After the global chip shortage put the brakes on technology that would allow drivers and passengers to shop from their dashboards, banks and payment companies are taking another shot at in-car commerce.
JPMorgan Chase, for example, plans to expand in-car shopping beyond parking and fuel payments. The bank's new
The idea is that a fully connected vehicle would allow the driver to order and pay for food, lodging or other travel needs while using payment credentials stored within the car. In time, as vehicles become autonomous, drivers will be able to conduct any business from behind the wheel.
"With cars being a digital device, they also form the basis for data collection, with a potential of expanding into leveraging data for monetization and turning the car into a 'living device'," said Ali Almakky, global head of mobility payment solutions at JPMorgan Payments.
JPMorgan is motivated by the end of the chip shortage that challenged the auto industry over the past few years. The bank in April led an
Auto manufacturing got caught in the pandemic's rush to buy devices. As consumers bought more personal digital devices, that demand soaked up the supply of computer chips. This
"The chip shortage had a huge impact on the growth of in-vehicle commerce. However, the consumer adoption of these experiences grew tremendously," said Julius Alexander III, head of emerging payments at Discover Financial Services.
As a result, the momentum that had built up in the late 2010s toward
JPMorgan, which acquired a 75% stake in
Other emerging use cases include remote software upgrades, enhancing headlights or locating and accessing chargers for electric vehicles.
"What we see as a result is that equipment manufacturers are building propositions in which they find multiple ways of direct customer engagement and various services that they can offer," Almakky said.
In-car payments are part of a progression away from static points of sale toward phones and other web-connected devices. The migration includes paying with watches, for example, which is already commonplace today, according to Zil Bareisis, a senior analyst at Celent.
"Think of Apple Watch, Fitbit Pay or Garmin Pay, all of which rely on the same tokenization technology that powers mobile wallets," said Zil Bareisis, a senior analyst at Celent. "And while in-car, 'connected fridge' and other types of ["internet of things"] payments are being adopted slower than some predicted, there are unique and powerful payment experiences being developed all the time."
To facilitate more payment options, Discover is increasing its focus on authentication and risk management by integrating car security systems with payment authorization, Alexander said.
"We are working on ensuring the cardholder is actually the person completing the transaction," Alexander said. "We can connect with a lot of partners, but we're also trying to keep up with the pace of new entrants."
The automotive digital cockpit market, which measures the sales of technology for in-car usage, is expected to grow from $23.8 billion in 2023 to more than $50 billion in 2030, according to
The in-car commerce market, which more closely measures payments from inside vehicles, is expected to grow even faster. About $1.5 billion in payments were made from inside cars in 2021, a volume that's expected to hit $89 billion by 2026, according to
"The simplicity of digital payment acceptance is driving immersive shopping experiences, and in-car commerce is no exception," said Rob Cameron, Visa's global head of acceptance solutions.
Bank technology company Fiserv recently entered into a partnership with Sunoco that uses an API to connect different digital payment types at gas stations, including in-store, in-app, at-the-pump and inside-the-car.
"We are also on the cusp of fully autonomous driving, which will present merchants new opportunities as consumer behavior and new commerce models arise within autonomous vehicles," said Scott Mackay, vice president of Carat Connected Commerce at Fiserv.
As the auto industry evolves and electric vehicles become more commonplace, their ability to purchase power digitally will be a stepping stone to other forms of commerce, MacKay said. "Digital payments and apps will create a canvas to further loyalty, embedded financial tools, EV charging and other solutions through the car."
