The Internet of Things (IoT) is expected to reach USD 8 trillion in value at stake by 2025 according to a recent report issued by Cisco.
The number of internet connected devices is on target to reach 50 billion by 2020, representing a major boost for global connectedness and trade.
This development has the potential to become so life changing as to be seen as an entire new chapter in the history of the information age. Although the full range of applications and their potential benefits are still unclear, this is certain to have a major impact on everything from health care to entertainment and from manufacturing to retail.
One of the interesting predictions is the loss of status of the now all conquering smartphone. This may be one of the reasons why the major phone suppliers are placing significant bets on wearables: watches, fitness bracelets and glasses. The fact is that even the most trivial device can become something entirely different with a simple and very low cost Bluetooth connection.
In the area that is of most immediate concern to us, it is natural that many devices will have built in payment capabilities, either for themselves or for a range of products and services. Currently fitness trackers are already used to pay for anything from amusement park rides to coffee. But this is still early stage. There are already low cost gloves and hats in the market which have Bluetooth connectivity, built in microphones and even speakers. With the right infrastructure in place any piece of apparel thus equipped can be used to pay for anything. You just have to put your clothes on, walk into a restaurant, your hat connects to the Beacons inside and it takes care of the bill; the same concept applies to any retail operation. None of this is very imaginative and is all “here and now”; it may take ten or twenty years and one generation for the really interesting applications to appear as was the case with factory automation and the internet itself.
Transportation in general and cars in particular will see major changes with this level of connectivity. Interconnected self driven cars are a reality, the only obstacle to their commercialization being legislation and public perception, which will both change very quickly. The changes in this space will also make a contribution to the payments industry as goods and services will simply be charged to the car itself, the car effectively becoming another e-wallet. This is not restricted to car related goods and services, such as fuel, parking, tolls and services; it can be extended to the McDonalds’ drive through and to digital content such as news, music or videos. Furthermore it may change the way car registration, congestion taxes and insurance are priced, with all these being charged to the car wallet in real time and based on the distance travelled, time of the day and level of congestion on the road.
Energy production, distribution and consumption is another example of a market where interconnected devices, including any household appliance, can be provided with its own payment capability, either through a prepaid e-wallet or a credit account. The IoT is set to open a new and exciting range of opportunity for the payments industry.