“With a trillion sensors embedded in the environment, it will be possible to hear the heartbeat of the Earth, impacting human interaction with the globe as profoundly as the Internet has revolutionised communications”. Peter Hartwell, senior researcher at HP Labs, shares the belief that the Internet of Things is about to profoundly alter the way we live, communicate and interact. EDC shares the same belief and discusses the transformation of the Internet of Things (IoT) and Connected Objects on commerce and payments.
Grégoire Toussaint will chair the session on IoT at TRUSTECH Incorporating CARTES from 29 November to 1 December 2016 in Cannes, French Riviera. Join us there to discuss the evolution of IoT and Connected Commerce: www.trustech-event.com.
Technology is transforming our lives and commerce
In the past 15 years, technology has prefigured the advent of a new era where communication and information are embedded in our very lives. Long gone is the time when some of us were looking forward to receiving snail mail or using cord phone.
We all now own a breadth of different screens, ranging from desktop, laptop, smartphone or tablet, which can be used concomitantly and for a variety of purposes. Commerce has grasped this transformation and merchants have seized the opportunity to launch e- and m-commerce. They are now bridging the gap with brick-and-mortar shops to develop omni-channel strategies and generate synergies across sales channels.
All is about to change again. The sheer growth of the number of connected objects ranging from 10 billion today to 50 billion in 2020 according to different market research means that a new revolution is underway and commerce will definitely be part of it. This analysis is shared in EDC’s 2016 Advanced Payments Report: 93% of surveyed senior executives in payment think that IoT will find applications in a large range of industries and 85% believe that IoT will ultimately change the way we live, shop and pay.
Some questions spring to mind. When will it happen? Which devices will make it happen? How will this opportunity materialise?
The advent of the Internet of Things
A new industrial revolution is indeed underway. Some objects like a watch, a fridge or a car with “basic” functions today will evolve in connected devices providing smart information and enabling new opportunities of interaction.
The number of potential use cases is colossal and affects many industries. Examples range from a smartwatch providing rebate on health insurance depending on level of physical exercise like life insurance MLC in Australia, a fridge like Samsung ordering automatically groceries to a car becoming a travel assistant and booking automatically restaurants and hotels based on a set of specific criteria. These examples may have once been compared to George Orwell’s 1984 novel but are about to become reality and transform our very daily lives.
Connected Object, a pillar to develop innovative applications
EDC defines IoT as the interconnection of uniquely identifiable and smart consumer objects and industrial equipment via the Internet. This leads to two key applications:
- Industrial-related applications with, for instance, automation and control of supply chains or smart farming
- Consumer-related applications with three segments with high potential in the short term: wearables, connected home and connected cars. Other segments such as connected cities or transport have also significant potential. These Connected Objects are the cornerstone to develop a breadth of opportunities and provide new services to consumers
Wearables gathers a wide range of different devices ranging from watches, wristbands, jewellery or glasses. It is estimated that there are now 70 million wearables in circulation with a staggering 50% annual growth rate expected between 2015 and 2020 according to Gartner. Examples abound with the Apple Watch and Apple Pay, the partnership between Bellamy’s Swatch watch and UnionPay and the launch of low-cost wearables ($13) by Xiaomi partnering with Alipay in China.
The potential of connected home is immense, considering all potential applications related to kitchen and cooking, energy savings or home security. Connected cars are on the radar of many companies, starting with car manufacturers as evidenced by Ford’s launch of FordPass, an application providing mobility options and merchant rewards with an integration of the mobile wallet FordPay.
EDC’s vision: Connected Objects with payments become commerce enablers
Connected Objects will provide a breadth of innovative use cases. These devices coupled with the integration of payments will allow to expand beyond their original purpose and become true commerce enablers. Contrary to IoT, payments benefit from well established standards focused for instance on inter-operability and security.
It is not surprise to see IoT players partner with payment companies, integrating payment within Connected Objects. Jawbone’s fitness band closely tracks physical exercise and monitors health. But the same band can also be used to pay for groceries after running thanks to Jawbone’s partnership with American Express to transform a fitness band in a payment device.
Players involved in wearables, connected home and connected cars can expand the value proposition of their devices or solutions by integrating payment and create innovative services for consumers. The partnership between Samsung and MasterCard is another good example to create a connected fridge with the ability to order groceries automatically.
In our Advanced Payments Report, 68% of surveyed senior executives in payment believe that IoT will revolutionise the payments industry as every connected device can be a vehicle for commerce but security is thought to remain the biggest concern by 84% of respondents.
Payment crafts a wide array of opportunities in the IoT sector and Connected Commerce will be powered by connected objects with payment capabilities.
Strong potential yet to become reality
EDC believes that Connected Objects will empower the way we purchase to create innovative consumer experience. Many hurdles are still yet to overcome with a fast growing but fragmented eco-system that needs to mature and integrate with other industries.
Considering the size of the pie and the strong interest alike from IoT actors, payment companies and merchants, Connected Commerce has exciting perspectives in the years to come. 46% of senior executives in payments indicated that IoT will become mainstream within the next 3 to 5 years and 37% within the next 6 to 10 years. Let’s follow closely the emergence of this sector to see when Connected Commerce becomes prevalent and an intrinsic part of our daily lives.