The Internet of Things: taking humans out of the payment process

The proliferation of internet-connected devices – better known as the Internet of Things (IoT) – has rapidly led to developments in payment systems that are ultimately taking the consumer out of the equation.

What is the Internet of Things?

Simply put, IoT is the result of developments in low-cost sensor technology which, when installed, connect previously “dumb” devices to the internet and to those that already have a connection.

Though it’s only in its infancy, this advancement is fast becoming one of those things you take for granted; it is already so ubiquitous you may not even notice it. From tap-and-go functionalities, through to payWave and near-field-communication payment systems like Venmo—all of these functions are the result of IoT technology.

New developments

Only recently has it been considered a landmark that a fridge could automatically send alerts when you’re out of bread. But in 2017, developers are asking what would happen if technology could automatically alert you when you’re out of milk and then organise for your fridge to be restocked, all without you lifting a finger.

Not too long ago we saw the rise of “one click” payment systems like Amazon Dash Buttons. Technology like this was initially designed to achieve a specific task or order. Then voice activation systems like Amazon’s Alexa and Google Home came out, sparking a whole new revolution of humans relying on the internet to fulfill needs and demands.

Furthermore, developments in artificial intelligence and machine learning mean that consumers in the near future might not have to do anything at all, beyond setting up an account and some boundaries.

Send your car to the servo

Most smart cars these days are sold with a SIM card and already contain hundreds of sensors that connect to the cloud. These sensors are the devices which allow you to use apps like Google Maps, Spotify and iTunes in your vehicle.

Centred around IoT technology, Australian company Timpani’s CEO Stuart Waite says before long, technology will have the ability to authorise payments on your behalf. For example, if councils were to allow the use of sensor payment technology for parking meters, drivers would be able to authorise their cars to pay for parking as needed. This would be done by simply preselecting a suburb or particular jurisdiction in which the car is authorised to automate payment.

And soon, once the cost of self-driving cars becomes more accessible, it won’t be long before your vehicle drives itself to 7/11, fills up with fuel or recharges and drives home again—all while you’re still in your jim-jams.

“There have been plenty of trials around smart cities type scenarios,” says Waite. “A lot of car sharing systems recognise drivers by an individual code. This then charges the account based on how much it is used.

“You still have to pre-authorise payments, but the point is you will only have to do that once. As long as it meets strict requirements for repeat purchases, it will just happen.”

What it means for credit unions

This Internet of Payments (IoP) technology also offers considerable competition for credit unions, which are increasingly becoming a more traditional way of sending money on a peer-to-peer basis.

“A lot is happening in the blockchain space, the fintech sector, and the identity space,” says Waite.

Blockchain is the name given to the receipt aspect of the digital currency known as BitCoin. Blockchain utilises a database that maintains a continuous record of every BitCoin transaction ever made.

“It’s something we’re interested in developing for the Internet of Things,” says Waite. “If I have a digital identity and it’s managed on a blockchain, I should be able to identify myself to any system and then authorise payments.

“From a user perspective, it is what I call a ‘frictionless experience’…the way we pay for products is dramatically changing. Your home, car and office are increasingly becoming the centre of how you automate payments.

“In the future, we are saying it will be a distributed method of payment where a number of devices will have the authorisation to pay for something. Right now, it’s at the point where banks and credit unions are trying to remain relevant by having authorisations go through their systems.”

To find out more about Indue’s new product developments and other leading-edge technologies, contact a member of our expert team.

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