Visa added 13 new partner companies to its Token Service Provider (TSP) program, which allows firms to use Visa credentials and standards to offer tokenized payment offerings in their devices.
The firms include FitPay, Infosys, and others, and focus on areas largely outside of North America, with players in Asia-Pacific and India; Europe; the Middle East and Africa; and Latin America and the Caribbean. The move vastly expands Visa’s TSP program, which launched in October, and ultimately pushes the firm further into the IoT.
Visa’s move comes at a time when connected device payments are on the cusp of the mainstream.
- Connected device ownership is rising. A study conducted by Visa and PYMNTS this spring found that the typical consumer owns four connected devices, with 14% of adults owning a smart speaker and 15% owning a smartwatch. That number is poised to grow — BI Intelligence expects the number of installed connected devices will hit 22.5 billion by 2021, up from 6.6 billion today.
- And they’re starting to be ready to use these devices to pay. As these devices become more popular, it’s likely that users will demand more robust functionality from them, including payments. In 2015, when connected devices were barely on market, 19% of consumers were already “very” interested in connected device payments. That’s likely to grow — the Visa study found that consumers are looking for an experience that’s more seamless to pay, and 83% would use a connected device to do so at least some of the time.
Pushing into seamless payments via the IoT is a smart growth play for Visa. For Visa, seamless and embedded payments carries a clear benefit — by making spending simpler, and more frictionless, users are likely to spend more and more often, which, in turn, leads to higher volume and, thus, revenue gains. That’s beneficial, especially in a fast-growing space. And at the same time, it’s likely a competitive play — Mastercard, Visa’s largest competitor, is rapidly innovating in the IoT as well, and Visa likely wants to keep up — so this could help the company’s brand positioning and loyalty.
The rapid expansion of the Internet of Things (IoT) offers payments companies an opportunity to expand beyond mobile phones, cards, and point-of-sale devices, to a broad and diverse ecosystem of internet-connected devices.
We forecast that there will be 24 billion connected devices installed globally by 2020, up from nearly 7 billion today. And over 5 billion will be consumer connected devices by 2020, representing a massive expansion of touchpoints that could eventually offer payments functionality.
BI Intelligence, Business Insider’s premium research service, has compiled a detailed report that dives into the budding industry of connected device payments, providing a rundown of the stakeholders driving innovation in wearables, connected cars, and connected home devices. It also gauges the impact of new payment devices on different payments companies, along with how these devices could shift consumer purchasing behavior.
Here are some of the key takeaways from the report:
- The Internet of Things is ushering in a new era for payments companies and manufacturers. The rapid expansion of the Internet of Things (IoT) offers an opportunity to facilitate payments beyond mobile phones, cards, and point-of-sale terminals, on a broad and diverse ecosystem of internet-connected devices.
- More transactions could eventually pass through connected devices than smartphones. We estimate there will be 24 billion of these devices by 2020, with 5 billion of them being consumer-facing. This represents a massive expansion of touchpoints where payments could be enabled.
- Card networks have developed a basic framework to enable commerce in everyday devices. Visa and MasterCard are creating the underlying infrastructure to support the standardization of payments integration and stake themselves out as the key connected payments gatekeepers. Their payment platforms are universal, allowing digital payments to grow without being tied to the success of a particular manufacturer.
- Consumer-facing IoT companies have much to gain from enabling payments in their devices, including improving the value of the device, being able to cross-sell products through the device, and laying the groundwork for future opportunities to earn incremental revenue. For payments companies, connected payments offer a new revenue stream and an opportunity to gain market share ahead of competitors.
- Wearables, connected cars, and smart home devices will be the top connected payments product categories.
In full, the report:
- Frames the opportunity for embedding commerce capabilities in new devices.
- Explains how a device becomes commerce-enabled.
- Discusses the potential for payment-enabled wearables, connected cars, and smart home devices.
- Examines the impact of connected payments on key stakeholders.
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