The Race to Revolutionize Driver Payments

FinTech is providing frictionless solutions for nearly every aspect of our financial lives, from mobile banking and instant money transfers, to more tailored borrowing options and instant mortgages. One area that has lagged behind somewhat – and, in fact, hasn’t changed much in the last thirty years – is the driver’s payment experience.

But this could be about to change. Last year, Jaguar, in collaboration with Shell, offered customers the ability to pay for fuel from inside their car. Now, new solutions are promising to not only benefit the consumer, but every player in the fuel payments ecosystem.

This is precisely the drive behind CarPay-Diem. I spoke to CEO and founder Frederic Stiernon about the vast opportunity for revolution in this area, and how all sides can benefit from the long-awaited transformation of the driver’s payment experience.

Why did you create CarPay-Diem?

I wanted to find a solution that was based on one single business, ideally involving a recurrent transaction. Naturally one option was hyperstores, but this wasn’t an interesting area for me and there’s already a lot of work going on in that space. The other option was fuel. People using a car are fully captive – as soon as you have a car, you will become a customer of a fuel station. You have to go there each time your tank is empty, and you’re obliged to take part in that recurrent transaction. On top of this, the user experience of purchasing fuel hasn’t improved in the last thirty years. My grandparents were purchasing fuel in the same way I am today.

There is an opportunity here to vastly improve the user experience. It took me about nine months to fully understand the relationship between the different participants in the ecosystem – you have fuel networks, the fuel manager, fuel card issuers, PSPs and so on – I wanted to find a solution that would provide value for both the business and consumer elements of this structure, utilising mobile payment. That’s  CarPay-Diem. We position ourselves as a platform – we’re not an app – that forms the link between the driver and the fuel station. The platform allows any mobile app or connected car to activate any fuel pump and manage the payment from inside the car. We also allow fuel stations to provide commercial offers to drivers who are using the platform. The idea came from different studies I read which showed that drivers really didn’t like waiting to make a payment at a fuel station. If there isn’t an option to pay at the fuel pump, the driver is obliged to go into the station to make the payment. This is a strategy of the fuel networks, because they want to sell you more than just fuel, and the margin is higher on snacks than on fuel.

How does CarPay-Diem provide a solution for this?

The solution was actually very simple. Fuel companies have their own apps already, but the main problem for them will be acquiring customers. Because, if I’m a driver, where do I purchase fuel? Near to my house, or my work, on in between. Or on a long journey, somewhere along the motorway. Necessity dictates where I buy fuel, not the fuel company. It’s hard to establish customer loyalty in this market. I don’t want to download an app from Shell, then an app from Esso, from BP, and whoever else – I want to remain free and take fuel wherever I want without having an account everywhere. This kind of service could be proposed not only by fuel companies, but by anyone who wants to provide a service to their customers. There, we are targeting navigation apps, banking apps and fuel apps. Some fuel companies are integrating our technology with their systems, and we can connect to their systems very easily.

Do you see CarPay-Diem as part of a broader trend in financial technology to make people’s financial lives more frictionless, taking as much thought as possible out of the payment process?

It is exactly that, yes. People just want to make things faster than before, and they’re realising that they’ve been conditioned to go about these things in a certain way and can’t imagine another way of doing them. Technology is changing the game, and I think the main difficulty is for big players being able to change their behaviour.

How do you foresee big banks reacting to this influx of new financial services for consumers?

We’re talking with different companies and we’re talking with bankers. Banks, of course, have their own apps in which you can access any of the services you might have previously accessed in-branch. The main thing is that banks want to keep contact with their customers, and with PSD2 coming, they might have to change their approach. The banking apps have very recurrent usage and a large client base. Banking app users don’t want to be sold a banking product every time they use the app, but they would massively benefit from having access to financial services that help them in their day-to-day lives within these apps. If banks can provide these kind of services, customers will be far more likely to stay with them for longer and use their apps more frequently. This is exactly the positioning we have taken. A bank that has decided to integrate CarPay-Diem into their app will keep their relationship with their customers in this way.

Collaboration in this way seems to be the only way to move forward now, right?

I think that banks will, more and more, create or participate in their own ecosystems, wherein, they believe, they will add value for their customers. If they can make their customers’ lives easier, in a recurrent way, then they’ll have taken the best position they can. The way they will do this is by creating partnerships with other companies that can ensure this added value is available for their customers. We remain focused on the fuel, and this also enables the banks to propose innovative solutions. On the customer side it provides added value because it enables them to pay for their fuel faster via their banking app, but on the other side, the bank will also allow the payment directly with a credit transfer from the bank account of the driver to the bank account of the fuel station. This means there isn’t a complex payment system involved, and a simple transaction can take place, which reduces the transaction cost for the fuel station. In this way, our solution is a collaborative one that provides benefit for everyone involved.

What do you think needs to happen next to continue improving the financial lives of consumers?

That’s a tough question. I think customer authentication is probably the next area that requires more attention, as it still causes a great deal of friction. No matter how frictionless the service itself is, if the authentication process takes too long or is too complicated it kills the user experience for the customer and they won’t adopt the service. Generally, the blockages here come from authentication or KYC, and I think this is a really challenging problem. I think technology will provide some solutions for this.

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