In a matter of years there will be about 20 billion connected devices on the planet. This is the internet of things (IoT), and financial services institution Visa today announced its intention to turn many of these into a way for you to pay.
Speaking at today’s opening of IBM’s Watson IoT Centre in Munich, Germany - an enormous skyscraper with labs inside that will invite the company’s many partners in IoT to take up residence - Visa’s Jim McCarthy and IBM’s Bret Greenstein laid out their vision.
Think of what the plastic card in your wallet represents: it is a simple form factor that securely communicates a payment between the consumer and the retailer. But Greenstein suggested that its time may be up, as every object around us begins to have intelligence embedded within them, these could also be payment signifiers in some way.
The technology itself is called the Visa Token Service, which IBM describes as replacing sensitive payment account information found on payment cards with a unique digital identifier, running on IBM Watson IoT. These digital identifiers can then be placed into product lines - so, for instance, a connected car could lead the driver to the nearest gas station, and by using the pump, the driver has consented to being charged for the purchase.
If the concept of introducing transactions into every walk of life without the payment itself sounds like a pretty colossal behavioural shift, that’s because it will be.
During the keynote, he predicted a form of paying where the customer will only pay per use - this could extend to the driving of a car, which would understand how many miles had been driven. Or even watching content - a series of intelligent micro transactions enabled by a vast connected network. It could potentially introduce leasing or renting as an option anywhere it could be applied.
Greenstein said it will be the class of the device that would likely determine whether pay per use made more sense. A fridge, for example, is always on - so you would likely want to own one. But an expensive or somewhat esoteric tool that you’re likely to use once or twice a year might make more sense in a pay per use category.
The goal, then, is to perform transactions without the act of transaction itself: think Amazon’s concept bricks-and-mortar shop in Seattle that allows users to walk in, take what they like, and leave, with everything they’ve picked up charged to their Amazon account.
Visa hopes that the agreement will be as vital as its first with IBM - back in the 1970s when the two collaborated to work on the Visanet backend system.
“We’ll do a hundred billion transactions off the pieces of plastic we carry,” McCarthy said. “But the real magic is the technology called Visanet. That actually was built in cooperation with IBM.”
“To think about a world that’s mobile-first, digital-first, and AI-first in terms of all the data and information, most of which is unstructured, we need to think about how we scale,” said Visa’s Jim McCarthy. “We are a really small company -13,000 employees around the globe.”
“In a world that is getting increasingly software-first we need to partner and when we think about how we reboot this franchise, the partnership with IBM is right at our roots and in our core,” he explained. “It will allow us to scale to get access to those 20 billion devices that we would have a tough time doing if we were doing it directly.”
“What IBM has done today with Watson IoT allows us to take our software credentials and mix them with what IBM is doing here and in locations all around the world, with clients of all sorts - auto manufacturers, companies like Bosch, Ricoh and others, when payment occurs we can work through IBM and get access to those companies and create those new consumer use cases.”
In short, the finer details about what exactly these new uses look like do not exist. But the partnership gives Visa access to IBM Watson IoT’s more than 6,000 clients.
“We’re testing and we’re only constrained by the imagination,” McCarthy said. “This is now, developers out there are already engaged with us to embrace these APIs and build these solutions.”