on a country with high vehicle ownership and usage, expansive geography and an extensive road network. US citizens spend large amounts of time in their cars. Based on a survey of 2000 US commuters, the P97 Digital Drive 2019 report estimated that 135m Americans spent an average of 51 minutes a day, five days a week commuting to and from work in their vehicles, for example. Nearly three-quarters (73%) of those surveyed reported connecting to the Internet while driving, up from 66% the previous year. Most (59%, up from 49% in 2018) also used their smartphones to do it.
Smartphone screen or dashboard?
The critical question is whether consumers prefer to conduct mobile payments from their dashboards instead of their smartphones, given the ubiquity and convenience of the latter and the increased security offered by embedded biometrics. In reality, drivers may end up using a mixture of both interfaces. Integration with the smartphone is a standard option, more so with platforms like Apple CarPlay and Android Auto, where in-car payments are just an extension of eWallets. Honda and Visa gave users the option of having fuel charges calculated and displayed by an app on their car dashboard or smartphone.
Other than a larger, more accessible dashboard screen, perhaps the most crucial advantage of in-car payment systems over the smartphone is safety and better compliance with local laws. For example, various US states regulate the use of mobile phones while driving, while in the UK, drivers can get six penalty points and a £200 fine for the same offence, even when the vehicle is stopped in traffic or queuing at lights. However, drivers are still able to use their smartphones to pay for a drive-through takeaway.
Merchant partnership networks key to success
While the potential opportunity for in-car payments is substantial, their success depends on establishing a network of partnerships between financial institutions, merchants, mobile operators and car manufacturers themselves. For the moment, those merchant partnerships are primarily limited to fuel and parking providers – ostensibly the goods and services that motorists most want to access whilst driving.
Top in-car browsing activities identified by the Digital Drive 2019 report involved finding a gas station (47%) and ordering food (35%) and coffee (34% at drive-through restaurants. A separate report conducted by Strategy Analytics found that parking and traffic apps topped the list of in-demand services for connected cars, with eCommerce functions such as placing food orders, making reservations, or shopping at the bottom of the same list.[iii]
A recent report by McKinsey[iv] highlighted how companies have generally failed to monetise in-car information systems by failing to generate sufficient customer interest and differentiate their services. The research firm also concluded that car manufacturers have too often worked in isolation to set up payment systems and failed to scale up their merchant ecosystems or establish B2B partnerships beyond working with one or two fuel and parking providers.
For the moment, the volume of connected available is keeping users of in-car payment systems to a bare minimum (Statista estimates there were 51m connected car shipments in 2019, a figure that will grow to 76m by 2023). However, that could change as more vehicles take to the road. It will be interesting to see if drivers find in-car payment systems more accessible and more convenient to use than their smartphones, or if dashboards simply become a window onto the eWallets they already use to conduct mobile payments.
[i] Hyundai is launching in-car payments in the all-electric Ioniq 5, TechCrunch, 25th May 2021
[ii] Hyundai’s In-Car Payment System Brings Everyday Convenience, Hyundai Motor Group, 31st January 2020.
[iii] Connected car users demand parking, traffic apps, Mobile World Live, 24th June 2019
[iv] Unlocking the full life-cycle value from connected-car data, McKinsey, 11th February 2021