The idea of the car as a software platform on wheels is not new. The idea of the car as a commerce operating system is. Mercedes Benz, which traces its history to 1886 and Karl Benz’s creation of the first combustion engine in Germany, is developing an in-house eCommerce ecosystem, complete with its own operating system.
E-commerce may have started on the web, “but now it’s shifting to the vehicle,” Mercedes pay CEO Nico Kersten told PYMNTS’ Karen Webster,
First introduced in 2018, Mercedes pay was designed to give Mercedes owners an easy, secure, one-click-esque way to purchase services and products, including software upgrades.
That payments capability spawned a growing number of features that Mercedes owners could add to their vehicles via the Mercedes me apps store — navigation systems, live traffic updates, charging packages, and even a soon-to-be-released acceleration package to boost car performance.
Five years later, Kersten says that Mercedes-Benz envisions payments firmly rooted at the very beginning of the customer’s journey with Mercedes, where the driver’s identity is bound to the car as they transact and interact with a broad range of digital services, initially focused on the car itself, but setting the stage for a broader ecosystem to take shape across a range of providers.
The forging of the Mercedes ecosystem starts when the owner takes possession of the car, said Kersten.
“All of this works with the Mercedes me ID,” he said, which creates a single user account and point of access for the Mercedes-Benz apps.
“With this ID you also have a payment profile. There’s always a connection between the vehicle, the hardware, and the person — whether it’s the driver or a ‘co-driver.’”
Authentication, he said, is done through a fingerprint sensor mounted in the car. Data is collected and stored securely through Visa’s Delegated Authentication and Visa Cloud Token Framework technology.
The biometric feature, he said, helps streamline authentication that otherwise, with PSD2, would have involved multiple steps. “Two-factor authentication,” he said, “is good for customer protection, but unfortunately it’s not so good when it comes to customer experience. So that’s why we’ve used biometrics to authenticate payments.”
At the nexus of Mercedes-Benz hardware (the car) and software (the operating system) lies the Mercedes pay+ function, actively rolled out on select new vehicle models beginning in March in Germany. In the announcement where Mercedes said it had begun using Visa technology to enable native in-car payments, the automaker’s customers in Germany can now pay for digital services and on-demand hardware upgrades
Kersten said that the initial use cases for payments remain firmly housed within the Mercedes ecosystem — paying for vehicle financing and maintenance. But the company is in discussion with several partners to see where the time spent on the road — during the daily commute and beyond — can be transformed in the years ahead as third parties become part of the Mercedes me ecosystem and Mercedes owners want to pay for everything from coffee to fuel from the car, by just activating the Mercedes pay+ payments function inside the car.
Kersten mentioned parking as an example of how partnerships between Mercedes-Benz and other providers can crystallize. In that case, Mercedes, of course, does not own the parking lots, but as Kersten said, “we’re partnering with external companies to bring in their assets.” In terms of the mechanics, upon driving into a lot and stopping the vehicle, the driver is prompted with a message that asks whether they want to start paying for parking at the moment — and the prompt to “stop” payment starts when getting back into the car and starting up the engine. Among the benefits: No longer hunting for a parking meter or feeding coins into a slot.
Looking ahead, there’s an opportunity to bring voice-activated commerce into the mix (through the Hey Mercedes voice assistant), and the existence of multiple tablets (used for infotainment) in the car also offers additional avenues for interaction (from passengers in the car, too). As consumers drive from Point A to Point B, he said, and find themselves wanting a cup of coffee or to charge their vehicles.
Kersten told Karen Webster that the Mercedes pay vision is clear, the principle is simple, but the execution is challenging. In-car payments, he said, have to be so easy and integrated into the experiences that drivers have inside the car that they will want to use it without thinking about how this all works.
“Turning the vehicle into a payment device has to be so intuitive that even my 70-year old mom will feel comfortable making in-car payments,” he explained.
It also has to be competitive with the ambitions of Big Tech companies. They, too, see opportunities to bring the commerce and infotainment ecosystems they operate outside of the car inside the car cockpit and are striking partnerships with OEMs.
A 20-year veteran with Mercedes, Kersten sees that as a catalyst for innovation. Operating as an internal FinTech hub, Kersten said that Mercedes pay’s goal is to bring the best innovations outward beyond automobile manufacturing. Payments and commerce will play an important part in their future.
“We already have a great piece of hardware, but we’re a software-driven company now,” he said.
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