The news: Daimler AG, the parent company of Mercedes-Benz, partnered with Visa to enhance payment authentication and security for its in-car payments solution, Mercedes pay, per Digital Transactions.
Here’s how it works: Visa will bring its Cloud Token Framework—which guards sensitive payment information with encrypted tokens and improves two-factor transaction authentication—to Daimler Mobility, the company’s unit specializing in financial products.
The integration lets Daimler drivers authenticate payments with their fingerprint from their car dashboard. The solution will be available for customers in Germany and the UK in the spring with a broader European rollout planned later.
Why it's worth watching: In-car payments are gaining steam as more connected cars hit the road—the number of connected cars is expected to top 352 million globally by 2023, according to Capgemini. And as connected cars become more mainstream, payment providers like Visa see an opportunity to expand their volume and revenues and use their transaction expertise to improve vehicle payment infrastructure.
- It’s why JPMorgan acquired a majority stake in Volkswagen’s payments unit, which includes services like in-car payments and may suggest the issuer’s interest in expanding further into the developing space.
- And last year, Fiserv teamed up with ExxonMobil to enable fuel payments for Amazon Alexa-enabled vehicles.
Visa’s opportunity: A tie-up with Daimler, one of the largest automakers in the world, gives Visa a foothold in the fast-growing in-car payments segment, which is expected to surpass a market value of $86 billion globally in 2025, up from just $543 million in 2020, per Juniper Research.
