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© Edgar, Dunn & Company, 2016
Smart Payments for connected IoT Devices
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What is the Internet of Things (IoT)?
The Internet of Things (IoT) is the connection of devices (other than the typical computer/smartphone) to the internet
The IoT network enables objects to collect and exchange data using embedded sensors
The technology will enable:¡ Smart Industry¡ Smart Cities¡ Smart Homes¡ Smart Things
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Drivers of the Internet of things
The Rise of the
Internet of Things
Cloud computing
Improved data analytics technology
Low cost sensors
Prevelance and adoption
of smart phones
Wireless technology (3G/4G/5G and Wi-‐Fi)
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The rapid growth of the IoT is driving the development of connected commerce
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The Internet of Things has a breadth of potential applications….
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…but which segments will enable connected commerce?
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EDC has identified three key segments that will significantly develop connected commerce in the coming years
1. Consumer connected devices to make payments
2. Merchant connected devices to receive payments
3. New points-‐of-‐interaction enabling commerce
Connected cars
Smart home
Wearables
Kiosks
Vending machines
Connected screens
Contextual commerce
Conversational commerce
1. Consumer connected devices to make paymentsThe rise of Wearables
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bPay BandJune 2014
2014 2015 2016 …
Apple Watch March 2015
Jawbone UP4April 2015
Xiaomi & Alipay
April 2015
Samsung Gear S2
October 2015
Microsoft Band 2 October 2015
bPay Jacket September 2015
AliPay PayWatchSeptember 2015
Kerv Ring November 2015
Disney Magicband
2014
Swatch BellamyOctober 2015
Topshop x Bpay
November 2015
Visa NFC RingAugust 2016
MC10 Wearable stamp
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1. Consumer connected devices to make paymentsHigh potential for wearables in years to come…
2. Merchant connected devices to receive payments The “Endless Aisle” -‐ Department store de Bijenkorf
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These smart kiosks enable consumers to purchase from the merchant’s full product catalog, irrespective of what
is in stock within a given store
Promising results
Out of stock items comprise 90% of in-‐store kiosk transactions; the remaining 10% correspond to bulky items, where home delivery is preferred
While the kiosks are fairly new, incremental sales at de Bijenkorf – and other smaller, more specialized merchants are reported to increase by 10 – 14%
Source: de Bijenkorf, Adyen
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Speed up transactions and increase data
collection
2. Merchant connected devices to receive payments The IoT in urban transit – today’s use cases
Improve fleet management
Improve the security of citizens
With Apple Pay in London, it is quicker to tap a wrist device than use a Oyster/credit card or smartphone to go through a ticket barrier
The New Jersey Turnpike Authority (NJTA) installed over 3,000 sensors to improve traffic flow and minimize congestion
Dallas transit system (DART –100+mn annual passengers) used Cisco IoT programs to improve fleet management (i.e. to monitor vehicles) and data from 1,700+ smart cameras that provide live and recorded video for the Dallas police
2. Merchant connected devices to receive payments “Screen-‐commerce”
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Wechat (QR codes)Bar codes (Tesco) Think & Go (NFC)
Tesco had launched a ‘virtual’ supermarket at Gatwick airport so holidaymakers can order shopping which can be delivered to coincide with their return at home
The user links the wallet to a Chinese bank account. The system works more like a direct debit system, with money deducted directly from the bank account
Think & Go is a digital interface that can process NFC-‐payments by waving a NFC card or phone
The future of retail stores will include screens and windows with interactive displays
3. New points of interaction enabling commerceunattended screens and kiosks to facilitate charity donations
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Consumers are increasingly going cashless meaning that traditional cash collection is becoming redundant in countries with high card penetration
Connected screens such as those offered by Ingenico enable passers-‐by to make contactless payments of €3 or €4
Connected devices suitable for charity donations can generally be split into two categories:¡ High end (e.g. connected screens located at major stations)
¡ Low end (e.g. replacements to the traditional charity cash box located at smaller retailers)
2016 Ingenico campaign with Institut Curie
JCDecaux Australia, Donations for the Melanoma
3. New points of interaction enabling commerceContextual commerce
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Dash, launched in March 2015, branded plastic buttons intended for consumers to stick on cabinet doors and washing machines
Has expanded to 140 different consumer products with reorders paid via a direction connection to the consumer’s Amazon account
Alexa, the voice activated assistant of Amazon Echo, can enable consumers to buy the “everyday essentials” through a simple voice command
The connected commerce revolution has already started, but hurdles exist before wide scale adoption
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Some challenges to address…
Branding
Unproven consumer needs and behaviour
Data security and privacy
Fragmented eco-‐system and lack of governance
Lack of interoperability and standards
Connectivity and power
New business models
Source: EDC, Gartner, Sharpen
… but a revolution already under way
A breadth of solutions already in the market and more released every week13.5 bn consumer connected devices by 202064% of consumers interested in connected devices in 2016 (in the UK)85% of payments professional think that IoT will change the way we live, shop and pay
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Will the use of data with connected objects prefigure the advent of connected commerce?
Contact details
Edgar, Dunn & CompanyFirst Floor, Candlewick House120 Cannon StreetLondon, EC4N 6ASUnited Kingdom
Tel +44 2072 831114Mobile +44 7825 027527
Tim Grocott-‐Mason Consultant
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