New Mobility, the future of mobility will open doors to new passenger transport. Electric, driverless and cashless will be important features. It will change the way we travel, the way we shop and the way we work – and it will make our mobility more sustainable.EVP Group Strategy Markus Eichinger gives you insights into how this megatrend is made possible by the intelligent use of new technologies – and what a central role payment plays in this.
More environmentally friendly and smarter: the need for New Mobility solutions
Mobility and climate protection are on everyone’s lips at the moment. And rightfully so: Globally, about 15 percent of manmade carbon dioxide comes from transport vehicles, i.e. cars, but also trucks, planes and ships. At first glance, this share may not sound very high – but it is growing massively in terms of quantity, as a look at the global air traffic as an example shows: while in 1990 it was responsible for the emission of 258,941 megatons of CO2 produced by fossil fuels, by 2017 emissions had already reached 543,381 megatons, an increase of almost 210%.
Apart from passenger traffic, emissions from international shipping due to growing world trade and the rise of e-commerce have also grown massively: from 371,804 megatons of CO2 in 1990 to 677,248 in 2017, an increase of over 182%.
The increasing populations worldwide and the growth of emerging economies exacerbates this problem even further – which is why new forms of mobility are urgently needed. And they are already emerging – just take the following examples:
Beijing Daxing, the world’s largest airport, which was recently built. With its ultra-modern and spectacular design, it symbolizes the huge hunger for mobility especially in the emerging markets.
Completely new urban mobility concepts are springing up like mushrooms in western cities: From car sharing to autonomous cars to e-bikes and e-scooters. Despite some teething troubles, they are enjoying growing popularity.
Amazon’s order of 100,000 electric transporters from the Startup Rivian is a good symbol of the dynamism that electric mobility has already achieved and how important climate protection has become for companies.
This leads us to our thesis that digitalization will change mobility and travel in the long term and allow global trade to grow further.
How technology enables entirely new approaches to mobility
The demand is huge and groundbreaking technologies such as AI, machine learning, IoT, smart data, 5G, digital platforms etc. open up completely new possibilities for New Mobility. In the following we explain which mobility megatrends are driven by changing needs and enabled by new technological possibilities – and what central role payment plays in this. And since cars are not only the most important means of passenger transport overall, but also, as seen above, the main cause of CO2 emissions among all means of transport worldwide, we will pay particular attention to them in the following.
These three technology-driven solutions satisfy the growing need for New Mobility:
1. Integrated mobility – enabling mobility as a service
These days, car dealers are not doing well, with more and more having to close down. The reason is that more and more city dwellers are asking themselves: Why should I own my own car at all? The concepts of sharing economy and mobility as a service are becoming increasingly popular – which in turn is an important prerequisite for the realization of so-called Smart Cities.
This is made possible by intelligent apps that help us plan complete journeys for ourselves, advise us which means of transport and routes we should use, taking into account traffic jams, construction sites, personal preferences, etc. To ensure such connectivity and a seamless user experience, you need solutions based on a digital platform.
While there are still four different apps for car sharing and five for e-scooters in Munich alone, the future belongs to comprehensive solutions: By using just one connected travel app, payment will also be greatly simplified for users. They deposit their preferred means of payment once and pay for everything they need for their mobility – visible or invisible: from parking fees to fuel and flight reservations.
But integrated mobility also brings advantages for other means of transport: Compensation due to flight or train delays or loyalty points can be paid via an app thanks to the platform-based system.
Integrated mobility solutions make the mobility smarter, greener and more comfortable – and they enable city dwellers to use "mobility as a service" and no longer need their own car. (Source: Frost & Sullivan: Future of Mobility)
2. E-Mobility: The challenge behind seamless charging
New, cleaner drives reduce the environmental footprint and changes the way we move, including private and shared e-cars, e-motorcycles or e-scooters etc. Through tax policy and regulatory policy, governments worldwide will increasingly promote e-mobility, and at the same time "punish" those who still use conventional combustion engines by means of more and more heavy taxation.
