Collaboration of MasterCard, Visa, and PayPal, among others, Expected to Result in a Massive 18.15% Growth for In-Vehicle Payments Market Between 2022-2031
In-vehicle payments are a form of payment that allows users to pay for goods and services while inside their vehicle. The technology is gaining popularity as a convenient and secure alternative to cash and card payments and is increasingly being offered as a feature in new car models. The global market for in-vehicle payments is expected to grow significantly in the coming years, driven by the adoption of digital payment methods and the increasing demand for passenger vehicles. BIS Research, the global leader in providing market intelligence on deep technologies, has released its latest study titled In-Vehicle Payments Market – A Global and Regional Analysis.
According to this study, the recent surge in the adoption of in-vehicle payment services across developed economies and their growing global awareness is shifting automakers’ focus to equip their upcoming models with the in-vehicle payment system. A prominent example of this is that well-known automakers, including Honda, General Motors, Mercedes, and others, have already begun to offer payment services in recent years.
In addition to this, debit and credit cards are the most popular payment methods, and they are widely used to make in-vehicle payments as these methods provide a convenient way to pay without cash or checks and are accepted almost everywhere.
Contactless payments and QR codes
The increasing popularity of contactless payments and QR codes is having a significant impact on the in-vehicle payments market. These payment methods offer users a convenient, fast, and secure way to pay for goods and services, without the need for physical cash or cards. The adoption of digital cards, which are tokenized versions of physical cards, is also driving growth in the market. Digital cards are being standardized by EMVco, a consortium with control split equally among Visa, Mastercard, JCB, American Express, China UnionPay, and Discover, and are widely used around the world.
This shift in OEMs’ focus toward developing in-car payment services is expected to generate a significant growth of 18.15% in the in-vehicle payments market between 2022-2031.
Passenger Vehicles to Dominate the Global In-Vehicle Payments Market
Another very significant insight that this study highlights is that in terms of vehicle type, it is the passenger vehicles segment that is currently credited with the highest share of the demand for in-vehicle payments. One of the key drivers of the in-vehicle payments market is the growing demand for heavy and luxury vehicles and cars driven by diesel engines. This trend is fueling the demand for in-vehicle payments in the passenger vehicles segment, which is currently credited with the highest share of the market. In 2022, the passenger vehicles segment alone accounted for a market share of $4.04 billion out of the overall $5.77 billion. The trend is expected to continue in the coming years, driven by the increase in population, urbanization, and disposable income, which has significantly increased passenger car production.
This trend is expected to continue for the next few years owing to the rise in demand for heavy and luxury vehicles and an increase in cars driven by diesel engines. Additionally, increased population, urbanization, and disposable income have significantly increased passenger car production, thereby fueling the market.
According to Dhrubajyoti Narayan, Principal Analyst, BIS Research, “The rate of digital payment innovation is driving a cost reduction that is expected to double the compound annual growth rate of the in-vehicle payments market. The emergence of new players results in new business models and a more competitive environment. Some examples of innovations are contactless payments, and QR codes, among others. Subscription and mobility-as-a-service are on the rise, and automakers must learn how to balance these new business models to ensure they continue to enhance customer experience and meet their revenue sales goals. Contactless payments are a safe payment method that uses a debit, credit, or smart card enabled by radio frequency identification (RFID) or near-field communication (NFC). Due to its speed and convenience, this digital payment method is gaining popularity. Moreover, proliferating demand for EV infrastructure and autonomous vehicles is expected to significantly augment the demand for in-vehicle payments in the coming years.”
Automakers face several challenges in balancing new business models such as subscription and mobility-as-a-service with their revenue sales goals. While these new models offer opportunities for growth and innovation, they also require significant investment in technology and infrastructure. Additionally, automakers must ensure that these new models enhance customer experience and meet their revenue sales goals.
In summary, the in-vehicle payments market is expected to grow significantly in the coming years, driven by the adoption of digital payment methods and the increasing demand for passenger vehicles. The market is being shaped by the rise of contactless payments, QR codes, and digital cards, as well as the challenges faced by automakers in balancing new business models with their revenue sales goals.
