The payments landscape is changing rapidly and the Internet of Things is set to change things even further. How will this affect the supply chain and will companies feel comfortable with connected devices making payments?

A widely quoted figure from Cisco suggests that by 2020, there will be 6.6 devices connected to the Internet of Things for each person on the planet. That's more than 50 billion connected devices, which is more than double the figure in 2016. Many of these devices will be embedded in the corporate supply chain of goods and payments. Their main function will be to transmit data, to measure and track goods or services, while also authorising payments. So as the Internet of Things (IoT) is discussed in terms of the Internet of Payments (IoP), what will it take for us (as individuals and as corporate treasurers) to feel comfortable with payments being automatically authorised by a connected device?

A token gesture

Tokenisation is one key area where new capabilities will have to be developed, according to payments experts. Tokenisation is a feature of payments security software, where sensitive account information is replaced with a unique digital identifier called a token. The token allows payments to be processed without exposing actual account details, which could be compromised by hackers. As Javelin Strategy & Research's director of payments, Michael Moeser, explains, tokens will have to evolve so they can become device-specific, so that purchases can be connected to specific devices. Moeser says: “Payment networks will need to evolve and use their token services. As consumers add more devices that can make purchases, the payment infrastructure will need to evolve to keep up with the data and management capabilities necessary for IoP. Consumers and businesses will expect their payment provider to answer questions such as ‘Which device made a particular purchase?’”

Embedded technology and device interfaces

Other payments or technology developments that need to happen before we really see the IoP as a beneficial, secure and profitable way of managing commerce and payments include the ideas of embedded commerce and the evolution of application programme interfaces (APIs):

• Embedded commerce means having devices that can measure, monitor or track, through built-in connected applications (whether it's your fridge at home or a commercial warehouse that needs to stock up on inventory).
• APIs would provide the interface between the device that places an order for a goods delivery (for example) and the external companies that will provide the service or deliver the goods. Payment would probably take place through this interface.