Symposium Insights

May 2024

For nearly a century, phones were used only to make and receive calls. Today’s phones serve so many purposes it’s hard to name them all.

Technology and innovation transformed phones, and now they're transforming cars. We enjoy smart safety features, on-board infotainment and self-driving capabilities. Next up: the ability to make payments from your dashboard.

That’s one of the nuggets shared by Deloitte Consulting principal Zach Aron at a session of the 2024 Payments and Banking Symposium.

The event brought together executive leaders from across the industry to dive into pressing topics. Aron leads Deloitte’s U.S. Banking & Capital Markets Payments and is co-leader of its Global Payments practice.

“We believe about 12-13 percent of payments profit in the near future will come from mobility payments – those made in your vehicle,” he told attendees. In fact, by 2030, it’s thought that more than $500 billion in payments will be made from automobiles every year.

In-vehicle payments will allow drivers and passengers to make various payments directly from a car's infotainment system or dashboard interface. Say you’re running low on gasoline. Your car's navigation system detects a nearby station, then prompts you to initiate a payment for refueling. You select the fuel grade and authorize the payment using your car's touchscreen display or voice commands. The payment is processed securely, so fueling can begin automatically without needing to swipe a card or use a mobile app.

The Evolution of Payments: From Transactions to Contextual Value

The original payments economic model was based on fees charged per transaction. It’s now shifting due to customer expectations, tech advances and digitization, Aron told attendees. “The economics of being in the payments business is fundamentally changing. The new model will be based on when and why money is moved,” he said.

In this new paradigm, payment fees will be based on risk elements, timing and access. This opens new avenues for financial institutions and payment processors to create value-added services tailored to specific transaction needs. By focusing on the context—why and when transactions occur—organizations can develop differentiated pricing strategies.

Overall, the shift in the payments landscape emphasizes the strategic importance of not just moving money efficiently but also understanding the contextual factors involved in payments. This approach, Aron said, aims at enhancing value creation, improving cash flow and leveraging new technologies to stay competitive.

Key Investment Areas for Payments Companies
There are three critical investment areas for the future success of payments, Aron said:

• Getting the Basics Right: Building a robust data infrastructure is essential for effective payments management.
• Security, Privacy and Identity: Investing in security measures = faster and easier transactions for customers, fostering trust and efficiency.
• Standards of Interoperability: Ensuring compatibility across different systems opens opportunities for seamless integration and innovation. “Will you be a lightbulb or will you be an electric adaptor?” Aron asked. “There are opportunities within each approach.”