Connected Vehicle Payments: Getting Real

In its Connected Vehicle Payments Global Study, PTOLEMUS was forecasting that in-vehicle payment solutions would generate half a trillion dollars in transactions by the end of the decade.

As highlighted in my recent blog, it now seems evident that the “battle for connected vehicle infotainment is lost (by OEMs)”, to take Ford CEO Jim Farley’s words.

Does it imply that connected vehicle payments are doomed to fail?

Well clearly, we believe that v-commerce solution providers that are entirely dependent on car makers for their survival could face challenging days. Players such as HERE, Inrix and Parkopedia and have so far largely focused on selling to premium vehicle manufacturers for their living. If you pay upwards of $50,000 for your car, you should get a premium vehicle with premium features, shouldn’t you?

With the current challenges faced by the German OEMs as a result of Chinese manufacturers entry, we believe that the road to market must be diversified.

Based on our analysis of connected mobility services markets, we found that:

• Mobility payments have largely been driven by aftermarket service providers, not OEMs and
• Interest has come from fleet markets rather than consumers.

Successful players have been fuel card providers such as DKV, Edenred/UTA, Eurowag, Shell, TotalEnergies and WEX.

But also toll service providers such as Axxès, Bestpass, Telepass and Via Verde. Although less “sexy” than connected vehicle payments, most of these companies securely handle critical payment transactions above $/€ 1 billion using satellite-positioned and cellular connected aftermarket devices.

The surprising aspect is that most vehicle manufacturers are just starting to form partnerships with these companies to offer vehicle payment services to their fleet customers. As a result, most OEMs still do not offer a convincing suite of payment services, thereby losing the opportunity of creating a long term relationship with fleets.

This is particularly the case in parking payment where most suppliers have focused on providing consumer apps. Thus we see with a lot of interest new companies enter these markets with fleet-specific offerings.

Some of them are native providers to fleets such as Concar / Parkd, active in Smart Parking. Other players with experience in the consumer market are trying to catch up, for example SMS Parking or EasyPark.

In all cases, these companies leverage existing connectivity from smartphones and fleet telematics devices. To date, the smartphone app environment remains much more open than the in-vehicle app and data market.

Fleet Telematics Service Providers (TSPs) have also been much more active in creating partnerships. The best examples are Geotab and Webfleet, which have both created very successful market places for third parties to collect data from their connected devices.

In our view, despite sometimes grandiloquent announcements by OEMs, the aftermarket providers will continue to lead the charge in the domain for the next 5-10 years at least.

This will last until OEMs get their act together and offer simple and affordable access to connected vehicle data on all their vehicles. Maybe vehicle data market places such as Caruso, Echoes, High Mobility and Smartcar can contribute to change this for the better.

Our conclusion is that vehicle makers have not been good at introducing service innovations. This is because their decision-making processes, manufacturing constraints and profit goals are not able to match the needs of a fast moving service environment, which is experimenting new models all the time.

OEMs are good at integrating standardised and / or commoditised solutions. The day of standardised connected vehicle payments may come but we will have to wait a few more years…

To leverage PTOLEMUS’ connected vehicle payments experience, contact Frederic Bruneteau.