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A new payments vehicle - the connected car

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Ali Almakky, global head of payment solutions for the mobility sector at J.P. Morgan, looks at the key components of the automotive payments ecosystem fuelled by the evolution of the ‘connected car’.

The overarching objective of all these developments is to create value for the consumer and increase customer engagement. We at J.P. Morgan Payments are already working with the automotive industry to build solutions which deliver many of these use cases.

The connected car is just one of the factors changing the face of payments across the automotive industry, alongside developments such as shared mobility, electric vehicles, and autonomous vehicles.

A connected car can be defined as a car that is connected to the cloud (usually through a built-in wireless network) which allows it to share data. This data can take many forms – including telematics, or on-board diagnostics data from sensors in the vehicle – and can be used to improve driver safety and convenience, as well as to create opportunities for commerce. The connected car is therefore a significant enhancement on the personal vehicle of the past.

According to Fortune Business Insights, the global connected car market is anticipated to grow from $59.7 billion in 2021 to $191.9 billion in 2028, as wireless connectivity systems gain traction across the automotive industry.

If we think about the customer’s automotive payments journey, the first stage is ownership of the vehicle and the facilitation of loans/leases and insurance payments. The next stage is maintenance and add-on services – paying for servicing and parts, and enhanced in-car entertainment features, such as traffic alerts. Additionally, facilitating day-to-day consumer use cases including those relating to payment of charges related to parking, tolls, fuel or EV charging.

The manufacturer currently doesn’t play a direct role in that payment ecosystem, but they are looking to get more involved through increased customer engagement. J.P.Morgan wants to be an active participant in that space as business models transform.

As the business evolves from B2B to B2C, manufacturers increasingly deal with end customers, as well as dealers that require a different approach to managing their finances – specifically the ability to onboard various types of merchants (e.g. dealers) within the automotive ecosystem and beyond, in addition to onboarding drivers or end-customers.

The support we provide includes facilitating payments from the end consumer or merchant to ensure there is a high level of convenience for the customer, as well as a high rate of acceptance in the payment process to minimise the cart abandonment or purchase fail rate.

Once the manufacturer has received the funds, J.P.Morgan helps them manage those funds. This involves support for companies moving towards subscription-based models in which the customer rents the car for a year with a payment that covers everything from insurance to maintenance.

Mobility services

J.P.Morgan observes how captive finance companies – which normally own the retail experience within the automotive industry – are supporting their auto brands to expand into new flexible usership models via car subscriptions, car sharing, and other inter-modal transport solutions as a new revenue source growing direct sales.

Many of these companies have already created mobility services divisions running in parallel to the traditional captive finance business. J.P.Morgan’s mobility payments solutions can support the handling of the payments flows for brands and aggregators in the mobility services ecosystem.

It is crucial to be able to support split payments and chain payments which facilitate multiple players within these value chains that include players from cities, municipalities, private owners and operators of infrastructure assets. This also ensures their payment needs are being met in an automated fashion, thereby reducing the burden on them to reconcile and manage the large number of micro payments.

Overtime, there is also a role to play in helping all participants in the automotive value chain (including consumers) meet their ESG objectives by providing more sustainable solutions around fleet financing
Ali Almakky, global head of payment solutions for the mobility sector

We support payments to vendors, which can be made through simple bank payments, or other alternative methods of payment including e-wallets. J.P.Morgan is looking to provide value added services around data analytics and loyalty and reward management for consumers and merchants.

Overtime, there is also a role to play in helping all participants in the automotive value chain (including consumers) meet their ESG objectives by providing more sustainable solutions around fleet financing.

Additionally, as the larger commercial fleets become more expensive to own and operate, we can help finance their capital-intensive purchases of electric vehicles with extended operating ranges and much lower carbon footprints.

For consumers, we are helping them make the switch to electric vehicles by processing charge point and recharging solutions payments, making it easier for people to use their vehicles, and therefore, contributing to increased demand.

Looking to the future

A possible next step in this process would be to explore solutions around tracking and managing ESG credits, which would allow fleet operators, as well as individual consumers, to track and aggregate carbon credits leveraging ESG platforms and marketplaces.

Other significant future developments around the connected car include creating a more seamless in-car experience around purchasing entertainment services or food from quick-service restaurants, for example. Other developments could include creating other consumer opportunities around curated content, allowing brands to provide contextualised marketing within retail experiences, especially as they evolve around electric vehicle (EV) charging stations, for example.

Looking further ahead, J.P.Morgan sees a great deal of potential in making auto OEM wallets more ubiquitous in terms of their use cases to support what will eventually become ‘invisible’ payments. This is where the context and experience around the payment becomes more relevant, and these wallets become a regularly used application for the consumer in circumstances beyond automotive.

Finally, there is also the potential application of blockchain, especially in an area such as identity management. This will be key to truly seamless in-car payments, with the ability to support identifying the user making the payment and authorising the use of the wallet. Essentially this is digital Identity on the blockchain, combined with in-car biometrics.



Read the other articles in this content series:

The megatrends revolutionising payments, and the world

Third-party money: A new form of cash management for treasurers

ISO 20022: A transformational standard

Disclaimer: The views referenced in this article and video are of a general nature, and do not constitute financial advice. Please consult a professional adviser before making any investment decisions.

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