The Internet of Things (IoT) is rapidly changing the way we pay for goods and services.
The technology embeds physical objects – such as devices, vehicles and appliances – with sensors and network connectivity so they can send, receive and act on data. Adoption is growing so fast that the total number of connected IoT sensors and devices is expected to exceed 50 billion by 2022, up from an estimated 21 billion in 2018.
Now, a new report from Juniper Research predicts that the IoT payments market will grow at an average of 75% per annum over the next five years, reaching $410bn (£320bn) by 2023 compared to an estimated $24.5bn (£19.1bn) in 2018.
The biggest growth is expected to come from in-vehicle payments. According to the research, IoT in Finance: Payments, Insurance & Banking Opportunities, Transaction Forecasts 2018-2023, the automotive sector will become the most lucrative IoT platform by 2021, accounting for $63bn (£49bn) in transactions or 55% of the overall market, compared to just over $50bn (£39bn) for connected home devices, including smart speakers and TVs.
Most of the car-based spending will be for fuel payments and tolls, with little increase in spend overall, Juniper Research noted.
Voice payments are another significant area of growth, with voice-enabled transactions over smart speakers forecast to reach $51bn (£39.8bn) annually by 2023. Goods purchased through these devices will account for just under 12% of connected home transactions by volume over the next five years. The majority of purchases will be for digital content, typically made through connected TVs.
“Full financial service products will be slow to come to voice commerce, as the automated processes need to satisfy compliance requirements,” commented research author James Moar. “However, with voice assistants already supplying advisory and finance updates, there will be much data to draw on once the regulatory requirements are met.”
The report also highlighted a “significant” opportunity for players in the IoT-enabled insurance market which will be worth more than $334bn (£260bn) by 2023, with the technology enabling services such as telematics-based motor insurance and automated accident prevention.
Find out more about how connected devices will provide new avenues for digital commerce by downloading our Next-generation connectivity report.