What Happens When Machines Do the Shopping?

The convenience of purchases made by connected devices 'without the need for human intervention' may be superseded by fear that machines largely controlled by their manufacturers or the tech companies that provide their software may drain consumers' bank accounts by making unnecessary or unaffordable purchases and which the users have no right to challenge. JL

Benoit Morenne reports in the Wall Street Journal:

Banks, information technology companies and manufacturers are looking to equip devices with the ability to buy and sell goods and services on behalf of human users, in most cases without the need for their intervention. Smart toothbrushes made by Philips NV can already automatically order new brush heads when the bristles wear out. Machine-to-machine connections are projected to grow to 50% of global connected devices and connections in 2023. Connected objects could contract with one another to execute tasks and earn users money

The day might soon come when a car itself pays for parking using funds it earned by sharing data collected as it drives. Or a cat’s bowl orders the appropriate pet food after analyzing the feline’s nutritional needs.

As everything from toasters to trucks gets connected online—an ecosystem known as the Internet of Things—banks, information technology companies and manufacturers are looking to equip those devices with the ability to buy and sell goods and services on behalf of human users, in most cases without the need for their intervention.

Some of this is already happening. Smart toothbrushes made by Philips NV can already automatically order new brush heads when the bristles wear out. Air filters designed by 3M Co. can detect when a replacement is needed and order one online.

The scale could expand, however, as more devices come online and technology that allows for rapid and autonomous purchases goes mainstream, saving users time and money.

There could be as many as one trillion connected devices world-wide by 2035, according to British chip designer Arm Holdings. Machine-to-machine connections are projected to grow to 50% of global connected devices and connections in 2023 from 33% in 2018, according to a 2020 Cisco Systems Inc. report.

Ultrafast fifth-generation wireless networks, artificial intelligence and decentralized payments systems could allow devices around us to simultaneously process, sell and purchase data, says Suat Mercan, a postdoctoral researcher in computer science at Florida International University. For owners, it may be as simple as allowing a smart home to draw from an online bank account to place orders, he says.

Smarter sensors and the rise of edge computing, which allows devices to crunch data without having to send it to a corporate cloud or a data server, could also pave the way for more machines that make savvy purchasing decisions, says David Nelyubin, a senior research analyst at Mercator Advisory Group, a consulting firm that focuses on the payments industry.

Eventually, connected objects could contract with one another to execute tasks and earn users money, says Umar Farooq, the chief executive of Onyx, JPMorgan Chase & Co.’s blockchain unit. Onyx recently tested blockchain payments between two orbiting satellites, opening the door to data-for-money transactions in space. A satellite could commission another one to snap pictures of a tanker stuck in the Suez Canal without having to communicate with Earth, for example, Mr. Farooq says.

Automated machines will be a boon to fleet logistics, says Helge Königs, who heads the Truck Wallet project at Daimler Trucks AG. The company has been experimenting with digital wallets that allow truck drivers to automate payments at selected gas stations and tolls. This system reduces fraud by linking a truck wallet to a unique truck identifier which prevents drivers from using a fuel card for personal use, he says.

An autonomous truck might one day be able to process payments upon delivery of goods, generate its own tax declaration and pitch its services on freight platforms. “That really remains the vision—that the machine can administer itself,” Dr. Königs says.

It’s too early to say whether existing payment networks will be robust enough to process potentially millions of IoT payments per second, says Dr. Mercan. While not optimal yet, decentralized payment systems that use blockchain-like technologies could offer a secure alternative, he says.

The value transfer protocol IOTA, named after the smallest letter of the Greek alphabet, has been developed to facilitate micropayments between connected objects, says co-founder Dominik Schiener. It relies on a “tangle” where each transaction confirms two others, which makes the process fast and feeless, he says. IOTA could become a standard adopted by devices as varied as electric cars, industrial robots and power grids, Mr. Schiener says.

The protocol is currently being tested as the backbone to a local, automated energy market in Trondheim, Norway, as part of a project funded by the European Union. A 2019 pilot program with Jaguar Land Rover had drivers in Ireland use IOTA to earn digital credits every time their cars flagged potholes and shared traffic updates with local authorities or navigation providers. Users could redeem the credits to pay for parking and tolls.

“As the infrastructure and opportunities across the industry evolve, there could be potential for this technology,” says Jess Bowden-Eyre, a spokeswoman for Jaguar Land Rover.

Ensuring device-to-device payments are secure is going to be paramount, says Mary Kay Bowman, the head of global seller solutions at Visa. She expects offerings like Visa Token Service, which replaces credit card credentials with a digital token only Visa can unlock, will become more common.

“We see that as a foundation for anyone looking at including more devices” into existing payment systems, Ms. Bowman says.