Ford enlists Stripe to drive car sales and put payments on the dashboard

Ford has entered a five-year deal with Stripe to not only modernize the automaker's e-commerce capabilities, but allow in-car commerce as well.

Ford Credit, the automaker's financial services division, will use Stripe's technology to speed development of digital payments in North America and Europe, Ford announced Monday.

The partnership comes as younger consumers enter the car-buying market, bringing with them the expectation of a seamless digital shopping experience.

"Younger generations are used to buying everything on mobile," said James Dyett, head of global product sales and payments performance at Stripe in San Francisco.

By implementing Stripe Connect, a product that businesses use to facilitate purchases and payments between third-party buyers and sellers, Ford will connect potential car buyers to their local Ford or Lincoln dealer. Stripe will additionally provide Ford dealers with payment acceptance, process transactions for vehicle ordering and reservations, and support Ford FinSimple, the automaker's financing bundle for commercial vehicles, servicing and electric charging.

"There's a whole host of opportunities that we are working with Ford to unlock, particularly once the car itself becomes a way of paying," Dyett said.

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There is a growing trend of embedding payments inside cars to cover travel needs such as paying for gas and parking, and eventual in-car commerce systems that allow the purchase of food and entertainment. JPMorgan Chase, for example, in 2021 acquired 75% of Volkswagen Payments, obtaining artificial intelligence, internet of things and other innovation for in-car shopping and B2B payments for ride-sharing companies or fleets. And Visa and Mastercard are working on ways to connect merchants and drivers through in-car shopping and payments.

"You can imagine somebody wanting to pay for charging for their car automatically without taking a card out of their wallet, or have fuel automatically paid for by their employer through a simple experience," Dyett said.

Like most merchant categories, car buying is becoming increasingly digital.

More than half of auto shopping starts online, according to Bain & Co., which attributes the trend to a greater number of digital natives such as millennials and Gen Z consumers entering the automotive market. Bain also reports nearly two thirds of buyers make decisions on a make and brand before visiting a dealership.

The total global automotive e-commerce market is projected to expand from $51 billion in 2021 to $203 billion by 2028, according to FortuneBusinessInsights. There has also been a boom in overall auto lending over the past year, with large lenders such as Ally Financial, JPMorgan Chase, U.S. Bancorp and Fifth Third Bancorp all reporting strong performances in 2021. Ford Credit's most recent financial report for the third quarter of 2021 showed earnings before taxes of $1.1 billion, down from second-quarter earnings before taxes of $1.6 billion, which was a record. Stripe's Monday announcement does not cover loan repayments, Dyett said.

Stripe can be helpful in supporting a variety of emerging payment and e-commerce use cases, according to Ford. "There are subscriptions for streaming content, hands-free driving, and many other use cases that will come up," said Julien Jacquet, chief product officer for Ford Credit in Royal Oak, Michigan. Stripe will cut down on time to market for new payment products that arise by helping Ford avoid separate deployment projects for each new addition. "It's not just about the vehicle anymore. It's about the vehicle and the capabilities."

Other technology companies are also pursuing the automotive e-commerce market.

Wipro, a Bengaluru, India-based technology company with several offices in the U.S., in November released Click-Shift-Drive, a contactless car buying product that supports shopping, loan approval, purchase and delivery. Wipro, which provides auto financing technology to U.S. banks, is targeting millennial and Gen Z consumers, using augmented reality and a partnership with Salesforce to power online shopping and auto payments.

Stripe, one of the world's most valuable privately held technology companies, with a valuation of about $95 billion, has been adding services designed to draw merchants that have traditionally relied on in-person shopping.

"We think of this Ford deal more broadly as part of a strategy to reach enterprise companies that want to facilitate payments between consumers and a third party," Dyett said. He noted that Stripe's clients include Instacart, Lyft, Uber and DoorDash, which use Stripe to connect consumers and drivers; and Salesforce and Shopify, which connect shoppers and small businesses.