The future reality of payments

A day in the life using the Internet of Things

The Internet of Things (IoT) is driving innovation and reinventing how we use everyday devices to connect and make payments.

There are almost five billion connected devices across the world according to the latest Gartner Research. This number is expected to grow by 500% in the next five years. Australians can expect to see more businesses use devices to capture these audiences that are keen to adopt effortless payments every day.

With this brave new world just around the corner, finance and banking industries will need to embrace this new world of disruptive technology. Many new business models and customer experiences are already starting to emerge.

But what does this new world order look like?

We explore how the future of connected devices might affect our everyday lives.

Driving to work

On the way to work at your local café, swipe your reusable cup to pay for your coffee. Use your car console to pre-pay for parking before you leave the car.

Visa announced that their token payment service will now be extended to auto manufacturers. This means automotive brands are developing in-car telematics to allow consumers to make mobile payments directly from their vehicle. Honda is one of the first to team up with a financial services company to turn vehicles into mobile credit cards.

When it comes to buying a new car, banks could advise you on how much finance you have access to and at what rate, seamlessly customising loans in the process.

At work

There’s no need to order more coffee pods or leave the office to buy milk — this will all be automatic, as will paying for it. Amazon is tapping into these restocking opportunities with the Amazon Dash Button; keep the button next to your stock and simply press the button to add a restock order to your Amazon cart when supplies get low.

Google is also rolling out its own ‘Hands Free’ program, taking effortless payments to a new level. The program allows consumers to make payments without taking their phone out of their pocket. The program connects the user’s phone with a point of sale system, so the user only needs to say they will ‘pay with Google’ and provide their initials. The cashier enters these initials and matches the person with their Google profile photo to close the transaction.

So at lunch, you tell the cashier you’d like to pay with Google. Even though your phone is at the bottom of your bag, the cashier matches your face with your Google picture and wishes you a great day, rewarding your Google account with loyalty points in the process.

After work

On your run, you pay for a bottle of water with your wristband. American Express is advancing the capabilities of the fitness band, Jawbone, which will allow payments similar to Apple Pay, at a more affordable price.

Data collected from the watch — such as fitness levels and workout locations — will also provide useful health information like when and where to hydrate. If you run past a kiosk or billboard of interest, you can receive information and prompts to buy products with your wearable technology.

But IoT products will not be limited to small devices; billboards will be given an IoT upgrade, tracking how many people view billboard content and for how long. CISCO have been working for over a year on customising messages based on the speed of traffic. These billboards will adapt so that cars driving faster will read a short, quick message and cars stuck at lights will have more information to peruse. The next step for these billboards, and even vending machines and kiosks, may include consumer alerts featuring purchase prompts through PayPal when they show prolonged interest.

On the weekend

At the bar or restaurant you can protect yourself (and your car) by using a wireless breathalyser. You can authorise the IoT device to lock the car for a few hours and book an Uber should you fail a quick breath test.

What does this mean for the banking and finance industry?

Wearable technology is not new to IoT, however the adoption of payment technology on more affordable devices will mean access to broader markets.

Financial institutions, insurance companies and retailers will all need to create valuable interactions by handling enormous amounts of data in real time. This means creating products and services that align with smart devices.

The key obstacle for businesses seeking to integrate payment technology into everyday life is security. Financial institutions must ensure customer security is safeguarded when making payments. Widespread adoption of new technologies will only happen when security progresses at the same rate as innovation.

Australia’s future business requires a combination of industry-best payment security and the innovation seen in the IoT.

The IoT’s impact on our daily lives will be significant and the financial services industry should start planning for these changes — the sooner the better.

For more information on the latest in payment technology contact a member of our expert team.

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