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Below is our recent interview with Nico Kersten, Chief Executive Officer at Mercedes pay:
Could you provide our readers with a brief introduction to Mercedes pay+?
In a digital world, the vehicle is increasingly transforming from a classic automobile into a smart device. This enables Mercedes-Benz customers to connect conveniently and easily with their environment – similar to using a smartphone. For example, customers can use the Mercedes-Benz MBUX infotainment system to access car-related services: They can search for a free parking space, a charging station or a nearby gas station and be navigated there. To make it as easy and convenient as possible for customers to use services such as parking, charging or refueling, Mercedes-Benz also offers in-car payments provided by its own digital platform “Mercedes pay”. Mercedes pay serves as an interface to payment service providers and credit card schemes. The driver starts and pays for the parking, charging or refueling process via the MBUX infotainment system.
In Europe, a two-factor authentication is required in this case for digital payment. This can consist of the following: something the consumer knows (e.g. a password), has (e.g. a device), or is (e.g. biometrics). At Mercedes-Benz, since March 2023, two-factor authentication is enabled by combining the vehicle (device) with the fingerprint (biometrics). This service is called Mercedes pay+. Mercedes-Benz is the first car manufacturer in Germany to introduce this form of so-called native in-car payment. Drivers of a Mercedes-Benz can since then purchase digital extras or hardware upgrades via fingerprint in their car and use them directly. Since August, customer authentication for digital payments after refueling by fingerprint directly from the car has been another use case for Mercedes pay+. Mercedes-Benz drivers have already been able to pay at the gas pump in the car for years via the Mercedes me Fuel & Pay app, but until now a smartphone was still required in the process step for customer authentication, to authenticate the payment . With the new native in-car payment function, the car itself turns into a means of payment – like a smartphone.
What are the main highlights of your latest announcement?
As of now, customers can also use the native in-car payment service Mercedes pay+ to pay for their fuel: By combining fingerprint and vehicle as components of the required two-factor authentication, the vehicle becomes a payment device. This makes secure payment more convenient and easier. The service is integrated into the vehicle’s MBUX infotainment system and uses Delegated Authentication and Network Token technology by Mastercard and Visa for online payments. This enables drivers to securely link payment data to the vehicle.
Drivers of your vehicles can now pay directly from their vehicle digitally by fingerprint? Can you explain it for our readers?
With native in-car payment, the customer pays for a single purchase – such as for a digital service in the Mercedes me Store or for a refueling transaction. Since there is no monthly billing in place and customers make an individual purchase, in Europe the transaction requires Strong Customer Authentication. With native in-car payment, the vehicle itself (possession factor), in conjunction with the fingerprint (biometrics / inherence factor), act as the two parts of biometric two-factor authentication. It is no longer necessary to enter a PIN on the MBUX infotainment system or to authorize the payment via an additional mobile device such as a smartphone. The car itself turns into a payment device.
This is where Delegated Authentication and Network Token technology come into play. Delegated Authentication transfers the authentication (SCA) from the card-issuing bank to Mercedes-Benz Mobility. This technology enables drivers to securely store their credit card information and link it to the vehicle. The real card number is never stored in the vehicle or used for a transaction. Tokens are used as placeholders for real card data; a token replaces the actual number of the physical card and is unique. The sensitive card data is stored in the secure background system and exchanged only between the organizations that know the card numbers anyway – the card-issuing bank and the card organization. Encryption of the tokens guarantees a high level of security and the transaction is triggered directly via the car. This means that criminal payment attempts cannot be made on other channels because they do not work there.
What can we expect from you in next 6 months? What are your plans?
The service Mercedes pay+ for native in-car payment has been available in Germany since March 2023 for the Mercedes me Store. Since September 2023, customers can use the service to pay for their fuel. The service will be expanded to other use cases and further European countries. We expect the car to become increasingly important as an e-commerce channel. According to a study by Juniper Research, the number of global in-car payment transactions will rise to over 4.7 billion by 2026 – up from just 87 million in 2021. This growth is seen as the next step in a natural evolution of payment methods for refueling: from cash to card payments, then to smartphone payments, and now to in-car payments.
What is the best thing about this new feature that people might not know about?
We are pioneers in native in-car payment. As Mercedes-Benz is the world’s first car manufacturer to enable secure native in-car payment using Delegated Authentication and Network Token technology of Mastercard and Visa. This technology opens up completely new possibilities in terms of in-car commerce, as we are implementing the first use case at the point of sale with Fuelling. We are only at the beginning of a major development in in-car commerce.
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