Consumers, IoT And The Slow Adoption Of Mobile Payments

People are quite happy with the status quo in the payments scene. Credit cards, debit cards and, of course, cash are quite convenient. So, why bother with Apple Pay or Android Pay and potentially increase the risk and headache of cyberfraud? Could IoT speed up the adoption of new technology to make mobile payments a habit?

Taking Apple Pay as an example, a study by PYMNTS and InfoScout found that, although an increasing number of people try Apple Pay, 23 percent abandon its use because they don’t find value in Apple Pay, are not comfortable with it or simply prefer another option, such as cards or cash.

Perhaps it’s not until people actually see tangible benefits that they are motivated to change their habits?

IoT As A Game-Changer

IoT is changing people’s lives. From an iPhone to shopping lists using Amazon Dash to the ability to remotely switch off lights or AC controls in the home with Alexa, smart gadgets are difficult to avoid. What’s more, IoT is penetrating the corporate world and changing workplace tasks and environments.

Take building management systems (BMS), for example. A BMS manages the mechanical, electrical and electromechanical functions within a structure. A network of sensors, software and a cloud-based data store can lower energy usage by adjusting heating, ventilation and air conditioning systems, lighting, security and safety operations. BMSs, like their domestic counterparts, save money, but up until now, that tangible gain has been difficult to discern and the initial cost outlays are huge.

Enter IoT. With IoT technology, the costs are coming down — and quickly. According to BUILDINGS.com, an IoT-based lighting fixture can cause energy efficiency to improve 90 percent, and Intel said that IoT-based approaches using wireless sensors can reduce deployment cost by around 30 percent compared to a traditional BMS. Intel has partnered with HCL Technologies and has developed low-cost wireless sensors, on-premises gateways and cloud analytics. A network of actuators and sensors on temperature and lights, for example, can be fitted throughout a building without the need to retrofit existing equipment.

According to Peter Middleton, research director at Gartner: “By 2020, component costs will have come down to the point that connectivity will become a standard feature.” And a recent McKinsey & Company study found that 80–100 percent of all manufacturing and industrial settings might benefit from the application of IoT by 2025. If Gartner predictions are accurate, corporations will be latching onto IoT and the associated cost savings. In that case, the job of a facilities manager might soon be done from the comfort of a living room armchair.

Amazon’s Drone Program

You can bet that, when Mrs. Jones sees her neighbor getting packages dropped off by drone, she’s going to want the same service. But it might yet be many years yet before Amazon perfects its drone delivery service — to the detriment of UPS drivers nationwide.

Amazon announced a partnership with the U.K. government last week to pursue its testing of drones for package deliveries. The major focus of testing is to explore “beyond the line of sight of its operators” in rural and suburban areas. Another area to be explored is whether just one person can operate multiple highly automated drones. But an insight by RCR Wireless News suggests that a bigger obstacle to Amazon’s vision of drone package deliveries is battery power.

The complex technologies required — such as geospatial data to avoid collision with known hazards, online flight planning and management, a reliable internet connection, drone-to-drone communication systems and sensor-based, sense-and-avoid systems — eat into the battery of the drone to such an extent that the distance a drone can travel is limited to just a few miles. To solve this problem, Amazon will need a huge network of drone delivery stations.

This argument was debunked last year by MarketWatch, who considered drone flight capabilities sufficient. Not just that, but fulfillment centers could be replaced by retailers and used to operate the drone deliveries. Walmart, for example, with locations just about every five miles and within reach of three-quarters of the U.S. population, could act as a drone network.

Only the passage of time will tell who is right, but if Amazon succeeds, consumer acceptance of drone delivery is likely to be swift, particularly if the business model means lower price points for consumer products.

And if you need further convincing that IoT will have a soon-and-sudden impact, Cisco predicts that 50 billion connected devices will reach the market by 2020, and BT Global Services says that 90 percent of cars on U.K. roads are expected to be connected to the IoT by 2021. Visa is also preparing by providing “IoT device manufacturers with a path to embed secure payments into their connected devices, enabling anything from a watch to a car to initiate payments.”

So, whether a bank provides already-setup IoT gadgets for a new homeowner as part of a mortgage package or a new car comes fully connected with Zubie, consumer habits will change because “people don’t know what they want until you show it to them.”