May 27, 2015
Internet of Things (IoT), from eye-wear to cars and smartwatches, is spreading its wings as the technology behind it matures. Connecting various types of electronic devices together for a great experience in the day-to day activities is stated to be the ultimate objective of IOT. So how can the commerce applications and ability to pay using such devices be left behind?
If you are building an IOT device as a startup and are looking for use-cases or as a bank/fintech firm you want to do something ahead of the curve to address the upcoming demand (think millennials), what should you do?
Integration of Internet (and connectivity) into increasingly more devices along with payment functionality will lead to greater number of payment endpoints. Card issuers like MasterCard, Visa and American Express will gain from increased non-cash transactions and the wide database of the customers. To be on top of the IOT technology, Visa has opened an office with over 500 employees to ensure that every device, appliance or wearable computer connected to the Internet can become a secure place for commerce. Startups have an equally great opportunity at this intersection of mobility, money and commerce that IOT payments present.
Internet of Things is attractive for fintech, not only for software and hardware developers, but also for banks and other FinTech companies to enable innovative payment experiences and provide wide range of methods to accept payments using NFC chips, payment apps, sensors, tracking devices, etc. So what options are available?
Building Apps for Smart Devices
A number of platform/software based solutions have come up to enable payments on connected devices. Specific applications being developed for such platforms are also enabling payment capabilities as highlighted by following use cases:
PayPal’s app for wearables - PayPal has been one of the first ones to create payment applications for wearable devices. Their app is featured on Samsung’s Gear 2 and Gear 2 Neo wearables. The PayPal app lets consumers make mobile payments, store and utilize rewards, and send money to other app users.
Payments Apps on Pebble - The Pebble Smartwatch has a prominent collection of apps on its app store with some of them enabling users to make mobile payments. PayPal itself has an exclusive app for the smartwatch. The app creates an auto-generated code for making payments wherever PayPal is accepted. LevelUp’s payment platform powers a payment application on the smartwatch that was developed by Beautiful Lab.
Banks have also started foraying into the IoT space by introducing apps for smart-watches such as on Apple Pay and Pebble.
Specialized OS for IOT (developed from scratch)
Tencent OS - Connecting IoT & Mobile Payments - Tencent, a leading tech company that owns China’s largest social network, QQ, and the widely used messaging app WeChat, had introduced its mobile operating systems TOS and TOS+, which can operate on multiple devices including smart TVs and smartwatches, and enable mobile payments. The new operating system includes voice recognition and payments capabilities. This means that users can use a smartwatch enabled with the TOS+ operating system to make a mobile payment.
Google’s Brillo OS for IoT - Google will be launching an OS named Brillo for low-power Internet of Things in the upcoming I/O conference. The OS concentrates mainly on low-power devices such as smart light bulbs or security cameras with 64MB or 32MB of RAM. The acquisition of Nest Labs has added to the fact that Google is venturing into the space of IoT. Nest Labs, makes smart home appliances such as smart thermostats, smoke alarms and security cameras. Brillo is reported to work with all Nest devices. Since Brillo has not been launched yet, it is mere speculation that it might integrate payments technology with the devices in the future. And we can hope and expect the payments functionality to come as the Android Pay platform is poised to be launched. At the Google I/O conference scheduled to be held tomorrow, we shall get more clarity as to how the Brillo OS would be associated with the Android OS and whether Android Pay would really come into picture with respect to IoT.
How an IoT Company can Integrate Payments at a Hardware level
There are already a few platforms and solutions available:
NXP & Qualcomm Technologies:
Qualcomm Technologies will integrate NXP’s near field communication (NFC) and embedded secure element (eSE) solutions across Qualcomm Snapdragon 800, 600, 400 and 200 processor-based platforms. The partnership will enable the rapid introduction of NFC and eSE on Snapdragon-based devices to meet market demands for increased functionality in a broad range of consumer applications. New designs will expand the reach of NFC beyond the smartphone into other applications such as home automation, consumer electronics, automotive, smart appliances, personal computing and wearables.
Intel & Ingenico:
Intel Corporation has partnered with Ingenico Group to combine Intel’s technology and Ingenico Group’s secure payment technology for the Internet of Things. The companies will jointly develop a mobile tablet that supports EMV and NFC payment functionalities. This will pave the way to a broader set of initiatives and value-added services to address other worldwide devices for the Internet of Things, including intelligent vending machines, kiosks and digital signage.
What is the approach(es) that Fintech and Money companies are taking to tap the IOT bandwagon currently
Apart from apps for IOT devices, Fintech companies are also making bold moves and developing customized platforms to integrate IoT with payment applications. As an example, MasterCard’s Platform Approach can be considered. MasterCard aims to build an operating system for digital commerce. MasterCard is also working on new verification techniques to enable smooth payments for the future technology. It believes that the Internet of Things will boost more payments through digital wallets.
Visa — partnering with Pizza Hut and Accenture — is working on a proof-of-concept connected car to test mobile and online purchases on the go. The connected car is expected to feature Visa Checkout, Visa’s online payment service, cellular connectivity, Bluetooth low energy (BLE), as well as beacon technology deployed at Pizza Hut restaurants to alert the staff when the customer has arrived and is ready to pick up the order. The integration of these technologies is being managed by Accenture.
American Express is looking to deliver financial services via wearable devices. It has recently enabled its service to enable payments through the fitness band Jawbone.
I was amazed to see back in 2013, the first banking app on Google Glass by Banco Sabadell (Spanish banking group) was launched. Google Glass itself is on shaky grounds now (might see an update tomorrow at Google I/O) but Banco Sabadell showed how elephants can also dance. If you look at it, Smart TVs and other smart home appliances are already a reality as they allow users to control the devices remotely. Ability to pay using smart-glasses, smart-watches and bands has already started but will be an added advantage for the appliances to have such features. A refrigerator with ability to complete a commerce transaction (with permissions) might allow for automatic refilling of the required items. Add to that, a refrigerator that regularly tracks food and health related parameters based on consumed food, using a smart scale that sends the data to a health insurance provider to receive reward points. Futuristic, as this (and all of it) may sound...
Albert Einstein said "I never think of the future, it comes soon enough"