Autonomous Vehicles, Connected Vehicles, and Their Impact on Payments

Mercator Advisory Group’s most recent report, Autonomous Vehicles, Connected Vehicles, and Their Impact on Payments, finds that autonomous vehicles (AVs) is a quickly evolving category with pilot programs, small scale deployments, and implementations happening across the U.S. and the globe. Covid-19 has led to new areas of focus and implementation, speeding up and expanding trial and usage of contactless purchases, payments, and deliveries. The pandemic increased consumer need for, exposure to, and acceptance of contactless delivery and the use of autonomous delivery robots and vehicles.

While much of the AV publicity is related to fully automated self-driving cars moving people in cities, the reality is that the most advanced trials and implementations are happening in the areas of moving packages and food rather than people (zero-occupant) and moving along predefined paths rather than flexible routes. Walmart has been testing self-driving truck and drone deliveries. Amazon has been making deliveries with its autonomous robot, Scout. Uber recently spun out the Postmates X robotics unit under the name Serve Robotics, which has been making deliveries in Southern California. Autonomous vehicles will have a major impact on the payments ecosystem.

AV benefits include time and cost savings, convenience, a smaller environmental impact, and reduced staffing requirements, a particular advantage in areas where there are labor shortages. However, there are also a number of challenges associated with the widespread adoption of autonomous vehicles, including those related to infrastructure, legislation, and safety concerns. Companies are testing a range of uses in multiple locations and applying the learning from one situation to the others (e.g., from ride hailing to trucking to local delivery).

“This is a highly impactful report,” stated the author of the report, Don Apgar, Director of the Merchant Services and Acquiring practice at Mercator Advisory Group. “We are following this among a number of similar technology trends that are making payments a frictionless and invisible part of our everyday activities.”

Highlights of this report include:

• Faster, safer, convenient, and more secure delivery options will lead to incremental purchases.
• AV stores on wheels will offer an expanded geographic footprint and hours.
• Digital tracking will help merchants minimize out of stocks and optimize the assortment they offer to maximize profits.
• The cameras and sensors added to AVs should help with minimizing theft and tracking deliveries.
• Key questions will need to be answered regarding the distribution of benefits among merchants, payment systems, delivery services, and consumers.