The global in-vehicle payment services market size was valued at USD 4930 million in 2021 and is estimated to reach an expected value of USD 19500 million at a CAGR of 16.5% during the forecast period (2022–2030). Increasing contactless payment post-COVID outbreak trends, growing customer base to achieve convenience in vehicles, and growing technology innovation are the major factors driving the market. The in-vehicle payment services permit the driver of the vehicle to simultaneously shop for groceries, order food and Coffee, and pay tolls & parking and at the gas stations for the vital commodity. The automotive industry is continuously evolving around the Internet of Things (IoT), and automotive manufacturers are increasingly integrating new technologies for innovative infotainment solutions.
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Growing Mobile Payments Adoption
Currently, the upgradation of regular payment infrastructures is in progress. The payments industry is going through a movement of infrastructure transformation that is essential to compete efficiently with nonbank trendsetters and address progressing customer requirements. More than 15 countries have modernized their payments infrastructures in the last few years, and many others are scheduling to upgrade. As the infrastructure renovations are costly for both the system and bank levels, banks need to find ways to build products and services on top of the infrastructure that provides value to end-users and accelerate the cash transactions to recover these investments as rapidly as possible.
Digital disruption in the money transfer ecosystem, combined with the rise in the need for quick money transfer methods, has transformed the payment gateway model. As a result of digital money transfer methods, consumers now demand secure digital transaction processing systems to transfer money to their merchants and individuals. With the rising digital financial transactions, a need for secure cloud-based architecture has increased among platform providers. The cloud-based money transfer platforms allow industry participants to manage higher volumes of transactions at high speed and low cost.
Increasing Technological Innovation in Automotive
General Motors partnered with MasterCard to develop a solution for in-vehicle payment. Visa, in collaboration with SiriusXM, has announced to launch a vehicle-based payments platform. Other manufacturers such as Honda, Volkswagen, and Ford have developed their in-vehicle payment platforms and solutions. Manufacturers are developing inbuilt systems such as voice-based control, enabling shopping on the road with safety for the drivers. Drivers need to keep their eyes and hands focused on the streets and highways while accomplishing their purchasing needs. The voice-activated dashboard can distract the driver. According to a study conducted at the University of Utah, speech-to-text technology causes a higher cognitive distraction level than any other activity since more effort is required to talk to the dashboard than talking to a real person. However, the connected and self-driven car's growth is expected to fuel the market growth in the coming years.
Security of Driver And Payment Data
With the growing adoption of connected cars and in-vehicle payment services, the primary concern is data storage and security. The automotive industry, including connected cars and electric vehicles, contributes to the maximum data generation. Hackers can locate and track the payment information causing significant financial losses. However, cloud storage resolves the issues of data storage and management.
By mode of payment, the global in-vehicle payment services market is segmented into NFC, QR Code/RFID, App/Wallet Based, and Credit /Debit Card based. The Credit /Debit Card based segment accounted for the largest market share and is estimated to grow at a CAGR of 15.9% during the forecast period. Credit and debit card transactions are the most popular and widely used transaction method in contact and contactless payments. Post cash transactions, card-present, and card-not-present transactions are widely used by people of every age group worldwide.
By application, the global in-vehicle payment services market is segmented into parking, gas stations & charging stations, shopping, food & coffee, toll collection, others. The gas stations & charging stations segment accounted for the largest market share and is estimated to grow at a CAGR of 17.4% during the forecast period. The gas station is a crucial requirement of any vehicle. However, payment methods such as e-wallet, NFC, and QR code save the time taken on payments. For instance, Visa and Honda demonstrated a new in-vehicle payment system they have been working on, in collaboration with the smart parking meter and gas pump manufacturers. Honda drivers will be alerted when they pull up to a beacon-equipped smart meter or fuel pump, and they can pay just by touching a button on the dash.
By region, global in-vehicle payment services market is segmented into North America, Europe, Asia Pacific, Latin America, Middle East & Africa.
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North America accounted for the largest market share and is estimated to grow at a CAGR of 15.9% during the forecast period. The region has the highest penetration of connected cars. Also, technological giants such as Google Inc. and Apple Inc. have entered the automotive market to develop innovative capabilities and cultural changes to compete with those that are based out of the region.
Europe is the second largest region. It is estimated to reach an expected value of USD 3395 million at a CAGR of 16.4% during the forecast period.
Asia Pacific is the third largest region. The in-vehicle payment services market in the Asia Pacific region is anticipated to grow at the highest compound annual growth rate owing to the growing population and rising disposable income. Technological proliferation and innovations in the payment industry are expected to drive demand over the forecast period.