While it sounds like possibly the vaguest description of anything ever, the Internet of Things (IoT) is the next technological revolution, and something that will totally change the landscape for payments in eCommerce in coming years.
To bring it back to basics, the IoT is connecting everyday devices to the internet, and then to each other. So from an everyday consumer perspective that could be items in your home such as fridges, air conditioners and the oven; wearables such as glasses, key rings or clothing; and even the family car.
Billions of devices will be connected
The concept of the Internet of Things has been around for a while now, with the term being coined back in the late 90s. But it’s only in recent years that it really started getting traction, and it’s only going to get bigger.
There are almost as many estimates on exactly how many devices will be on the IoT in the next few years as there are experts with opinions. But even at the conservative end of the range we could be looking at over 20 billion devices. That’s between three to four devices for every person on the planet!
Payments using the Internet of Things
So what does this all mean for eCommerce? Well quite a lot actually, as in the not too distant future we could be using those three or four (or six or ten...) devices to pay for pretty much everything. Think a fridge that orders groceries, a car that pays for petrol or a ring you can use at the checkout.
While not yet part of the everyday payment landscape there’s a huge amount of work being done in this space. Mastercard partnered with Samsung recently to showcase the aforementioned grocery-ordering fridge, Visa have joined forces with Honda to demonstrate in-car payments, and Amazon Dash already allows users to order products as they run low at the touch of a button.
Overcoming future eCommerce security concerns
Of course, developing the technology is one thing – getting consumers to use it is another. The biggest concerns for most people will be privacy and security issues. With so many more devices and so much more interconnectivity, opportunities for cyber criminals to hack personal and financial data will grow exponentially.
However, it’s an issue that fintech companies across the globe have identified and are currently grappling with, and that we can expect to see solutions for over the coming months and years. And considering the increasing take-up of contactless payments and smartphone based payments such as Apple Pay, which many consumers also had concerns over, it’s a pretty safe assumption that these concerns won’t be too much of a barrier for too long.
Challenges and opportunities
So the biggest challenge for the payments industry will be to adapt and keep up. The Internet of Things will likely bring huge disruptions to the environment we’re all familiar with, as the necessity to go beyond current payment channels and limits of current networks will make the payments landscape even more complex and challenging.
However, the opportunities for retailers who embrace the coming technologies are significant – for example the possibility of increasing market share by creating a selling environment that customers find intuitive and comfortable. And that’s before you even consider the possibilities afforded by the huge amount of extra data that will be available to help better understand, segment and target customers!
It may still be in the early days, but a payment revolution is certainly on the way. We’re excited about what’s ahead, and look forward to working with you to implement new technologies to meet your customers’ evolving needs.