At the annual consumer electronics show in Las Vegas earlier this month, Honda demonstrated an in-vehicle payments platform. Through a partnership with Visa, Honda will enable drivers to pay for a variety of services through their car, such as for parking and fuel. The car manufacturer made clear, however, that it wanted to enable in-car payments for a variety of other services in the future.
Honda is not alone. Volkswagen Financial Services AG recently announced that it had purchased mobile payment platform PayByPhone. Ford has announced a virtual wallet service called FordPay. And on January 17, 2017, Daimler Financial Services AG announced that it had acquired PayCash Europe SA and was planning to launch its own epayments service, “Mercedes pay.”
The integration of payment processes and related services into cars has the potential to bring about significant benefits for consumers. It also raises a variety of issues for automobile manufacturers and for merchants who want to be involved. For example, PayCash Europe (the entity acquired by Daimler) is regulated by the Luxembourg banking authority. In the United States, however, an entity cannot “passport” its money transmitter license among the states, so companies will need to analyze whether they’ll need licenses in the various states in which they operate. In addition to licensing issues, both automobile manufacturers and payments companies should think carefully about how to structure their partnerships (or acquisitions) to ensure that the regulatory compliance roles and responsibilities are clearly established.