Automotive Fintech: In-Car Payments and Smart Mobility

The automotive industry is evolving rapidly, embracing smart mobility and in-car payment systems to cater to diverse consumer needs, according to Loyens & Loeff. With the ability to purchase fuel, pay tolls, and even subscribe to software features directly from their vehicles, consumers are experiencing unprecedented convenience. This integration of payment services within cars reflects a growing trend toward digitalization in the automotive sector.

In-car payments could require automotive companies to obtain licenses as payment service providers (PSPs) or electronic money institutions (EMIs). According to the Payment Services Directive II (PSDII) and the Electronic Money Directive (EMD), companies providing such services in the European Union must have a license issued by relevant authorities like the Dutch Central Bank (DCB). However, there are exemptions for smaller entities or those operating within limited networks.

With the introduction of in-car payment systems, car manufacturers must address data protection and privacy issues, especially concerning the collection of financial and biometric data for authentication purposes. Under the General Data Protection Regulation (GDPR), companies must comply with stringent rules on data security, transparency, and data transfers, particularly if processing personal data within the EU.

To avoid the complexities of obtaining licenses, many car manufacturers collaborate with existing PSPs or EMIs, who manage the payment processes. This partnership allows automotive companies to focus on delivering smart mobility solutions without directly handling the financial transactions. Nevertheless, this collaboration involves sharing sensitive customer data, which must be managed carefully under GDPR guidelines.

As the automotive industry moves towards smart mobility, understanding the regulatory requirements and data protection laws is crucial for companies looking to offer in-car payment services. Automotive companies must ensure compliance with financial and privacy regulations to harness the full potential of these innovative technologies.