Payments

Enabling Seamless Transactions with the Internet of Things

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As the Internet of Things continues to grow and drive a more connected world, it is changing the way we live, shop and pay by moving data and the point-of-sale to wherever the consumer wants it to be.

Payment tokens are being put in devices like cars, elevators and wearables to create seamless transactions that users don’t even have to think about. Let’s consider a few examples that are fast approaching and will be taken for granted in the coming years.

A real world look at how IoT is evolving transactions

You’re driving your car down the road and at 35,900 miles a notification pops up on the dashboard with an offer to extend the car’s warranty for 10,000 miles if you pay now. The warranty offer will of course take into account your driving habits that are tracked by the myriad of sensors on the car (this isn’t going to be the best deal for those of you that have a lead foot like I do). For those that do decide to extend the warranty, a payment token integrated into the car will make it as easy as pressing a button to pay for the extended warranty. The connected car will become a payment hub in the future and also enable things like gas payment through a direct interaction between the car and the gas pump.

Another use case we’ll see in the near future is around connected buildings. Imagine getting home after a long day at work. You step into the elevator and a menu pops up on the screen in the elevator, which will of course be the menu of your favorite local restaurant based on your order history. You have the option to order delivery and transact payment in the elevator before you get to your apartment so you can kick back and relax on the couch as soon as you’re through the door.

Similarly, with a fitness device, an avid runner with a wireless running chip, could receive a digital alert when it’s time to replace running shoes, including a recommendation of the best model, at the best price, from a preferred retailer. Additional relevant and tailored recommendations could be offered, including nutrition and equipment recommendations, based on individual performance, local climates and shopping preferences.

IBM and Visa partner to drive IoT Payments

IBM and Visa share a vision and commitment to embed payments and commerce into any device – from a watch, to a ring, an appliance or a car. This collaboration will enable companies to infuse secure payments across their entire product lines using the Visa Token Service, a new security technology that replaces sensitive payment account information found on payment cards with a unique digital identifier, via IBM Watson IoT. As a result, IBM and Visa could support payments and commerce on many of the 20 billion connected devices estimated to be in the global economy by 2020.

This work will give all of IBM’s Watson IoT customers access to Visa payment services via the IBM Cloud. As a result, rather than approaching businesses on a one-by-one basis, IBM and Visa will provide all customers with access to these capabilities, so they can begin to build personalized commerce experiences and proactively make recommendations based on consumers’ unique needs.

As part of this collaboration, the companies will also ensure that all consumer information remains secure by leveraging Visa’s Token Service, which replaces sensitive account information found on payment cards, such as the 16-digit account number, expiration date and security code, with a unique digital identifier that can be used to process payments without exposing actual account details. The Visa Token Service is accessible through a network of token service providers (TSPs) as part of the Visa Ready partnership program, which certifies the next generation of third-party payment solutions to ensure they meet Visa’s security standards and specifications, and will have seamless and secure global acceptance.

The day is not far off when pulling out a credit card to transact will be a distant memory. We’re excited to be partnering with Visa to accelerate this vision into a reality.

To read more on IBM and Visa’s partnership, check out our website. Or let us know in the comments how IoT is affecting your payment methods.

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Vanessa Yuen-Roberts

How will the token technology be auditable to the satisfaction of the user in cases of “do not recognize” the transaction?

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