A new way to manage payments through smart objects

Marco Loro

Easier and safer transactions thanks to tokenisation

Commonly used objects, which make purchases independently

The washing machine realises that you need to change the filter, orders it and buys it online. The meter buys the energy it needs in real time, to manage a peak in consumption and prevent a loss of power. The connected car which, if parked on a geo-located parking area, “understands” that the user is asking it to make the parking payment. Commonly used objects, which make purchases independently: the last frontier of the Internet of Things, applied to the payment system.

It will no longer be the consumer to initiate a payment using digital devices, but the object that will understand the context and pay for the service, then deliver it directly. Pay Reply, with a team of payment architects, is designing and planning digital payment solutions in which it is no longer people who do the buying, but “smart” objects.

Invisible payments

In the very near future everything can be managed automatically by objects, thus allowing us to move from the “one click experience”, where it was still necessary to subscribe to an online service and to have consumer interaction to complete the purchase, to the “invisible payment”, which simplifies the payment process, allowing smart objects to make purchases for us.

A revolution that can be applied to wearable devices, to mobility and the services offered by smart cities, with the services offered by e-bikes for example, or to in-store payments, like the supermarket which you can leave without going through a checkout because artificial intelligence recognises the objects and loads them into the virtual shopping bag associated with the user’s profile.

Tokens, safer than cards

Payment by connected and intelligent objects will be possible thanks to tokenisation: Inside the object there is a “secured amount”, in other words the token, connected directly to a payment card. When the object needs to make a payment, it uses this secured amount to trigger the purchase process, guaranteeing its reliability. This approach has many advantages.

To date, registration and then payment on an e-commerce site requires several actions and information to the customer, rendering the process complex and associated with high abandonment rates. Moreover, the users’ payment data is distributed across several platforms (from those of the retailer, to those of the payment system), with a consequent increase in data security risks.

With tokenisation, consumers can manage the life cycle of each of their tokens and revoke it or limit it from a temporal point of view, for example by setting deadlines, or by setting limits on the amount. If a token is stolen, it cannot be used by third parties to carry out a financial transaction. Tokenisation is already a reality, on the consumer side, when it comes to contactless payments made through smartphones, the service models linked to the Internet of Things still remain to be implemented.

The new system thus offers consumers a better way of managing their payment tools, as well as greater transparency and security.The purchases made by objects can be configured to send “push” notifications in real time to the consumer and can be monitored via an app. Thus, even if the payment becomes invisible, the user never loses control.