How the Internet of Things could affect your payments
The buzz around the Internet of Things has sent imaginations running wild trying to predict what this next stage in digital communication could mean for the way we do everyday things. It’s not that strange though. People did the same thing when the World Wide Web was first introduced to the public in the early 90s. While the Internet of Things is still an emerging technology, future applications are already looking promising – and nowhere is this clearer than in the payments industry. Giving any inanimate object or device the capacity to facilitate and authorise transactions is a game-changer for payments and upends a lot of what we’re used to in terms of consumer behaviour. How, exactly, could our payments change? Let’s have a look.
The rise of the machines
In 1999, Neil Gershenfeld wrote in When Things Start to Think: “Beyond seeking to make computers ubiquitous, we should try to make them unobtrusive … For all the coverage of the growth of the Internet and the World Wide Web, a far bigger change is coming as the number of things using the Net dwarf the number of people. The real promise of connecting computers is to free people, by embedding the means to solve problems in the things around us.”
It was too early to realise back then, but he was among the first to loosely define what the Internet of Things would eventually become. A few years later, in the early 2000s, the term started gaining a lot of attention. In an article published by Forbes entitled The Internet of Things, Kevin Ashton of MIT’s Auto-ID Center summarised thusly: “We need an internet for things, a standardised way for computers to understand the real world.”
A brave new world of buying
As the Internet of Things grew stronger, it became less about getting machines and everyday devices to communicate with each other and more about exactly what different kinds of communication these machines could have. One capability that it seems the Internet of Things is perfect for is facilitating autonomous payments between machines.
Samsung unveiled a “smart fridge” earlier this year that can intelligently order and pay for groceries when it senses that they’re running low. The fridge does this by using the MasterCard App, part of MasterCard’s ambitious Commerce for Every Device programme. MasterCard doesn’t just want to give smart devices the function of facilitating payments, they envision a world where any everyday item, smart or otherwise, can do this. Where the things around us aren’t just invisibly transacting with each other, but making our lives easier in the process.
If the Internet of Things does eventually become the “Internet of Payments”, it will bring with large amounts of data. Analysts are already speculating that this data could hold consumer behaviour insight that the business world has never been able to get before. As more “things” are able to not only transact, but store and possibly analyse information about every transaction, we will enter a new paradigm of business and purchasing behaviour. The obvious barrier to this is the same as the barrier big data used to face: without the necessary analytics tools, whatever data the “Internet of Payments” brings could be useless. But if (or rather, when) we do find a way to analyse and contextualise it, the possibilities seem endless.