Ai Editorial: IoT commerce, a trend to watch out for in 2017

First published on 8th December, 2016

Ai Editorial: As the devices that can be connected to the Internet expand, wrapping up a shopping experience by paying on these devices would be a logical progression. So airlines need to gear up for what all IoT can do to facilitate a transaction, writes Ai’s Ritesh Gupta


Technology that augments your decision-making is enamouring.

Imagine this – a family is in a car, and one of the member’s smartphone is connected to it. The family decides to go on a holiday. A digital assistant (could be a smartphone service or an app) is being posed questions, and itineraries are getting flashed on the screen in the car. And the screen is also displaying things to do, weather-related information etc. Five itineraries are short-listed. The user sees these options in the smartphone app, and ends up booking.

Going by what all is being talked about – seamlessly moving between connected devices and turning any Internet connection into a commerce experience – this makes technology enticing.

IoT and seamless experience

Between the Internet of Things and emergence of concepts such as wearable technology, the travel booking funnel is getting split and fragmented – marked by a number of sessions across devices. There is huge pressure to understand the profile, intent, context/ booking phase, location, device etc.

The IoT assumes that information and data will flow seamlessly and securely from one device or one party to another, where it can be accessed and used immediately, says Kristian Gjerding, CEO of CellPoint Mobile.

“If the IoT keeps track of the items you intend to purchase, it can automatically tally the payment and process the payment as soon as it connects to the nearest payment terminal or app and verifies the customer's information and data,” says Gjerding. “The IoT will remove even more layers and more steps that are now involved in shopping and paying for goods and services – such as the IoT-connected refrigerator that senses the absence of baby formula and orders it automatically.”

The value of IoT commerce is that it can make our lives smarter and simpler.

So how can airlines evaluate the potential of IoT commerce at this juncture?

“Everyone knows how frustrating modern air travel can be, and any technology that simplifies that experience for passengers will be a welcome phenomenon,” says Gjerding.  

In the airline environment, IoT can:

-       connect a passenger’s baggage to his/ her mobile device for real-time tracking and updates.

-       create verified IDs from distributed documents, speeding the process of passing through security, customs or boarding a plane.

-       be used to provide real-time alerts about flight changes, status updates or emergency notifications.

“The potential of IoT commerce, however, requires airlines to embrace mobility, connectivity and IoT thought processes and strategies now. Because passengers, consumers and technology innovators are moving faster than airlines and retailers when it comes to technology and expectations, and the travel industry needs to play catch-up,” stated Gjerding.

Transactional capabilities of IoT Commerce

The fundamental transaction model is similar to that of a customary one featuring – a customer, a merchant, an issuer, and an acquirer.

The technologies that are required to process transactions does not change with the IoT – payments still have to go through the usual verification, authentication and security checks that are already in place, says Gjerding.

 A traveller transacts, the issuer authorizes the same and the flow of payment runs through to the acquirer and merchant.

“The IoT comes into action because of the role it can play in making transactions and commerce much more seamless, connected and transparent in peoples’ lives,” says Gjerding.

He says airlines should prepare for IoT commerce in the same way that they must prepare for mobile commerce: They must make conscious, tangible commitments to modernizing and streamlining their legacy systems around payments, data collection, data integration, security and other activities. Instead of storing data in separate silos or divisions, the IoT assumes that data can be accessed and acted upon in real time, regardless of where it originates. For airlines, the first order of business is to embrace mobile-first and IoT technologies, and then to make sure that airlines have the right internal expertise, third-party vendors and innovators in place to create real change.

“Instead of thinking about payment processes as a cost center, airlines need to embrace these new technologies and capabilities for their revenue-creating potential. As payments, shopping, travel booking and buying move rapidly away from cash and credit to the mobile and digital environment, airlines need to follow them there in order to capture the revenues that they’re already creating – revenues that will continue to grow as more consumers make the shift to mobile-first payments and as more “things” become connected to each other via the Internet,” explained Gjerding.  

Issues related to security and privacy

All customers and passengers worry about security and privacy of their information, especially when it is stored in the “cloud” or available online databases.

Cyber security specialists have been working on roadmaps and architecture of IoT security.

Gjerding says airlines and all businesses must ensure that their payment and security processes meet or exceed the current industry standards, and they must also be open to ongoing security innovation. According to him, blockchain processes, for example, are just one new type of technology that can be used for improving security, verifying identities and authenticating passengers and payments. “No doubt other new technologies, apps and IoT-enabled capabilities will emerge, and all companies – airlines or otherwise – must have their ears to the ground about what’s coming next so that they’re not caught off guard and are fully capable of leveraging and benefitting technology to their advantage,” says Gjerding.

Main challenges in progressing with IoT commerce

The main challenges involve technology and actual implementation.

Gjerding says for IoT capabilities to work, modern devices need to connect to the broader IoT network, and older devices need to be updated or replaced. And even more importantly, the private companies and public agencies involved in collecting and leveraging IoT information need to embrace IoT strategies directly into their organizations and operations, and they need to make sure that policies around data collection and privacy are modern, secure and foolproof.

“Nothing can put the damper on a new technology or bold new idea like lack of consumer trust. There's a balancing act involved – moving quickly enough to stay in touch with the market, revenue streams and travellers’ expectations, but not moving so quickly that critical precautions are overlooked,” he says.

Gestation period

There’s certainly a lot of innovation around the IoT, but broader implementation will take time as the rest of the world catches up to IoT innovation. IoT thinking and increasingly smartphones are leading to more sophisticated digital wallets and mobile payments – which will lead to personalized mobile wallets or payment technologies with predictive capabilities built in. IoT might extend to other transaction or authentication technologies, and some banks or companies are already experimenting with voice recognition, facial recognition, various kinds of chips, even pulse recognition as the identification-verification step needed for payments. Blockchain, a verification-authentication process developed for virtual currencies like Bitcoin, has the potential to evolve and grow as an underlying process for other types of virtual payments, peer-to-peer payments and other transactions.

When it comes to Internet technology and commerce – the sky is the limit, summed up Gjerding.


Follow Ai on Twitter: @Ai_Connects_Us