The Role of IoT in Payments

IoT in Payments
                                                    The Internet of Things (IoT)

The Internet of Things (IoT)

The Internet is connected or linked closely with our everyday lives. We use it for our every need like a source of news, shop for our favorite products, to stay connected to everyone, and to check our bank accounts, among a million other things.

As consumers or users become more tech-savvy and get connected to different devices, seamless payments become table stakes. In 2017, e-commerce sales accounted for 7.3% of all retail sales in Canada, generating a revenue of $20.2 billion USD.

As users of the internet it becomes more comfortable with the idea of paying online, it becomes natural that merchants want to capture this market and obtain valuable information about their customers, online and off. How they connect is the Internet.

The Role Of The IoT in Payments

To make an easy and simple shopping experience for the customer, merchants seek to make an effortless payments experience. The IoT is the responsible force in making this happen frictionlessly. For payments, the IoT means that a customer can pay in almost any possible way.
Just think about that for a moment.

Instead of a credit/debit card, Customers could pay with their phone, a wearable, a car, or a voice-activated device like “Alexa, order me a pizza.”. For businesses, this means next to future enabling things other than a standard in-store terminal to authorize payments. The IoT is playing role in extending the connectivity between things without the need for human intervention.

The need for online payments to be processed automatically applies to both the B2B and B2C business worlds. A smart fridge could identify when you need to buy milk, itself makes the order, and have it delivered, all without you never having to lift a finger, this is something that IoT means. Customer buys a printer that tracks toner usage, orders via Amazon once it reaches a certain level.

Think about when a customer logs into a mobile application like Apple Pay. The user can make in-app purchases without ever having to re-enter their credit/debit card information. A customer can also pay with fingerprint identification, enabling them to make purchases in seconds.

Such applications are quickly becoming the norm, but for them to operate successfully, information needs to be kept safe and secure.

Keeping Payment Data Safe In The IoT

In spite of having many benefits of the IoT, the risk of a security breach cannot be ignored at all. With so much critical information shared across many devices and things, it is inevitable that hackers may try and get access to this valuable data for any wrong intention.

Billions of device connected, many were not built to be PCI compliant. All connected devices need to be kept safe as virtually any device can be a potential point of entry for fraudsters or hackers. In the world of online payments, it is crucial that all devices must adopt the PCI protocol to ensure that any company that transmits sensitive credit/debit card information maintain a secure environment.

User authentication for online payments is another big issue in the IoT. If we take the printer example from above again, what will happens if the printer orders $1000 worth of toner instead of $50 because the account was hacked?

It is crucial to develop an understanding of who can be held responsible for such outcomes. If the person who has authorized the transaction cannot be established, who will be held responsible in the event of a security breach?

The answer falls in tokens. Tokenization programs are created specifically for this scenario of IoT because they will be vital in preventing data breaches or security breaches. Authentication of a user can be tied back to the payment token, creating security and ownership for a payment transaction.

IoT Technology Solutions

IoT for the Platform, Merchant, and Customer

The application programs for IoT in a retail environment are already in effect omnichannel experience. A customer may start their shopping journey on one device and end it on another device, and still expect the same seamless experience they would have as if they shopped on one device.

Retailers need to integrate this into a platform that allows them to bring this seamless shopping experience to the life of people. A platform in the IoT connect the gap between the network of data and all devices, providing insights using backend application like the cloud to make sense of the mass amount of data.

A platform to operate such activity in the IoT makes it easier for developers to connect different devices sensors for applications ranging from goods or services. These sensors may be used to provide suggestions on a retailer’s mobile application to keep you alert if you left the lights, fans etc on at home.

IoT impact on the Checkout

IoT could be at work from the point customer enters the store to the moment customer leaves. The self-checkout is common place, and with online applications like Amazon, the physical checkout will eventually disappear the way of the dodo. Check-in to a mobile application or online store will become the new way of check-in and check-out.

IoT and Smart Cities

IoT can also be tied to smart city initiatives. The IoT will be dynamically instrumental when it will come to effectively managing water, energy, transportation, and environmental issues.

Especially and necessarily Consumption for things like energy and water can be monitored easily to ensure they are being used efficiently, tying in payments to manage the consumer behavior.

The Future Of IoT

It is estimated approximately 20.4 billion devices will be connected by 2020, more than the number of people that will be living on this planet. Each person will likely have multiple connected devices, the amount of data sharing and information available will be limitless.

Merchants and retailers will want to use customer data to create the most seamless payment experience possible.

The IoT is still and will continue to grow in ways we can’t even imagine. The technology of devices will get smarter day by day as applications like artificial intelligence (AI), and blockchain get incorporated into the mix or you can say AI will rule this application world. If everyone abides by the rules of the game and the information is kept secure from hackers and used to benefit society, there is nothing to fear, quite the opposite, it should be embraced and you cannot imagine the worst condition.

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