Smart cars will soon be able to pay for tolls and fuel, driving a big increase in transaction volume for the emerging category of IoT payments.
The IoT payments market is tipped to grow at an average of 75 per cent per annum over the next five years; reaching $410 billion by 2023. This is up from an estimated $24.5 billion in 2018; the biggest growth will come from in-vehicle payments.
The figures are contained in a report from Juniper Research.
The new research, IoT in Finance: Payments, Insurance & Banking Opportunities, Transaction Forecasts 2018-2023, has found that the automotive sector will become the most lucrative IoT platform by 2021; accounting for $63 billion in transactions that year, 55 per cent of the overall market, compared to just over $50 billion for connected home devices, including smart speakers and TVs.
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Car based spend, however, will mostly be payments for fuel and tolls, but with little increase in spend overall.
Meanwhile, smart speaker voice-enabled commerce transactions are forecast to reach $51 billion annually by 2023. Goods purchased through these devices will account for just under 12 per cent of connected home transactions by volume over the next five years. The majority of purchases will be for digital content, typically made through connected TVs.
“Full financial service products will be slow to come to voice commerce, as the automated processes need to satisfy compliance requirements,” said research author James Moar.
“However, with voice assistants already supplying advisory and finance updates, there will be much data to draw on once the regulatory requirements are met.”
The research found a significant opportunity for players in the IoT-enabled insurance market which will exceed $334 billion by 2023, primarily through telematics-based motor policies. But this will reduce premiums; impacting insurers’ gross revenues.
Juniper believes that this decline in premiums will be offset by improved overall profitability due to reduced costs per claim; this will become more immediately evident in home insurance, with automated accident prevention through the IoT.