Car manufacturers continue to develop connected consumer experiences, opening up precious new revenue streams and opportunities to improve the customer experience of their marques and foster deeper brand loyalty. Olivier Bessi, Head of Fintech solutions at Star, looks at the opportunities for fintechs in the connected car ecosystem.
The value of in-car payments could reach $86 billion by 2025, up from $543 million in 2020, according to Juniper Research. Car makers are keen to seize the opportunity to drive revenue growth and foster long-term business sustainability, thus becoming active players in the digital economy. How can payment specialists get involved despite not being experts in the automotive space?
Providing drivers with the ability to make payments – for anything from parking, tolls, fuel and food on the go to roadside assistance – directly from the vehicle dashboard, provides a speed and convenience turbo boost that could significantly increase brand loyalty for car manufacturers.
Further opportunities to customers are also available. For example, if a customer has a flat tire and needs roadside assistance but can’t afford to pay for one upfront, providing buy now, pay later (BNPL) solutions as a roadside payments solution could boost subscription-related services and further foster customer loyalty. This innovative approach not only offers immediate financial relief to customers in unexpected situations but also presents an additional untapped revenue stream for car manufacturers, diversifying their service offerings.
Navigating go to market complexity
With no heritage of payment solutions, the payment ecosystem is a complex one to navigate for car manufacturers.
Finding the right financial ecosystem partners will be critical for them as they develop hybrid or capsule solutions for car users; pinpointing use cases that truly enhance the customer experience – beyond the obvious, like paying for tolls and gas.
For example, paying for quick service food, groceries and scheduling and paying car maintenance are all potential applications. Data and AI technology baked into in-car systems could suggest relevant goods and services, anticipate drivers’ needs, and shed light on desires they didn’t even know they had, providing a true open road experience.
Manufacturers may want to build their own in-car systems to empower dealerships and more directly manage the impact the experience has on customer loyalty but building an operating system from scratch, the approach being adopted by Mercedes for example, is an enormous investment.
There is a huge opportunity for fintechs to work together to help manufacturers overcome the multiple hurdles such as compliance with payment regulations and the security of sensitive customer information.
Fintech’s innate understanding of consumers’ payment needs will help manufacturers shape their offerings accordingly and create sensible subscription models that lead them to their endgame.
Where are the opportunities?
Payment providers and fintechs can help car manufacturers with several nuanced, technical aspects beyond building or outsourcing. Keeping the customer as the focal point and devising a holistic approach to payments that enables access to a strong network of partners is crucial.
When it comes to the secure and seamless protection, storage and analysis of customer transaction data for example, they can short circuit the journey to full connectivity and overcome technical and regulatory hurdles such as data encryption and privacy laws, breach prevention measures, adherence to industry-specific regulations like the Payment Card Industry Data Security Standard (PCI DSS), or access to major card schemes as a principal member.
The future customer journey is the endgame to keep in mind for car manufacturers and fintechs alike. Partnering will get you there quicker and deliver a consistent digital payment experience across brands and vehicles, increasing adoption, decreasing confusion and making it easier to onboard new merchants as the retail ecosystem expands.
