Electric vehicles (EVs) represent a new paradigm of connected experience. The ongoing transformation in the automotive industry is more than just a transition from gasoline to electricity — it’s evolving how consumers interact with their vehicles.
Payments, along with commerce, sit squarely at the forefront of this technological shift.
“EVs represent a tremendous amount of opportunity for the payments ecosystem,” Julius Alexander III, the head of emerging payments at Discover® Global Network, told PYMNTS, highlighting that the shift to electric vehicles necessitates the development of new payment solutions tailored to the unique needs of both EV drivers and the sustainable mobility sector as a whole.
According to the International Energy Agency (IEA), electric car sales saw an increase of 35% in 2023, with an additional 3.5 million units sold worldwide compared to the previous year. The U.S. market alone experienced a 60% surge in EV sales.
Still, the transition to electric vehicles is not as easy as flipping a switch. Scaling EV adoption, while full of opportunity, brings with it a set of challenges distinct from the traditional petroleum-based experience.
“The payment process is extremely important, and it can help the industry achieve high levels of innovation while providing payment methods familiar to consumers in their daily lives,” Alexander said.
One of the challenges facing EV drivers today is the charging infrastructure.
Alexander said the EV charging process involves multiple dependencies, ranging from the connectivity of the charger and payment terminal to the functionality of the charging back end. Even seemingly minor factors, such as weather conditions and the condition of charging plugs, can impact the overall experience.
“We’ve seen that payment processors are often the first step to activate the charger and are also often mistakenly blamed for non-functioning units as well,” he said.
Alexander said Discover’s in the equation is to ensure that the adoption of sustainable mobility is not hindered by potential friction in the customer experience. This includes collaborating with various stakeholders in the EV ecosystem, from suppliers to mobile app providers, to enhance the customer experience and promote seamless payment options.
“Key differences for EV payments that we’ve observed to date are lower fraud rates as well as smaller transaction sizes, but more frequent transactions,” Alexander said. “With EVs being electric vehicles, a lot of the car features are dependent on the same thing, the same energy that’s making that car move, unlike with traditional vehicles.”
The importance of payments in building consumer trust around a reliable national charging network cannot be overstated.
Interoperability and range anxiety are two significant concerns for EV drivers, and Alexander said Discover is playing a crucial role in addressing these issues by maintaining strong relationships with EV supply equipment manufacturers and offering guidance on integrating payment solutions into the charging experience. By working closely with the entire ecosystem, it’s possible to provide a consistent and reliable experience, he said.
Discover has implemented several features to enhance convenience for EV drivers. One notable innovation is incremental authorization, which can provide consumers with a seamless, pay-at-the-pump-like experience when charging their vehicles. This feature not only benefits consumers by confirming the availability of funds but also provides value to merchants by enabling them to charge fees for parking spaces occupied after the charging session has ended.
Technologies such as in-vehicle payments and secure remote commerce are expected to play a significant role in the EV charging ecosystem, he added.
As the EV market continues to evolve, Alexander is excited about the potential for further innovation in the payments landscape, particularly the rise of autonomous vehicles, which will create new opportunities for enhancing the customer experience during travel.
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