Did Anyone Ask for In-Car Payments?

A couple of news items and LinkedIn posts about in-car payments caught my eye this week. Car IQ announced a partnership with Visa to enable “vehicles to transact directly with Visa’s global ecosystem of merchants and banks, and purchase fuel, tolls, parking, insurance, service, and repairs using the Car IQ Pay vehicle wallet.” Earlier this year, Mercedes announced its Mercedes Pay+, which is also enabled by Visa and allows customers in Germany to pay for digital services and on-demand hardware upgrades in the Mercedes me Store using a fingerprint sensor in the car.

Juniper Research says car-based payment transaction volumes should “exceed 4.7 billion by 2026.”

I will go out on a limb and say I do not buy that.

It’s hard to get people to pay for things in a new way. We still love to pay for items in old forms. We still barter; we pay with coins, cash, checks, Zelle, Venmo, Cash App, Visa, Mastercard, etc. I can’t check out with Apple Pay at Home Depot or Vons Grocery store.

I’m unsure if people recall, but major card issuers attempted to roll out NFC-based contactless payments in 2012 and 2013. I distinctly remember getting a Chase card with a chip (I probably had to call and ask for one), driving to a Jack-in-the-Box, attempting to use it, and finding the cashier who thought I was messing with their card reader.

Apple, the global leader, is making people use new technology that made relatively minor waves in changing actual payment behavior until we all became deathly afraid of touching things. Only now, post-COVID-19, are contactless payments genuinely mainstream.

All this history is why I find it hard to believe that in-car payments will go up 5800% (unless they mean the passengers in the car buying stuff on their phones from the Internet). If you want people to adopt products, you must find out what problem the product solves. Other than things like toll payments (which already have in-car technologies), I never think, “Wow, I wish my car was a payment device.”

Let’s consider all the problems:

1. I have to manage a digital wallet in my car
2. I have to find a place that accepts my car payment
3. I want to stay in my car to pay
4. Mercedes is going to use this to charge me to turn on the air conditioning on a hot day

I see how fleet payments, specifically, as they appear to be the focus of Car IQ, make more sense. A corporate fleet card, tied to a corporate-owned vehicle, buying fuel. That makes sense to me. Are consumers buying stuff with their Mercedes? I don’t get it. When I get to a gas station or restaurant, I usually want to get out of my car. Plus, smartphones make it easy to make payments from your vehicle without all the extra hassle. I can give my code to a McDonald’s employee at the drive-through, and they can charge my stored card no matter what I am driving.

All of which brings me back to my original question: who asked for car payments? Leave a comment and let me know if it was you!

Bank of America Fines

This week, another CFPB fine. Bank of America was fined for double-dipping on overdrafts and opening fraudulent credit card accounts. Why are bankers opening fake card accounts? Bank of America lost $250M in its couch cushions last year on its way to $26 Billion in net income.

Has no one learned a lesson from the many scandals of Wells Fargo? As the saying goes, “Show me how someone gets paid, and I’ll show you how someone behaves.” If you incentivize employees to open accounts, they will find a way to earn that money. Banks need to move to corporate-level incentives and disincentives for bad behavior.

The lesson for consumers is that credit monitoring is essential. Lock or freeze your report and monitor it closely. It’s easy and free, and credit monitoring is everywhere.

Totem

Over the past few years, several identity-based banking startups have come and gone, including companies focused on the LGBTQ+ community, people of color, and more. Last week I learned about Totem, an Indigenous-owned company that intends to change how Native Americans bank. First Pryority Bank issues Totem accounts.

Identity-based banking is hard to justify. Many of the core features of a bank account are the same across these neobank products: early pay, free ATMs, fee-free access, etc. I believe Totem might be an exception, as Native Americans in the United States have historically faced systemic exclusion from traditional banking. Many live in rural communities with limited access to services. You can see some differences in the community needs through the prominence of cash loading on the site’s marketing materials, which are traditionally downplayed in more coastal-centric neobanks aimed at the general young consumer population.

Plus, Totem has a great card design. I’m rooting for this one.

Totavi Updates

I am proud to share that my new consulting business continues to grow. We are launching new services around technology advisory to help companies migrate providers, architect for scaling, or assess products and software in corporate transactions. We look forward to helping readers of CardsFTW with these needs. If this interests you, just reply to this email to reach me!

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Thanks for reading CardsFTW, a debit and credit newsletter by Matthew Goldman. Matthew is the founder of Totavi, LLC, which provides GSD Product Consulting with real operational value. Visit totavi.com to learn more and engage us.

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