Study: Internet of Payments (IoP)

The demand for self-paying machines is high and continues to grow. However, the potential of the Internet of Things can only be exploited if the devices can also settle payment transactions among themselves.

The prerequisites for the introduction of M2M payments are a clear legal framework and the creation of machine identities.

For payment service providers, the implementation of M2M payments poses major challenges such as security issues, digital onboarding, compliance checks and payment identification.

M2M payments will lead to a sharp increase in transaction numbers – in the euro area alone, PPI expects at least 85 billion additional transactions by 2025.

Digital money such as stablecoins or e-money is particularly suitable for M2M payments. Of the classic methods, instant payments are the most suitable.

Payment service providers must decide which role they want to play in this market in the future: that of a provider of data-based business models or that of a pure infrastructure provider.

At the same time, complex IoT ecosystems are developing in some industries. To remain competitive, payment service providers must adapt their sales structures and service portfolios accordingly.

With the establishment of M2M payments, the functional and technical requirements for the IT infrastructure of payment service providers are increasing considerably. They must be available without interruption, process very high loads and be able to distinguish between machine and non-machine payments.