The rapid rise of the 'Internet of Things' has opened up spectacularly the possibility of everyday devices, such as like refrigerators, going beyond their traditional functions to become payment platforms. But, is it realistic to imagine an 'Internet of Payment through Things'?
The arrival of such devices en masse in our daily lives could be just the first step toward the development of connected houses, with a wide range of coordinated devices equipped with sensors, allowing them to detect our daily activities and anticipate our needs based on this information. And this, obviously, is where payments 2.0 comes in. The growth of the Internet of Things makes it urgent to table a series of questions:
The opportunity for new business models
The possibility of new offers and services is now opening up, especially in relation to data stored as the result of monitoring our daily activities. For example, we will be able to link financial benefits or penalties with the monitoring of user activities (for example, intelligent scales can allow health insurance providers to reward their customers for meeting monthly weight loss targets).
Thinking about changes in the user experience
Obviously, our experience as users will not be the same if our refrigerator depends on an external device (such as our smartphone) to make payments compared to it hosting our credit card or Paypal account data and thus permitting automatic payments. As explained by Mickey Ristroph, CEO of Mutual Mobile, a team of designers and engineers helping companies to develop devices, the trick is for the user not to have to think about payment processes or the type of technology that makes them possible in the course of their daily activities. In the Internet of Things payments should be invisible and transparent.
The need for new financial information security systems
One of the major problems that payments in an Internet of Things will have to face is that we do not use these 'things' in the same way we use other devices connected to the internet up to now (PC, tablet, smartphone, etc): they are purchased, installed and started up, and they can operate indefinitely without requiring our attention, making it less likely that we will notice if they not operate normally.
However, many studies have detected high percentages of smart appliances running and connected to the Internet without their users having taken the trouble to change their default settings (with no password or an insecure password). In some cases, this was found when investigating avalanches of spamcoming out of such devices.
If the time comes when payments are a key element in the Internet of Things, we will have a problem if manufacturers, developers and users do not place greater emphasis on security than they have up to now. And the problem is compounded when we have to take account of aspects such as devices being used by multiple users, who in many cases will not share a family nucleus (as is the case for vehicles).
In this context of serious risk to our financial data, banks, thanks to their position as trusted institutions, could play a significant role in protecting such data, since they already have their own technological infrastructure.