With the rapid spread of fintech solutions, one thing has become clearer: companies don’t have to be in the financial sector to get a share of the pie. This is most obvious in the connected car market.
Connected cars allow drivers to pay for goods and services through their vehicles, paving the way for automakers to access financial services. Volkswagen is one such manufacturer that has created a financial services platform that turns its vehicles into digital wallets. Now, JPMorgan Chase is taking over a large part of its payment platform and hopes to expand it to other areas.
Unfortunately, the automotive industry has been hit hard during the pandemic, and the shortage of key technologies may have a negative impact on their ability to continue to develop connected car technology.Even with some government intervention Responding to supply chain dilemmas, The industry may feel the impact in the next few years.
We will look at the upcoming deal between JPMorgan Chase and Volkswagen and try to predict the next development of the platform and the connected car market.
What is a connected car?
There is no doubt that cars are becoming “smarter”, better connected, with backup assist, Bluetooth connectivity and automatic steering to prevent accidents. Now, they can also pay through in-vehicle payment services.skill improved Enable the Internet of Things (IoT) Edge computing can now process payment data remotely, even in the car.
In-car payment can be used to pay for tolls, gasoline, parking, and even food and beverage expenses without getting off the car. As expected from any such progress, the impact on other industries deserves attention. Connected cars require various parts and functions that other industries can use.Not to mention Rich data generate.
As connected cars become more common, automakers and their partners will have a lot of data about people’s movements, purchases, and preferences. Although this data is undoubtedly useful, it also exposes connected cars to privacy risks. Despite these risks, connected cars are still a market with huge potential, and many companies are rushing to enter.
JPMorgan Chase’s partnership with Volkswagen Payment Company
In the latest example JPMorgan’s approach to the future In terms of financial decisions, the financial giant plans to acquire a 75% stake in Volkswagen’s payment platform. The transaction is expected to be completed in 2022, and JPMorgan Chase has hinted that they will make some changes to the platform.
Volkswagen Pay SA was established in Luxembourg in 2017. Its payment platform provides services in the automotive industry, such as car purchase and leasing, refueling and charging (electric vehicles), in-vehicle payment, insurance, parking, and in-vehicle entertainment subscriptions.
As it is now, JP Morgan Chase’s wholesale payment business provides payment card and merchant services, corporate financial services and trade financing.They report that Volkswagen’s The platform is a “match made in heaven” Allow them to enter the automotive industry and express interest in expanding beyond this industry in the future.
Future outlook
JPMorgan Chase’s acquisition of Volkswagen’s payment platform appears to be a promising match, especially since the partnership allows Large companies set foot in financial technology Is becoming a trend. But overall, what is the outlook for the connected car market?
Before the COVID-19 pandemic, the connected car market is expected to Reached $180.9 billion By 2025. However, the pandemic has disrupted car production and supply chains, and many major manufacturers have suspended production this year.
research shows More than 90% of SMEs Due to the pandemic, income loss in industries such as logistics and construction. Companies of all sizes are struggling to cope with supply chain disruptions, transportation delays and other issues, so it is not surprising that the automotive industry has been similarly affected.
Take, for example, Semiconductor shortage Troubled the industry. Over the past year, the supply of computer chips needed to power connected cars has been in short supply.Car giant Including the public Suffering financial losses due to the suspension of production, the chip shortage is expected to continue until at least 2023. It is now estimated that by 2025, the global connected car market will reach 166 billion US dollars in 2025, but this will depend on the recovery of the overall car market.
That being said, the pandemic may also have some positive effects on the growth of in-car payments. Contactless payment methods are becoming more and more popular, so transactions like JPMorgan Chase may be exactly what the industry needs. JPMorgan Chase reported that it intends to use the alliance between the two companies to develop platforms for new markets, so they may not be constrained by the recovery of the auto industry.
More importantly, this is not the first time Volkswagen has collaborated with such innovations. Recently, Volkswagen has cooperated with Amazon Web Services (AWS) and Siemens, Provide its industrial cloud As a B2B service. This will enable partners to optimize their operations and contribute to Volkswagen’s systems.
This decision was made at a time when the demand for artificial intelligence for vehicles was high. Automakers are eager to use Amazon’s Alexa or similar voice assistants in their products. They are also increasingly concerned about the security risks associated with these innovations.
Beginning in 2022, a United Nations regulation will require connected cars sold in the European Union and other countries such as Japan and South Korea to take certain protective measures against automakers to reduce the risk of hacker attacks. According to recent statistics, Most developers Have less than five years of industry experience. Therefore, when developing software, safety becomes more important, especially in vehicle applications, where the cost of errors can be fatal.
We hope that the financial expertise of JP Morgan Chase can help the Volkswagen payment platform to safely meet the needs of the automotive industry and any other industries they are involved in. We can also hope that similar platforms will prioritize cybersecurity in the next few years to maximize the benefits of connected cars and reduce risks.
Why all this is important
The partnership between JPMorgan Chase and Volkswagen is just one recent example Digital payment mainstreaming trendDigital payments will continue to exist regardless of whether it is paid in cryptocurrency or purchased from the dashboard of a car. Although there may be some setbacks, the connected car market still has great potential to continue the digital trend through in-vehicle payment solutions.
