Once an abstract concept, the Internet of Things (IoT) became a tangible global sensation. Smart appliances, connected automobiles, and wearable technology are just a few examples of the IoT that have changed the way consumers interact with the world around them. And IoT just keeps growing. IDC forecasts that there will be 55.7 billion connected devices by the year 2025.
IoT also provides ample opportunity for players in the payments space to capitalize on this phenomenon. The realization of a concept like IoT, which essentially enables machines to preemptively fulfill needs based on data, suggests to consumers that their payment experiences should be just as efficient. Consumers now expect payments to integrate seamlessly into their everyday lives through their IoT devices.
Examples of IoT
Smart Speakers
Amazon Echo and Google Home are among the most recognizable smart speakers. Driven by AI-powered intelligent personal assistants, these devices can provide information about everything from traffic conditions to recipes. They can also be used to help consumers manage their finances, from looking up account balances to making bill payments with simple voice commands.
Retail
IoT also enables new and enriched shopping experience for consumers while simultaneously presenting lucrative revenue opportunities for merchants. Some retailers are investing in beacon technology to send push notifications, promotions, and coupons to shoppers as they enter their stores. These types of enriched shopping experiences can help traditional retailers bridge the gap between online and in-store shopping, possibly leading to increased sales.
Auto
Connected cars are becoming more common. Business Insider estimated that 75% of the estimated 92 million cars shipped globally in 2020 would be built with internet-connection hardware. Internet connectivity combined with apps like Spotify and Netflix make in-vehicle entertainment a fully integrated and seamless experience. Auto insurance companies are also leveraging IoT to track the driving habits of their customers and offer discounts for safe driving.
Home
Smart home devices are streamlining our daily lives like never before. From smart refrigerators that can reorder groceries to video doorbells that help keep our homes secure, almost every part of our home can be streamlined by IoT. And smart speakers can help join these disparate smart devices together into one central command center, making it easier to manage them all.
What does IoT mean for payments?
The explosive connectivity that IoT delivers is poised to increase payment transaction volumes, making a robust payments infrastructure a fundamental component to sustained success. Financial institutions and other payment service providers can help businesses prepare for monetization opportunities by offering comprehensive services that can integrate into the fast purchasing environment made possible by IoT.
It’s also important to note that the rapid expansion of IoT can expand payments risk and fraud as well. Banks and other stakeholders will have to keep the possibility of increased fraud in mind and develop additional security measures to verify and protect consumer identities.
The Bottom Line: As consumers continue to leverage IoT for increased connectivity and convenience, there is an opportunity for financial institutions and payment service providers to gain a competitive advantage. This advantage can be realized with a balance of innovation, security, and user-focused design.
Updated from a blog originally published September 9, 2019.
AI-powered personal assistants can make payments. Read 4 Ways Chatbots are Revolutionizing Electronic Bill Payments.Â
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