The uptrend in connected cars got a boost Wednesday (Sept. 8) on news that J.P. Morgan is acquiring a majority stake in Volkswagen Payments, the digital transactions unit launched by the German auto maker in 2017 that now operates in 32 countries. Terms of the deal were not disclosed but the transaction is being hailed as a win for the growing field of 5G and the increasingly connected cars that run off that tech.
In a statement, Max Neukirchen, global head of merchant services at J.P. Morgan, said, “Auto payments encapsulate many of the characteristics of the wallet of the future more generally. Partnering with a leader in the field gives us a great opportunity to be at the heart of that.”
Set to become part of JP Morgan Wholesale Payments unit, JPM’s 75% stake in VW Payments puts the biggest U.S. bank squarely into the dynamic in-vehicle payment services arena which is forecast to reach $4 billion in 2021 per research cited in the announcement.
“Volkswagen has been pushing into the digital payments industry for some time now,” CNBC reported, adding that its platform allows everything from loan and lease payments to settling parking tickets or paying for time at an electric vehicle charging station.
It’s the latest — and to date biggest — move to turn cars into rolling payments platforms.
Connected car tech firm Car IQ CEO Sterling Pratz all but predicted such a development, telling PYMNTS’ Karen Webster in May 2021 that “The OEMs are very interested in [connected car payments]. They ultimately want to create a luxury payment experience for their customer that simply allows them to push an icon on the dash and pay for something.”
Under the Hood of Connected Car Shifts
Underscoring the action in connected cars, the day before news broke of the JPM-VW deal, it was reported that Ford Motors has hired Doug Field as the company’s chief advanced technology and embedded systems officer, overseeing its Ford+ connected car project.
Field led the team that created the Tesla Model 3, then went to Apple where he was working on its not-so-secret “Titan” car project. In a statement, Field said, “I’m thrilled to be joining Ford as it embraces a transition to a new, complex and fascinating period in the auto industry. It will be a privilege to help Ford deliver a new generation of experiences built on the shift to electrification, software and digital experiences, and autonomy. I’m committed to helping the team make those experiences seamless, delightful and continually advancing over time.”
Field’s departure won’t slow Apple’s roll in autonomous autos, or embedded payments tech.
Mac Rumors reported on Tuesday (Sept. 7) that Apple’s AI chief John Giannandrea “is still leading the project, and Apple also recently brought on Apple Watch lead Kevin Lynch to oversee the Apple Car development. We’re not expecting to see an Apple Car until the mid to late 2020s at the earliest, so Apple still has some time to work out ongoing leadership woes.”
Connectivity and the Commuter
Besides proving that Doug Field is a high-demand guru of the connected car world, the spate of announcements and news shows what major auto and payments players think of connected car potential, and by extension, the role they expect embedded payments to play in that future.
Fleet telematics and embedded payments are arguably hotter than the on-again, off-again buzz around self-driving cars, with manufacturers partnering up for new connected models.
According to PYMNTS research, the ability to seamlessly pay for gas, tolls, a cup of coffee, one’s lease payment and more is driving the trend, putting the JPM-VW deal in perspective.
According to PYMNTS’ How We Will Pay report, “the typical commuter not only owns more connected devices than the noncommuter but also tends to use more of those devices per day. The average commuter owns 5.7 connected devices and uses 4.9 of those devices while they perform routine activities throughout the day, which is higher than those who do not commute to work.”
See also: How We Will Pay
To that point, J.P. Morgan was clear in its intentions to grow the business and the burgeoning connected functionality that it supports.
“We plan to build on Volkswagen Financial Services’ innovative groundwork on the existing platform and apply the global scale of our payments expertise to meet evolving customer expectations in the auto space and beyond,” said Shahrokh Moinian, EMEA head of wholesale payments at J.P. Morgan.