An estimated 125 million connected cars are expected to ship worldwide by 2022, up 270 percent since 2018. These cars will increasingly act as rolling payment processors, enabling drivers to pay for everything from gas to dinner.
But first, the automobile and payment industries will need to persuade merchants to incur the costs of upgrading their payment technologies to adopt platforms that accept new solutions. It will take sizable investments and thoughtful partnerships between automobile manufacturers and fintech industry players to develop these solutions and enable their widespread adoption.
When negotiating partnerships, issues to consider will include:
Liability and risk
Parties must weigh risks previously unrelated to their products. Carmakers must consider potential costs connected with payment fraud, while payment platforms must consider the risks of physical harm or property damage that arise when users perform transactions in moving vehicles.
While conflicts will arise regarding who owns the data generated by connected cars, ownership is less relevant than what data each party contributes, how it is collected, each party’s rights to use the data and obligations to secure it.
Carmakers will generally control the environment where credentials are displayed, but payments companies typically insist on making their brands visible when payments are made.
The parties bring different industry regulations to the relationship, presenting challenges. For example, if one party is subject to a regulator’s request for information, will the other party voluntarily share information, or demand a subpoena?
Technology partnerships can stall when early-stage concepts are co-developed and arguments over IP ownership result. In every partnership, it is important to settle these issues early.
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