A Forbes article titled Your Car Is Your Wallet: Connected Cars And The Future Of Fintech describes a not-so-distant future in which you zip through toll booths, refuel—or recharge, as the case may be—your car, pick up an order at your favorite drive-through restaurant, or park your car, all without having to rummage through your wallet for cash or a credit card.
These and copious other conveniences offered by connected cars are quickly becoming a reality. Automakers incorporate a growing number of payment applications directly in the car’s infotainment system, offering simplicity, convenience, and added safety of mobile payments directly from the vehicle.
Automakers and fintech pundits alike use the phrase “your car is your wallet” to describe this idea. It is intriguing and convincing, for sure. But it’s also out of alignment with consumer habits and expectations.
Mobile Digital Identity
In this popular “your car is your wallet” model, your virtual wallet is associated with and is inseparable from your car. Let’s use an example. If you are a SiriusXM satellite radio customer, the content is streamed to your car and only to your car. When you subscribe to SiriusXM service, you provide your car’s VIN (vehicle identification number) so only way for you to enjoy the service is while in that car.
It’s as if the car, not you, paid for the service. If you drive your spouse’s car or a rental car, the service is not available (unless the rental company gave it to you). If you sell your car and forget to cancel your subscription, the new owner will be able to enjoy satellite radio at your expense.
This has been the model since the early days of telematics. Services such as GM’s OnStar are built into the car, and consumers are limited to those services that are offered with the car’s VIN (and must pay subscription fees the OEM hopes the market will bear).
Misalignment with Consumer’s Mobile Digital Identity Slows Down Adoption
With the ubiquitous availability of smartphones and overabundance of mobile services, many of them completely free, consumers find built-in vehicle-centric devices and services inferior, costly, and painfully slow to keep up with technology advancements available on consumer-level information and communication products.
Consumers prefer their smartphones because the personal data and personalized services represent their mobile digital identify. This identity lets consumers enjoy an uninterrupted, personalized, modality-independent digital presence: same content, same service, and same overall experience, independent of the location and the mode of transportation being used.
Automakers Have it Wrong
Automakers will continue to offer built-in technology and vehicle-centric services. But as they continue to add options and features in their never-ending pursuit to out-innovate the competition, the in-vehicle experience for drivers and passengers is becoming increasingly bewildering and demands re-learning and re-personalization—a stark difference from the everyday experience of smartphone users.
To be sure, consumers may be willing to pay a premium for certain in-vehicle technologies, such as a large touch screen, especially if it improves the occupant’s experience while reducing distraction and promoting safe driving. But consumers are less willing to shell out additional monthly fee for services they already paid for to access on their mobile device. And they certainly do not want to pay the OEM for an expensive wireless data plan if they already have one.
Sounds simple enough, but automakers still don’t quite get it. They do not realize that your car isn’t your wallet. It’s just taking you to places where spend the money in your smartphone-based virtual wallet. The more hardwired payment systems are built into cars, the more incompatibilities and fragmentation are introduced. For example, Honda collaborated with Visa, Gilbarco and IPS Group to demonstrate in-vehicle payment system with infrastructure parking and fueling. Obviously, you can enjoy the convenience offered by this collaboration only if you drive a Honda, refuel at a gas station that uses Gilbarco fuel dispensers, and park at an IPS facility.
The recently debuted GM’s Marketplace is an OnStar-based commerce platform that offers a portfolio of products and services from popular merchants that include Applebee’s, Delivery.com, Dunkin’ Donuts, IHOP, ExxonMobil, Parkopedia, TGI Fridays, Priceline.com, Shell, Starbucks, and Wingstop. Although GM worked hard to give customers a smooth and safe user experience, there’s very little that GM’s Marketplace does that isn’t available on mobile devices for free and without the added middleman.
The Road Ahead
While innovation in built-in infotainment hardware and display technology will continue to grab headlines and provide some short-term boost to the brand, OEMs will have only limited success selling services and establishing long-term differentiation in a space with abundance of free and paid services available on consumers’ mobile devices.
Instead of putting the vehicle’s VIN at the center of these services, OEM should realize it’s the consumer’s mobile digital identify that the offering should revolve around. OEM should strive to develop business models based on open standards and interoperability, and encourage collaboration even if some of the transactions do not happen to take place from within their cars.
This framework removes automakers from being at the center and in control of these services, which OEMS will probably eschew. But their mission should be to reduce friction and enhance customer experience, while enhancing driving safety. And there’s more than enough room for innovation here. After all, until we reach the promise of autonomously-driven cars, congestion-free highways, and air taxis, consumers are going to spend many hours stuck in traffic and searching for a parking spaces.
Image: Dollar Sign (Andy Warhol, 1982)