Blockchain-powered eWallet to Automate Payments in Smart Cars
【Summary】This particular blockchain network is private; and instead of humans facilitating and securing the network, nodes will be monitoring the system 24/7.
In the financial technology (fintech) industry, the blockchain is equivalent to what self-driving technology is to the automotive sector. For those who aren't familiar with the blockchain, it is an incorruptible digital ledger that relies on a network to confirm and verify financial transactions – the same set of protocols used to power bitcoin and other cryptocurrencies.
The blockchain is being adopted by numerous financial institutions worldwide, including Santander, Merrill Lynch and the Depository Trust and Clearing Corporation (DTCC), due to its ability to streamline transactions (money transfers) cost-effectively and in a timely manner. This technology can be applied to other processes that require transparent verification, such as smart contracts and electronic wallets.
The latter is being integrated into smart cars to automate vehicular payments, which is being pioneered by German auto parts maker ZF Friedrichshafen, the Innogy Innovation Hub (a spin-off of German utility giant RWE) and Swiss Bank UBS.
The group's project, called Car eWallet, is a blockchain-powered network that allows people to engage in financial transactions, such as paying for road tolls, parking spaces, drive-thru payments, as well as machine-to-machine transactions. These payments will be carried out through an e-wallet that is embedded in the vehicle's Electronic Control Unit (ECU). This particular blockchain network is private; and instead of humans facilitating and securing the network, nodes will be monitoring the system 24/7.
"We at UBS believe the blockchain is a potentially transformative technology that will leave as deep a mark on our world over the next twenty years as the Internet has over the last twenty," said Axel Lehmann, UBS Group Chief Operating Officer.
Blockchain-powered wallets, when integrated with smart cars, can add a new layer of seamlessness to everyday transactions. For example, imagine going through a carwash, buying coffee at a drive-thru and getting gas – without ever having to pull out your wallet or smartphone (this beats mobile payments too). All monetary transactions are completed autonomously through the blockchain e-wallet, making people at cash registers and toll booths obsolete. Such applications could also disrupt the ridesharing industry by decreasing reliance on centralized payment systems to process financial transactions.
No Cash Needed
For smart cars, the blockchain could help eliminate meticulousness that comes with handling banknotes (paper cash). Some countries, like Denmark, are already in the process of eradicating the use of cash. To date, only 25 percent of financial transactions in the country are cash-based.
"Eventually, establishments may soon have the right to reject cash- a practice that is common in Sweden. Government officials have set a 2030 deadline to completely do away with paper money," said Michael Cheng in a post published on Payment Week.
"When it comes to daily purchasing practices, Danes prefer to use credit cards. Andreas Sigsgaard, a hotdog vendor, confirmed that only tourists pay with cash at his stand."
To see blockchain e-wallets come to fruition in smart cars, machine-to-machine protocols must be established firmly and reliably, since this form of payments moves away from outdated, slow financial verification processes.
Michael Cheng is a legal editor and technical writer with publications for Blackberry ISHN Magazine Houzz and Payment Week. He specializes in technology business and digesting hard data. Outside of work Michael likes to train for marathons spend time with his daughter and explore new places.
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