How the Internet of Things Will Change Credit Card Acceptance


When you think about the Internet of Things, you probably conjure up a futuristic world where you can preheat the oven when you leave the office, be notified when you’re out of eggs, and turn on the television to your favorite show when you pull into the drive from one convenient dashboard.

The reality is that we’re already living in this world thanks to Wi-Fi hubs, smart televisions, and digital video recorders. In fact, you’re probably already interacting with 7 to 10 devices that are connected to the internet every day.

While the IoT is already disrupting numerous industries, it’s also going to change how credit cards are accepted.

‘Invisible Payments’ and a Smooth Customer Experience

‘Invisible Payments’ and a Smooth Customer Experience

“Providing the consumer with a truly frictionless experience is the holy grail for the payments industry. This has already been achieved in-app with platforms such as Uber, but has yet to be translated in-store,” writes Andre Stoorvogel for Mobile Payments Today.

“In the IoT era, however, we are moving ever closer to delivering a seamless in-store experience. Beacons, geolocation, computer vision and biometric technologies are being combined to deliver a frictionless experience.”

Stoorvogel also notes that “the industry will closely be monitoring the success of Amazon Go,” which is expected to launch sometime in early 2017. “The concept deploys various technologies (the exact details are yet to be released) that enable a consumer to walk into the store, pick up an item and walk out, with the order charged to their Amazon account upon leaving.”

Besides Amazon Go, other companies are expanding into the IoT market. For instance, Visa has teamed up with Honda and PakWhiz that allow for car-based concept apps that can be accessed through the car’s dashboard. These apps, which use beacon technology, will be able to notify drivers when fuel is running, locate the station with the best price, and then purchase the fuel using the car’s console -which has a card linked to it. It can also pay for parking using the same technology.

Capital One is allowing customers to pay their bills via Amazon’s Alexa. And, you can already instruct Alexa to purchase and order anything from a new pair of shoes that you need this weekend to a pizza for tonight’s dinner.

“In a limited number of US stores, Google has introduced the ‘I’ll pay with Google’ system, where shoppers just have to walk up to the cash register and simply say the phrase,” said Liviu Arsene, senior e-threat analyst for antivirus software company Bitdefender. “The hands-free system works by simply uploading a picture of the user and a payment method into a designated application and then it connects via Bluetooth and Wi-Fi to the store’s cash register to validate the transaction.”

And, there’s also Samsung’s smart appliances that can monitor the items in your fridge, for example, and will order the groceries that you need automatically. One problem that smart appliances had was that even if the fridge knew you were out of milk, it didn’t know how to order a new gallon. Visa has been working on this so that these complex relationships can work together.

How Secure is the IoT

Convenient, But How Secure is the IoT?

The biggest drawback involving IoT has been security. And, there’s good reason. A number of data breaches over the last several years has compromised millions of customers and have cost businesses millions of dollars as well. And, some security experts, such as Forrester, is predicting a large-scale IoT security breach sometime in 2017.

At the same time, Javvad Malik, security advocate at AlienVault; Jason Collins, says that in 2017, “the IoT device security debate will escalate, putting pressure on manufacturers to architect fundamental security principles into the designs of internet-connected products. We may even see governments around the world take an active role in IoT safety legislation.”

While security is a concern and is an area that companies are determined to improve, there are already built-in security measures. Since the IoT uses NFC and beacon technology, tokenization is used for every transaction. Additionally, biometrics are becoming more commonplace. In fact, if you have an iPhone, then you’re already familiar with Touch ID that uses your fingerprint to authorize a transaction. With more data points in place to verify your identity, the more protected you are.

Another solution to these security concerns will be the blockchain.

“The blockchain could be the answer to an already-emerging question of how to keep devices secure and stable in an overcrowded tech environment,” writes Peter Daisyme in a previous Due article. “With the blockchain acting as an intermediary, the IoT will be able to operate more efficiently as devices communicate with each other.”

“Since the blockchain is tamper-proof, customers will see a reduced risk of their personal data being leaked via a security breach,” continues Daisyme. “If IoT device manufacturers aren’t currently utilizing the blockchain, over time they’ll see the benefits and put this technology in place.”

The Possibilities Are Endless

What’s appealing about the Internet of Things are the endless applications that are possible. These applications will offer solutions that will provide greater security and mobility, convenience, and a smooth and enhanced customer experience.

With IoT, credit card companies will be able to collect more data, analyze it in smart ways, and automatically take action at the exact right moment. It’s a win-win for both customers, retailers, and credit card companies.