The number of IoT devices is expected to grow at an exponential rate. As a result, the payments landscape will evolve, incorporating a new “Internet of Payments” arena that is composed of consumers making purchases through a wide variety of connected devices. According to a 451 Research article published in Forbes magazine:
“7.5bn in new transactions will be driven into the US through IoP experiences , such as those that displace the usage of cash for low-value transactions and drive impulse purchases.”
Not only are internet of payments (IOP) transactions a convenience for the consumer, they also act as new data streams for providers:
“The opportunities for new data streams generated by IoT devices and sensors are endless and will serve to bolster decision-making accuracy in areas ranging from fraud prevention to ‘know your customer’ (KYC) requirements, to lending to targeted offers and recommendations.”
Most interesting are the revenue models that emerge from the new consumer ability to fully automate payments based on sensors, triggers or artificial intelligence. By fully automating a transaction, the consumer decision to purchase at a given point in time is taken out of the equation and put into the hands of a device.
Today, the Amazon Dash Replenishment Service is already enabling connected devices to order physical goods when supplies are running low. Large corporations such as Brother, Coway, Kyocera, Hp, and Epson are adopting this model particularly around the replenishment of consumables. Although purchase automations are simple today, the future of IoT devices making complex artificial intelligence based purchases is around the corner.
Overview by David Nelyubin, Research Analysts at Mercator Advisory Group
