The Future of Payments Hinges on IoT and Machine to Machine InterfaceNeeti Kotia
Earlier this year, Amazon made quite a stir when it opened a new brick-and-mortar store. It doesn’t sell anything unusual but there is something special about the store itself. There are no cashiers or checkout counters! Customers have to just walk in, grab anything they want and leave, that’s it. No, the products aren’t free, they will be later billed to their Amazon account. More than anything, what this futuristic store strongly reaffirms is that “the new age of IoT” isn’t coming anymore, it’s already here.
Then there is also the much talked about M2M that has quietly attained the pole position in virtually all areas of our lives. When was the last time you manually paid the toll on an expressway? Or remember that PoS you used for card payment? Hope you got the picture. And while these technologies have varying applications ranging from smart homes to smart cities, we will be here focusing on one key aspect- digital payments. In fact, it’s much more than that but will come back to it later.
Before we dive into specific applications, there is a shred of doubt that needs to be clarified- M2M and IoT are not the same but still are often used interchangeably. The reason they are different because they use different methods to communicate with their server- M2M uses standard cellular or wired connection while IoT is based on IP connections. Plus, data collected and shared by M2M modules are limited to the point-to-point interface while those collected by IoT are often shared with multiple enterprise applications and are subjected to a whole scrutiny under data science including Big Data, data mining, predictive analysis, and much more.
Then why do we use them interchangeably?
There are two reasons- 1. It’s all the same for consumers; 2. They are gradually converging. Let’s try an example- a traffic light that sends data to a central control-room is an M2M but when that data is processed to get various metrics of traffic, it becomes an IoT. Now if you are the consumer, it’s all the same to you and as IoT application development progresses to incorporate new domains, that barrier between the two is only going to de-escalate.
Now coming back to payments, deploying IoT and M2M solutions do not only make them digital but when fused with AI and ML, can also make them autonomous- just like Amazon Store did. It is a proof of concept that can easily be applied to all offline transactions- when you make your purchases, merely you presence will authenticate the payments.
But what about security? If merely possessing your phone or your smart watch gives access to your bank account, isn’t that a security nightmare? Plus, there is also the skepticism regarding how do you know you are billed correctly if the payments are happening without even you knowing about them? While both of these are genuine concerns, of which there is no airtight solution, there are still enough safeguards in place to push the transformation further.
As the Bible would say for these problems, the technology giveth and the technology taketh away. If you know anything about digital transactions, you must be aware that there are billion such cases every day amounting to trillions of dollars and we have created intelligent systems that detect fraudulent activities to near perfection. That is, if you walk into a store one day, you have never been before to buy something you generally don’t buy or are spending out of your general habit, the system would automatically flag such payments and ask for additional authentication.
On the closing note, it won’t be an overstatement we say that we are currently underway a seismic transformation in terms of payments, primarily fueled by IoT and M2M. And as mentioned before, the more IoT app developers converge these technologies with those related to artificial intelligence, these systems would only become more practical, robust, ubiquitous, and after a while, a new normal.