But even more important than tax incentives for the acceptance of e-mobility are not only factors such as acquisition costs of electric vehicles and their range, but also infrastructure and payment processes. Once again, payment providers are called upon to develop smart payment solutions for recharging the e-car.
This must be possible seamlessly, no matter whether I refuel in euros in my home town or during my holiday in Norway, where kroner are the valid currency. That is why cross-border and multi-currency solutions are needed. Payment providers must take on the task of ensuring exact billing with a wide variety of providers.
As in other industries, again it’s a simple and secure payment process that makes users happy by providing them with a seamless customer experience. Either with or without prior registration or a contract linked to the electric vehicle driver’s home power tariff. There are various possibilities for payment at public charging points, including:
- Scanning a QR code using a smartphone and being directed to a payment option such as credit card, PayPal, etc.
- Paying by app with various payment options
- Contactless payment by smartphone or credit / debit card
- Fully automatic, "invisible" payment by the car itself, via the previously defined payment option (read more about it below)
Having to get out of the car to pay for electricity, gasoline or a car wash? That will soon be the past!
Modern technology allows invisible payments, letting your car pay for you automatically – by turning it into a connected car. In Singapore, it has been standard practice for years for all cars to be equipped with a device that allows them to enter and exit parking garages without having to cross a barrier. Same for intelligent parking columns that recognize the cars and the fee is debited automatically. Drivers on toll roads enjoy the same level of comfort – they simply use them and the vehicle automatically pays for the distances driven.
Also other options are conceivable: if drivers want to go on holiday, they can extend the insurance for the foreign country. Based on the GPS data of the vehicle, it is possible to automatically take out travel insurance.
This depiction by Payment and Banking (click here for the complete infographic) shows impressively what an important future market connected cars will be – and already is today. In-vehicle payment cases range from car washing and hotel bookings to repair services.
Another exciting area is active payment by the driver. Autonomous cars in particular make it possible to find out about concerts in the evening while driving and then buy tickets via voice control.
In the case of payments actively triggered by the driver, this process must be particularly simple and intuitive so that the driver is not distracted from the traffic. Of course, this is especially true for conventional cars, where people still drive themselves. For example, through appropriate AI-based technology it is sufficient if the purchase is confirmed by voice – biometric verification through the previously registered voice makes this option very secure and convenient.
If the car pays invisibly by itself, it must be ensured that there is no confusion – but that users pay exactly e.g. for the toll and road fees or the parking space they actually used.
Guiding you to a parking space, paying for the refuel, ordering coffee, even redeeming points for VIP concert passes, these are some of the possibilities of the connected car as Visa shows it here in their vision for in-car payments (Source: Visa)
Conclusion: Payment paves the way for New Mobility – and is challenged by it
Remember the last time you fed a shared car coins or bank notes before using it? You see, neither do I. Cashless, digital payment solutions - whether active by the user or automatic by the car – have made the megatrend New Mobility possible in the first place. All means of New Mobility transport will be more and more interlinked to make them easy to use – it’s always about the seamless customer experience.
In addition, when we think of integrated mobility solutions where you just pay once for using an e-scooter, the bus and an Uber car, the distribution of funds to many different partners is also perfectly mastered by the payment industry.
The key challenge for integrated apps, however, is a common user identifier or account. While this continues to be the “holy grail” of interoperability, in my opinion the payment industry is in a prime position to provide exactly this identifier through mobile wallets or card tokens. This is because the means of payment, which have to be specified anyway before any means of transport can be used, enable users to be identified unequivocally and securely. This puts the payment industry in a prominent position to participate in the New Mobility megatrend that holds an enorumous global potential – and to be continually challenged by it in order to enable ever smarter, greener and more seamless mobility worldwide.
Do you want to learn more about all the other digitalization-driven megatrends that will have a profound impact on the payment industry this year and in the upcoming years? Find them all here: The Payment Megatrends Series