In-Car Commerce - Managing fragmentation and focussing on user experience

5 minute read

The global automotive industry is in the midst of a monumental transformation towards connectivity, and in-car commerce will play a significant role in shaping this connected future with huge growth potential. However, to accelerate the growth of this multi-billion-dollar industry, some key factors may be preventing automakers from fully capitalising on this opportunity.

In-car commerce is a fairly new concept, with many car manufacturers, system suppliers and e-commerce companies only now starting to work on solutions for drivers, albeit with little consistency or cohesion between offerings. Automotive OEMs need solutions that can work almost anywhere, ideally globally. For vehicle-centric services such as parking, EV charging, fuelling and tolling, a North American or a European wide solution can easily mean having to deal with hundreds of merchants in dynamic markets. Today, automotive OEMs are not equipped to manage this scale of fragmentation and complexity in markets outside their core business. 

Automakers are now starting to offer drivers the ability to pay using the vehicle head unit, as opposed to smartphones. The pandemic has only accelerated this, with consumer demand surging for contactless payments. A number of in-car marketplaces have been launched - in particular in North America. However, not all of them have got off to a flying start. Some of them show very little driver engagement, and transaction volumes are limited. The industry is going through a learning curve and one initial conclusion is obvious - user experience is king, and the driving experience is very different to a smartphone or a desktop scenario. Unfortunately, a lot of the in-car payment solutions today are suffering from a strategic flaw that puts the carmaker’s potential short term benefits first and neglects the actual user benefits.  

Existing solutions such as ‘phone screen mirroring’ have raised critical safety concerns by distracting drivers from concentrating on the road. Further issues also include the limited market of one or two merchants in small geographical areas that fail to meet driver expectations, combined with the incompatible customer experience delivered using different applications. Forward-thinking automakers understand that screen mirroring is not the long term solution required to meet driver’s expectations. Some automotive OEMs are trying to put a square peg in a round hole by aggregating individual merchant applications in in-car marketplaces, with drivers having to register at each merchant individually. These ‘Bring Your Own Account’ solutions inevitably fail in scenarios where the market for a particular service or product is fragmented, which is the case for the most relevant driver needs. Users do not want to register and input payment details repeatedly, leading to limited service coverage. In these scenarios, it is easier for users to keep using their smartphone apps where these apps have coverage. If a market is not fragmented, there is little incentive for a user not to use their smartphone in the first place, nor is there a need for dominant merchants to adapt to automotive requirements.

If carmakers want to create true value for their users with in-car payments, they have to deliver against the specifics of the driver experience and their own particular strengths. Secondly, the in-car payment experience needs to be comprehensive, efficient and integrated. Finally, any viable in-car payment solution must aggregate multiple merchants and provide sufficient coverage of transactable locations to make it worthwhile for drivers. 

In-car systems of the future need accurate, granular and comprehensive data to support highly automated vehicle-centric transactions - parking, fuelling, tolling and EV charging currently hold the biggest opportunity for car manufacturers. The more seamless and automated in-car transactions are, the higher the benefits for the user and also the car manufacturers and merchants in delivering more convenient experiences that give drivers the option to easily order, reserve and make payments safely and efficiently from their vehicles.

The automotive industry is also discovering that the idea of just aggregating transaction providers to obtain full coverage of relevant data for navigation systems is flawed. The inverted business model, that receives revenue share from all these merchants, instead of having to externally source the complete data is a typical example of a supplier mindset, as opposed to being user-focussed. For example, displaying one or two transactable locations miles away, instead of the closest or most convenient locations, will only discourage future platform use. To make in-car payments successful, the entire user experience needs to be complete and deeply integrated with the navigation, including locations without transaction capabilities.

A frictionless solution requires centralized user management, with Single Sign-On (SSO) capabilities across all merchants, covering all connected car services and the associated payments. This SSO set-up needs to be frictionless and consistent for the driver across all commerce domains. The payments need to be seamless too - orchestrated across the plethora of payment service providers and without additional enforced customer authentication at the point of sale. The driver should not have to pull out a smartphone to approve a payment, the in-car solution should take care of that. 

Carmakers have the ideal opportunity to leverage their unique position of controlling access to the vehicle systems and sensors. A deep integration of in-car commerce with these systems differentiates the in-car solution from any external smartphone app and creates unique in-car user experiences. The interaction between vehicle sensors and payments drives user engagement and transactions, for example, the vehicle prompting the driver to pay for parking or to charge at a specific location based on the destination arrival time or available range. This opens up entirely new service markets for automakers whilst transforming existing user experiences into a premium offering. Automotive OEMs will not be able to achieve this on their own in a cost-efficient manner with hundreds of merchants across different regions. Aggregators that are deeply integrated with their in-car systems are critical in delivering this.

The success of in-car payments will depend on the customer focus at the automakers. Will they put the driver first and create compelling user experiences - frictionless, ubiquitous, intuitive? Market fragmentation is not without challenges, but the key elements are already in place. The pandemic has certainly shown many merchants that contactless commerce and the integration into vehicle systems will be critical for them in the future. This will now facilitate and further accelerate the deployment of in-car payment solutions that drivers have long been demanding.

Hans will be taking part at the TU Automotive: Connected Vehicle Commerce event on June 8-10, 2021. You can use the code 'Parkopedia' for 40% off access passes.

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