Why are car makers taking the mobile payment plunge?
I started this year by predicting how much the automotive industry would show an interest in mobile payments. Very soon after, Volkswagen Financial Services announced that they were acquiring PayByPhone, a leading provider of cashless payment systems for parking, from PayPoint plc.
At the time, Dr. Christian Dahlheim, the Management Board member responsible for sales and marketing at Volkswagen Financial Services AG had this to say on the subject, “With our acquisition of PayByPhone, we are now the leading provider for the processing and mobile payment of parking procedures. In the future, we will be bundling this know-how in a separate business field around the theme of parking. For us, PayByPhone is the ideal addition to our portfolio because the company enables us to consistently expand our international presence in all areas relating to mobile parking management and digital payment solutions. Moreover, PayByPhone is highly innovative with excellent user-friendliness on all mobile devices.”
Last week, Daimler Financial Services AG announced that they, too, would be acquiring an electronic payment service. This time it is the provider PayCash Europe SA. By gaining a foothold in the ePayment business, Daimler AG says it will be launching its own electronic payment services provider under the 'Mercedes pay' brand name. “‘Mercedes pay’ is a fundamental component of our mobility and digitization strategy. Daimler’s new payment system underscores our ambition, as a leading provider of digital mobility services, to make the products and services we offer even more appealing”, said Bodo Uebber, Member of the Board of Management of Daimler AG responsible for Finance & Controlling and Daimler Financial Services. The parties agreed not to disclose the details of the acquisition.
This also makes a lot of sense for Daimler because unlike Volkswagen who are focusing on parking, Daimler have cast their net far wider. 'Mercedes pay' will be integrated into Daimler Mobility Services GmbH, a subsidiary of Daimler Financial Services, and incorporates a number of different mobility services, including the market leader in car-sharing, car2go, and the mytaxi taxi app, which operates in nine European countries. In 2016, Daimler Financial Services AG had more than four million financed vehicles in its portfolio for the first time in the company’s history. The company plans to use the new payment system to facilitate these and other financing transactions in the future.
It's a smart move for Daimler to embrace mobile payments with businesses such as car sharing and taxi in-app payments continuing to grow and become more ubiquitous. One interesting side note to the PayCash Europe acquisition is that the platform also supports Bitcoin. It is unclear about whether Mercedes Pay will continue the trend or not. However, with the automobile industry inching towards autonomous and intelligent vehicles, Daimler could gradually shift its focus towards blockchain technology as well.
As for answering the question in the title, the answer is obvious. The automotive market is changing, and the financial services within the automotive industry are changing even more, as they look outside of traditional insurance and financing. Looking to mobile payments and bringing it into their products offering for the future just makes good financial strategic planning. Other automotive corporations will not be far behind.
In the meantime, look out for ‘Mercedes Pay’ coming to a car near you - soon.
Steve Atkins
Contactless Intelligence
