IBM and Visa Explore New Points of Sale: Like Your Running Shoes, Your Washing Machine, Your Car...

Intrusive? Undoubtedly. But if it makes life faster, cheaper and more convenient, get out of the way. The challenge will be reining in the instinct to goose revenues by sticking it to consumers. JL

Edward Baig reports in USA Today:

Visa is teaming up with IBM Watson to bring secure payment experiences to all sorts of connected products and services. Visa’s expertise is in processing payments but Watson may help improve the shopping environment (by) listening to people in a room to determine their mood, and then alter the lighting. “It’s the combination of data coming off the sensors, tied to a device about your preferences. Payments is what completes the experience."

Are you ready to turn your car, washing machine or running shoes into a point of sale?
Visa is teaming up with IBM Watson to bring secure payment experiences to all sorts of connected products and services, embracing the ecosystem techies inelegantly refer to as the Internet of Things.
IBM and Visa announced the collaboration Thursday at an event in Munich, Germany, where IBM is opening up a $200 million Watson Internet of Things headquarters.
Via the partnership, the companies say they can support payments and commerce on virtually any of the 20 billion connected devices that Gartner estimates to be part of the global economy by 2020.
What we’ve seen over the last 12 months is serious companies committing serious business to IoT,” says Brett Greenstein, vice president for IBM Watson IoT.
Watson is IBM’s cognitive computing platform, which leverages natural language processing and machine learning to learn from and extract patterns and meaning from mounds of unstructured data, from health care to sports.  Of course, numerous other companies, including Apple, Amazon, Microsoft, Google, Facebook, are also in various stages of tackling artificial intelligence and machine learning.
“IoT devices now have the intelligence and connectivity to become extensions of company’s businesses,” Greenstein says. “That’s really what wakes up an opportunity like Visa.”
Connected car, smart shoes. Consider the scenarios: You drive a new car out of the dealer’s lot. But instead of purchasing the vehicle outright, you make automatic car payments determined by how far you drive each day.
Out on the road, the connected car alerts drivers when it needs a fan belt or other parts. The driver pushes a button in the vehicle to order and pay for the part, and to arrange a service appointment to have it installed.
In a similar vein, you might pay for the washing machine in your house based on how often you do laundry or how big the load is.
And your connected running shoes can alert you when it’s time to replace the pair, delivering recommendations of shoe models, retailers and prices on your phone.
“It’s the combination of data coming off the sensors, tied to a device about your preferences. Payments is usually what completes the commerce experience. It’s all of that coming together that hopefully creates those magic moments,” says Jim McCarthy, executive vice president, innovation and strategic partnerships at Visa.
UK-based analyst Allan Behrens of Taxal says we don’t really know what ultimate form of compensation and transactional models will evolve in the rapidly changing IoT landscape. But he believes the IBM/Visa relationship gives IBM a competitive advantage as it helps partner companies figure out to make money off IoT.
Meanwhile, Visa gains access to IBM 's partners; IBM is currently working with more than 6000 client companies in IoT.
Keeping it secure. IDC senior vice president Vernon Turner calls the partnership “a step in the right direction for everyone to be able to monetize IoT, while looking forward to better secure transactions.”
Of course, Visa rival MasterCard also has eyes on IoT. In October, for example, IBM Watson paired with GM OnStar to create an on-the-road platform to locate gas stations with MasterCard handling the secure payment capabilities.
To ensure security on IoT devices, Visa replaces the account information that would be found on a plastic credit card with a unique digital identifier that doesn’t expose those account details.
Watson might assist with security, too. Take the connected shoe example. It will send data to your phone at some normal regular interval, Greenstein explains. So if an anomaly is detected, “you know that in some way something was compromised.”
Visa’s expertise is in managing and processing payments, of course, but Watson may also help improve the shopping environment under some circumstances. In one research project, Watson is listening to people in a room to determine their mood, and then alters the lighting in the room accordingly. It isn’t farfetched to think that such technology might be deployed in a mall to help potentially brighten the mood for shoppers, and with it, their willingness to spend money.
For his part, Visa’s McCarthy says of the IoT efforts, “This isn’t us waving a flag saying, `hey look at this technology.’ If we get this right, we’re going to make consumers lives easier, solve merchant pain points and I think these will move very quickly as a result.”