Visa's SiriusXM deal is just one stop on a long journey for in-car payments

When Visa first introduced an automobile prototype designed to include a payments platform in 2015, it stated the intention for this research and development to be part of a five-year plan.

If Visa is still working with that timetable, the deal it struck with Sirius XM satellite radio this week to provide an in-car payments platform displayed on a dashboard represents a key step in that process. Notably, it moves Visa away from the need to work with individual car manufacturers, a process that was likely to fragment the in-car payments market.

Visa and SiriusXM plan to roll out the payment capabilities as an option in any 2019 vehicles in North America that offer the satellite radio services — an indication that Visa believes the concept can move forward quickly.

With Visa's system, a consumer who subscribes to SiriusXM can pay for gas, coffee, parking, tolls, movie tickets and other common amenities that can be purchased in advance without ever leaving the vehicle.

The SiriusXM deal doesn't invalidate Visa's other in-car payment plans. A year ago, Visa revealed plans to work with Honda to develop in-car payments for parking and fuel. The companies were working with IPS Group for the parking transactions, and Gilbarco Veeder-Root for fuel payments. Visa has kept that relationship with Honda and its Honda Dream Drive prototype.

"Over the last few years, our objective is to take a leadership role in enabling a diverse digital payment ecosystem across internet of things connected devices and our new venture with SiriusXM complements this approach," said Olabisi Boyle, vice president of IoT at Visa.

While the current focus with SiriusXM is on the connected car, it could also apply to other IoT platforms in the future, Boyle said.

"Our IoT Platforms group mission it to enable a digital payment ecosystem across a myriad of connected devices that include the verticals of car, home, cities and retail," Boyle added.

One of Visa's first ventures five years ago resulted in an agreement with Pizza Hut and Accenture for in-card food ordering. That particular project featured Visa Checkout communicating with beacon and Bluetooth Low Energy tech at the pizza restaurants. Its strategy has clearly evolved from that time.

"This is a long-term investment for both parties and there will be many competitors," said Richard Oglesby, president of AZ Payments Group and a senior analyst at Double Diamond Payments Research. "For Visa, this is just one of many possibilities for emerging payment channels."

Part of Visa's ongoing strategy calls for the card brand to enable all payment verticals "to maintain its competitive position regardless of what happens in the future," Oglesby said.

"For Sirius, it’s an opportunity to increase the breadth and value of its services from being an in-car entertainment provider to being an integrated solution provider," he added. "Payment is just one piece of that puzzle, but it’s an important one."

The companies will power the SiriusXM e-wallet through the vehicle dashboards, using application programming interfaces that will also allow the Visa Token Service to operate as an extra security layer.

Users will activate and authenticate payment with their Visa account using biometric authentication, such as voice and touchscreen commands. However, the user experience will vary from vehicle to vehicle.

The SiriusXM e-wallet features will be available to drivers and their passengers in the vehicle while driving or when stopped, according to SiriusXM, and the service operation will adhere to all local laws as it applies to hands-free or other stipulations.