Car IQ Raises $15M to Drive the Future of Machine-to-Machine Payments Using Cars
Tomorrow’s connected ecosystem will leverage machine-native wallets, enabling authenticated machine-to-machine transactions across various commercial settings.
No people necessary.
That’s the vision of Sterling Pratz, CEO at leading payment solution for vehicles and fleets Car IQ, who tells PYMNTS’ CEO Karen Webster that he and his investors see machine payments, and vehicles in particular, as the future.
Car IQ’s proprietary Car IQ Pay product provides vehicles with a trusted identity and secure payment capabilities, allowing them to connect directly with banks and merchants to purchase fuel, tolls, parking, and more without the use of a credit card.
“Essentially what we’ve created is a vehicle wallet, but what’s more important is what’s inside that wallet — in our case, we’ve gone further than storing money, storing value and distributing that value,” says Pratz. “We actually have purses inside each wallet and those purses can be responsible for different things: you can have a purse that’s just focused on loyalty rewards, one is focused on payments, one is focused on driver incentives, and you can add value to each one of those things.”
According to Ptolemus Consulting, the connected vehicle payment market is expected to reach $600 billion by 2030 and enable vehicles to control purchases.
At this year’s CES 2023, Car IQ announced a partnership with BlackBerry Limited for an OEM (original equipment manufacturer) integration that will allow cars to transact directly from their in-vehicle dashboard. The company is coming off of a successful recent Series B fundraise that has captured the attention, and imagination, of both the payment and vehicle industries. The company said Tuesday (Feb. 7) it had raised an additional $15 million to its Series B, led by Forte Ventures, with participation from Visa, Bridgestone, Navistar and Circle K, among others.
Seamless Integration
As the connected car trend gathers speed, vehicles are becoming rolling retail stores with embedded payments, enabling drivers to pay for services from inside their vehicles on a transactional basis.
“It’s a complete one-stop, in-dash experience,” Pratz says. “That’s what we think is revolutionary — any payment that’s gone into a car before has always been multiple steps. There’s an app for each merchant and then a credit card associated for each merchant and app. In our case, that all goes away. Anytime a driver goes into a gas station, it automatically connects and pays, same with driving through a toll booth. For electric vehicles, it’s even easier because the car can automatically scan the charger, know the merchant, transfer data and pay — the driver just plugs it in and goes.”
The mindset Car IQ wants to keep driving forward is one focused on simplicity and a single payment, he added.
Key to that simplicity is establishing vehicle identity through Car IQ’s proprietary technology.
“Our ability to surface all the data around a vehicle prior to a transaction to get a full view of not just the vehicle but the risk of the transaction was something that really stood out to our investors,” Pratz said. “For example, when a car comes into a gas station we can not only scan the vehicle and identify who that vehicle is with certainty, but also provide details such as how big the gas tank is in order to use that data to tell both the bank and the merchant the maximum risk of the transaction — so instead of underwriting $150 per transaction, we tell the bank and merchant that, say, based on five gallons of maximum requirement and $6 per gallon, this is a $30 risk transaction. And merchants love it, and banks love it — instead of $150, they only have to take out $30 from their treasury side and put it into escrow to underwrite, so it frees up their cash.”
Car IQ’s ability to support this kind of variable rate underwriting with its innovative data-backed visibility into transactions by leveraging identity as a payment trigger is something Pratz said people are “really excited about.”
“We’re really focused on how to weave identity into services to make them easier to use,” he added, “what we’re learning is we can use identity to basically automate everything: the payment workflows between the bank and the merchant and the customers, which cuts down the payment steps. Typical payments from acceptance to issuance require around 11 steps, and there’s some manual things in between.”
With Car IQ’s product, Pratz says, that process can be done in three steps — all of which are automated.
“It’s not something that’s pie in the sky anymore,” Pratz tells PYMNTS’ Karen Webster. “We are capable of this right now. And we’re going to take this fundraise and bring things to market in a big way.”