How the Internet of Things (IoT) is revolutionizing the FinTech industry by enabling an innovative payment landscape.
The internet has become an essential part of our everyday lives. We use it in a variety of ways, such as shopping for products, catching up with the latest news, connecting with our peers, and even making financial transactions in our banks and many other things. Moreover, with consumers becoming more technically competent, seamless payments have become a basic need in today's world.
Merchants all around the world aim to take advantage of this market and acquire beneficial information regarding their clients both online and offline. The Internet of Things is now core to how merchants connect with their clients.
According to payments and banking analysts Mercator Advisory Group, IoT is growing at 15% annually, with more gadgets like fridges, cars, and machinery connected than smartphones and laptops. This creates significant sales opportunities for businesses that adopt the Internet of Things for payments. Additionally, a report suggests that IoT-enabled devices are expected to reach 41 billion by 2027.
The role of IoT in payments
IoT-enabled platforms enable clients to pay for various goods and services via linked devices apart from smartphones and tablets. Clients can use multiple gadgets such as vehicles, laundry machines, kitchen appliances, or even watches to settle the payment of goods and services.
IoT extends the connectivity between devices without human involvement. For example, an IoT payment component can order laundry detergent when provision hits a predetermined level. With the owners' consent, IoT-enabled appliances can browse the internet, order, and make payments for goods and services. In short, such IoT utilities are rapidly becoming standard, but for them to function efficiently, data needs to be kept securely.
The financial services sector has been using clients and their related data to enhance their decision-making for many years. Organizations today tend to gather as much information about their clients as possible to protect their interests and to create value for themselves through their clients. In as much sense, IoT-enabled gadgets operate much the same.
More than 3.5 billion people worldwide own mobile phones, which collect data at an astonishing rate. Indeed, the rate at which human beings create data is mind-blowing, and it is estimated that nearly 90% of global data was developed over the last two years. IoT gadgets are receptive devices that gather data related to the world surrounding them. With the proliferation of IoT-enabled devices, the amount of data available to commercial businesses is set to undergo a massive hike.
Innovative IoT Payment Solution Examples
Fitbit and Garmin Wearables: During the latest world cup tournament Fitbit promoted a wearable wristband that football fans could use to pay for goods and services around the stadium. Additionally, the FinTech companies have also partnered with watch manufacturer Fitbit and GPS company Garmin to incorporate IoT payments.
Biometric information is vital for IoT payments. Many people today are acquainted with unlocking smartphones using biometrics. IoT-enabled devices can resolve the swindling concerns by incorporating biometric capabilities by ensuring only veritable payments are sanctioned.
Samsung Family Hub: The award-winning Samsung Family Hub refrigerator lets owners identify deals and coupons for stores within their geo-location.
The refrigerator orders meals and products from Amazon and GrubHub, shops and pays for groceries using Instacart, and ensures they have been delivered within an hour.
Honda Dream Drive: Vehicle-based purchases have been explored by several automobile companies due to the aspiration by enterprises to provide new payment models due to the outbreak of COVID-19.
Visa partnered with automobiles company Honda to incorporate secure and convenient in-car IoT payments. The Honda Dream Drive makes it easy and convenient for drivers to pay for petrol, parking, movie tickets, and food deliveries handsfree.
Other notable companies working on integrating IoT technology into their products include General Motors, Hewlett & Packard (HP), and Progressive Insurance. General Motors was among the earliest adopters of Internet of Things payments in a partnership with IBM and MasterCard. In addition, HP has enabled their printers to re-order cartridges automatically, and Progressive Insurance has introduced a pay-as-you-drive program that involves adding a device to cars' onboard diagnostics kits.
Why are top brands integrating innovative IoT payments?
The potential for IoT payments is rising at an extraordinary rate, primarily due to the Coronavirus pandemic when most people are either indoors or in cars and using their gadgets. You can now easily ask the voice assistant in your car to make an order for snacks or meals as you drive. IoT-enabled vehicles could make touch parking meters obsolete, and paying for fuel will be autonomous.
IoT payments have the potential to transform the payments landscape and our everyday life. Retail, automotive, and the financial sectors are not the only ones exploring IoT payments. Complex concepts such as smart cashless cities and smart IoT-enabled homes have been touted in recent years.
IoT solutions are innovating not only the smart homes and devices but have also played a disruptive role in the financial landscape. In the coming years, we are likely to witness several use-cases that merge with IoT and payments.