What IOT Payments Needs to Succeed: A Common Infrastructure

What IOT Payments Needs to Succeed: A Common Infrastructure

What the IoT Needs for Payments to Succeed: A Common Infrastructure

Russell Moore

Russell Moore

Currently an innovation director at TSYS, Russell Moore has worked in the product development and innovation world for 15 years. He is an advisor for the Technology Association of Georgia, BTC Media and several financial institutions.

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The internet of things (IoT) economy is upon us. With everything from appliances to doorknobs connecting to the internet, underlying support is needed to help make these non-disparate devices talk and interact seamlessly.

This matters to the financial industry because the IoT devices coming online will have three things in common — products, people and payments. How will this look? Products will be driven by people, and will be supported by the payments infrastructure.

Devices of the future

There will be a multitude of devices in the market in the not-too-distant future. What we do know is that growth of the IoT is unfolding at a breakneck pace. Gartner forecasts that 8.4 billion devices will be available in 2017, up 31 percent from last year. By 2020, it looks like even your shoelaces will be connected, with an estimated 20.4 billion devices available for consumers.

While it's clear the number of devices will be plentiful, it's difficult to predict what the landscape will look like for these devices in the future. So many great products from both large and small companies are flooding the market with the promise of making our lives easier and more efficient.

Not all will succeed, but a really good example of an underdog IoT product is from a company called Bigbelly. The self-compacting, solar-powered garbage can gives off a Wi-Fi signal and has other charging services. Saving time and money for garbage collection services, the trash can will send a message when it is full, ensuring maximum efficiency.

When you think of IoT you may not automatically think of trash collection, but it's actually a really good example of how all types of products are being IoT-enabled. There will be thousands of products from companies like Bigbelly making our everyday lives simpler and cheaper. So having the commonalities to support the system is essential.

Syncing up devices

Although no one can foresee them all, the devices will need to communicate with one another in order to stay relevant in the extremely fast-paced IoT market. And it becomes difficult with these devices because they can't operate in a vacuum. They need a complex infrastructure and network to ensure they meet consumer expectations and work properly.

A huge commonality between IoT products is the power they consume. Advancement in batteries and smart grids are driving when our devices can be used and the cost to run them. This is one benefit to innovative devices like the Bigbelly solar-powered trash can.

We have already seen how dependent we can become on smart devices like cell phones, but that is only the beginning of what we are seeing being 'smartified.' As people become aware and comfortable with smart devices, they'll absorb them into their lives. And smart grids will allow for devices that must have power to pull or store energy in the most economical way.

With every new technology, there's initially a niche audience. If it solves a legitimate problem, makes life easier or adds value to something we already do, the audience with become broader and consumers will use it — even if we didn't know we needed it in the first place. And with machine learning and artificial intelligence (AI), the financial industry will be able to predict how, why and where people consume and spend. They can also see trends that will perpetuate the development cycle — allowing more products to help ease our daily tech lives.

What it means for payments

The payment component of machine-to-machine (M2M) payments is often overlooked. IoT will also drive innovation in the payment space while forcing traditional methods to become more agile and adaptive.

For example, will the rails go to the blockchain or the established, trusted third-party system that exists today? It could be both. Keeping pace with trends and consumer needs will allow financial institutions to stay relevant and grow at the same rate as the fast-moving IoT economy.

Just like credit card transactions today, people won't care what the support rails look like or how they work. Rather, they want a safe, reliable and easy experience. Every time. IoT and M2M will deliver this and consistently deliver the user experience we customize, transacting on our behalf. Payments systems that support M2M payments will have to be built — or the existing rails of financial institutions repurposed — to help facilitate these transactions.

It's impossible to predict what technologies will be driving IoT tomorrow. Having the support and infrastructure in place will be critical.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by Russell

Russell Moore

Currently an innovation director at TSYS, Russell Moore has worked in the product development and innovation world for 15 years. He is an advisor for the Technology Association of Georgia, BTC Media and several financial institutions.

He eats, sleeps and breathes innovation. Whether he’s at home on his Alabama farm or exploring new payments technology products in an innovation lab, he is always searching for a new, more profitable way to build a better mouse trap.

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