IBM (NYSE: IBM) and Visa (NYSE: V) have begun working together on a flexible point-of-sale system that will allow merchants to quickly get set up to offer secure payments through any Internet of Things (IoT) connected device.
The project will combine IBM's Watson IoT platform with Visa's payment processing technology. In theory, it will allow for mobile commerce and payment on any connected device. As the two companies detailed in a press release, the system should allow for different kinds of payments and/or billing structures.
"IBM and Visa share a vision of a commerce-based IoT world where any device, from a watch, to an appliance or a car can make authorized payments on the consumer's behalf based on their usage of the device," the company's explained. "For example, rather than buying a car, the driver could leave the dealer's lot in a new car with payments being processed automatically based on how far the person drives each day."
How would it work?
Customers will have the ability to process payments using Visa's Token service, a security technology that replaces the sensitive payment account information associated with credit and debit cards with a unique digital identifier, served up via Watson. In addition, business clients will be able to leverage Watson's cognitive learning functions to gain insights into their customers' behavior.
"IoT is literally changing the world around us, whether it's allowing businesses to achieve unimaginable levels of efficiency or enabling a washing machine to ensure we never run out of detergent. And behind this transformation are companies like Visa and technologies like IBM's Watson IoT platform," said IBM Watson IoT General Manager Harriet Green. "This combination of IBM's industry leading IoT technologies with Visa payment services signifies the next defining moment in commerce by allowing payments on any connected object, with new levels of simplicity and convenience for everyone."
Since the advent of credit and debit cards, the way Americans pay for things hadn't changed much until recent years, when mobile payment via smartphones or even smartwatch began to became more common. This partnership aims to create the next phase -- IoT-enabled commerce. And while it's backed by two companies that have significant customer bases. it's going to be a while, perhaps years, before we see the winners and losers in this space. Still, IBM and Visa working together increases their odds of success.
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Daniel Kline has no position in any stocks mentioned.