As Car IQ Founder and CEO Sterling Pratz told PYMNTS, it wasn’t really an idea ready for development because the underlying infrastructure hadn’t been built yet. Connected cars, he said, are only as useful as what they connect to.
“Fast forward to today, and gas pumps are connected, tolling stations are connected, parking lots are connected, McDonald’s is connected, Starbucks is connected,” Pratz said. “These things suddenly become a reality of today.”
The connected car future, he said, is here. As of today, Car IQ is connecting cars directly to merchants to pay for services. They are buying fuel on demand, paying for services at centers like tire changes, brake jobs, tune ups, oil changes and general incidentals around the car. They’re moving into things like tolling and parking. And although Car IQ started by focusing on car fleets, as of the third quarter of 2021 it will be moving into consumer facing services as well, and eventually Pratz said, perhaps even into the world beyond automotive.
“We see this [as] something to be used for all types of machines,” Pratz said. “To be honest, we designed it as a machine payment platform.”
Know Your Machine
Making connected car commerce happen, Pratz said, starts with authentication. There are already hundreds of millions of machines connected to the cloud, but almost none are connected directly to a bank or payment network. The first question Car IQ had to tackle was how to create a platform that could connect a machine directly to a bank and enable that bank to trust that transaction and trust that machine “is who it says it is.”
When banks deal with people, they use the know your customer (KYC) process; what they need, and Car IQ has set to build out, is the analogous know your machine (KYM) architecture in place.
“We realized that machines have these attributes that are much different than a human, and that you can look at the data inside of a machine and correlate that data to exactly who that machine is and what it is,” Pratz said. “We actually associate the data that the machine is composed of, and we’ve developed very complex algorithms to help us look at the behavioral identity of that machine. And that allows us to connect that machine directly to banks and payment networks securely.”
Leveraging that KYM system, the company in September closed a deal with Discover to collaborate on an automotive machine banking system that will place Car IQ technology into the Discover payment platform. And the Discover announcement, he said, will be one of likely many as banks and payment platforms are increasingly interested in how they can connect themselves to the connected car.
They see the future is coming, where it is headed, and they want to make sure they are ready to bring that volume to their own networks, Pratz said.
The Connected Car Consumers
Car IQ started in the B2B space and at present works with mostly fleet customers looking to connect their thousands of cars at once, he said. And the excitement there is palpable as fleet customers like the additional controls they can add, the helpful way the company closes up friendly fraud leaks (like drivers using corporate cards to fill up their personal vehicles as opposed to the company’s), and the ways in which connecting the car (or truck) make accounting simple and fairly immediate, as opposed to complex and carried out over 60 to 90 days.
“We’ve got just a large, growing number of customers across the spectrum that are saying, ‘Hey, I really would like to modernize things and automate my payment strategy,’” Pratz said. “They’re just simply looking for a new way to pay that’s easier and more secure.”
And while growth has been strong, he said, it has also been what Car IQ expected. What the company did not expect, however, was how quickly it was going to see a consumer demand for the product.
“The thing that we’ve learned the most though is consumers say, ‘I want this today.’ And we didn’t expect that,” he said. “They just simply would love to add this car directly to their bank account and then add all the things they want to pay for without having to add a box or anything to their car, and then see all their expenses just right in their car. And so, we’re working hard to deliver that very soon.”
Soon as in sometime later this year — probably in Q3.
The Road Forward
From being something of a pipedream half a decade ago to being a growing reality now, the path forward for Car IQ and connecting the automotive world is wide. Beyond developing a consumer product, he said, the company is also increasingly working with original equipment manufacturers (OEMs) to start building digital wallets into cars off the line.
The company also envisions a future in which it is working with adjacent but separate industries, like tractors, for example, or even washers and refrigerators. The connected home is a place where KYM technology would be relevant for creating secure and seamless machine-to-business (M2B) transactions.
It’s a busy future, he said, but one Car IQ can’t help to be excited about.