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How “IoT” is Altering the Payment Landscape

Internet of Things concept with a cellphone connecting to various other electronicsWhat is IoT?

The Internet of Things, also known as “IoT”, is a network of devices – game consoles, activity trackers, smartwatches, voice-controlled assistants, thermostats, virtual reality headsets and the list is growing. These devices are equipped with computer chips and sensors that can collect and transmit data through the Internet. And the average consumer owns at least four of them.

These Internet-connected devices are at every consumers’ fingertips, and most consumers purchase these devices to make their daily lives simpler. Being able to make and accept payments more efficiently and securely is becoming extremely important to both consumers and businesses.

And it is being used for everyday transactions. For example, tap your Apple watch at the terminal in the donut shop to make a payment or place an order through the Starbucks app and pick up your order in the store. One day, you will be able to order groceries straight from your refrigerator.

Cool, right? For the transactions to come to fruition, payments must be able to be transmitted securely through these devices. And that is where a tokenization framework comes into play.

One option that people are finding helpful is Visa’s tokenization framework. Visa’s Token Service, Digital Enablement Program, and Ready Tokenization Program are the critical elements of Visa’s framework. Token service providers allow manufacturers to become payment-enabled in a short period of time by using this certified framework that Visa has in place.

How IoT Changes the Way You Conduct Business

Tony Fadell, the creator of the iPod and founder of NEST – programmable, self-learning, sensor-driven, Wi-Fi-enabled security systems – says that “‘IoT’ is a label that fails to describe the range of possibilities that devices connected to the Internet enable from the perspective of the end user.” He explains that manufacturers and merchants need to focus on how consumers are using – and want to use – their devices so that they can help deliver a better customer experience.

So how can manufacturers change the ways businesses accept payments?

Avin Arumugam, SVP of Visa’s Internet of Things, says that “giving device manufacturers the ability to embed payments into the experiences that their devices power for the consumer” is their number one goal.

But it is a challenge. Device manufacturers and Visa need to make sure that every new device has the capability to make payments seamlessly and efficiently. Today’s consumers and merchants are more willing to learn new payment technologies – if they don’t complicate the shopping experience. So, merchants need to be properly equipped to accept these different types of payments.

The Sky’s the Limit

Consumers feel secure when they use their Internet-connected devices to make purchases today. However, as the payment landscape changes, consumers need to continue to feel that their information is kept private and secure. By using the tokenization framework that Visa has in place, manufacturers can assure consumers and businesses of the safety and security of making payments and accepting payments.

It looks like the sky’s the limit for device manufacturers – and consumers and businesses can’t wait to see what they come up with next.

Find Out More About How IoT Affects Your Business

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