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Get In: The Connected Vehicle Podcast From BlackBerry (Episode 2)

How Car IQ Is Turning Autos Into Auto-Payment Vehicles

Update 03.08.23: New Episodes from Season 2 of "Get In: The Software Defined Vehicle Podcast," Are Now Available. 

By now we’ve all heard about cars that can drive themselves – but what about one that can also pay for itself? It’s a groundbreaking approach that will open up new revenue streams for automakers while delivering a wealth of exciting new features for car and fleet owners.

Welcome to the second episode of “Get In: The Connected Vehicle Podcast from BlackBerry.” This series will explore the possibilities created by – and technologies behind – the revolution in global transportation we are witnessing today.

In this episode, we meet Sterling Pratz, serial entrepreneur, former racecar driver, and current CEO of Car IQ, a company that’s paving the way for exciting capabilities that will forever redefine the concept of “pay as you go.”

Click below to listen/watch the full Episode 2 podcast. Episode 1 can be found here.  

New Cars, New Capabilities

Pratz’s company was built on his long-time love of cars, and his expertise regarding how technology can solve problems and provide advantages. The modern era of cars, particularly electric ones, is all about connectivity, and the capabilities and convenience that they can bring. Car culture has switched from horsepower and speed to the services, safety and comfort each car can deliver to its occupants. This journey starts with drivers being able to take their “world” – everything they love and need – right along with them, everywhere they go: from their favorite road trip soundtrack to their contacts and address book, maps and directions, games and entertainment, and more.

But it can go much further than that. A key cornerstone of the connected car is seamless payment capabilities – so you can buy what you want, whenever and wherever you want, all without ever pulling out your wallet again. That’s where Car IQ comes in. 

Pratz realized that financial connectivity was fundamental to making the addition of services to a vehicle seamless, and it would solve one of the fundamental problems for drivers, fleet operators and manufacturers alike. Cars and their occupants are constantly paying for services such as refueling, road tolls, parking, licensing, and less pleasant things like traffic tickets and fines. The total quantity of money being transferred for these services extends to hundreds of billions of dollars every year. But currently all these scenarios use separate, often incompatible, payment services that can be hard to operate. Car IQ allows merchants to accept payments directly from vehicles, and for vehicles to make and receive payments themselves.

“We got our opportunity through Citibank,” says Pratz. “I was already starting to build an early working product. I came in to meet the CIO of Citibank, Vanessa Colella, and started telling her about what we were doing, how we were going to make it more secure, and how we were going to create a new identity that the vehicle itself would own and would use to communicate with merchants and banks. She said: "That's fascinating." Not a bank in the world trusts a machine to transact without some intermediary form of payment - like a credit card - to sit in the middle. And that was the light bulb that I really needed.”

Currently, banks don’t trust Internet of Things (IoT) devices as conduits for payment, due to their potential for fraudulent activity. They would like to, but trust is a central requirement for all financial transactions. A key element for fraud prevention with humans making payments is knowing the typical habits and locations for that user, so that actions out of this pattern can trigger a warning and stop potential fraud. Car IQ creates a parallel for a vehicle, generating a profile of the automobile’s behavior from the data it produces. For example, the act of refueling a vehicle can be automated around knowing a vehicle is at a service station, so all the driver needs to do is indicate a pump ID number via a smartphone or the car’s own media display system. The fuel pumped into the car will be paid for automatically. This can be particularly useful for fleet owners, simplifying the process of enabling services for drivers of their vehicles. 

Car IQ Meets BlackBerry IVY

This ability to profile the car is why Pratz has been so excited about the partnership between Car IQ and BlackBerry to implement the service on the BlackBerry IVY™ platform. The integration of BlackBerry® technology into hundreds of millions of vehicles, and its ability to provide a secure environment to collect data from the vehicle’s sensors, combine to conclusively identify the car. This comprehensive ability to maintain 100% data provenance from car sensors enables the trust that is fundamental to financial transactions. Essentially, the car’s identity is confirmed reliably, in the same way as a secure credit card transaction can confirm the cardholder’s identity from their behavior pattern.

Initially, Car IQ’s technology will have the biggest impact with fleet operators. For instance, the technology can prevent fleet drivers from (ab)using their company refueling card for their own personal vehicles. This can account for as much as 7% of a fleet operator’s turnover, which could run up to billions of dollars for the largest fleets. Expenditures all go into a ledger in real time, providing much greater insight for the fleet operator. Car IQ can also make paying traffic citations seamless, avoiding the overhead when a fleet operator needs to locate and pay each citation individually across innumerable geographies and jurisdictions. A company managing hundreds of thousands of vehicles can benefit from huge time and cost savings this way.

For vehicle manufacturers, the system can also provide the ability to deliver a new car with a period of free fuel, tolling, or other services consumers want. This is just the beginning, though. Car IQ sees its OpenAPI enabling services such as paying for food or accommodations at a vehicle stop in the future. Using a car’s internal sensors, it is also possible for the vehicle to sense automatically how many occupants there are and whether the car qualifies for a High Occupancy Vehicle (HOV) toll discount on a highway.

Best of all, Car IQ is an OEM-grade service, so manufacturers can tailor it to their needs and provide a platform that generates revenue on every transaction. This delivers the financial cornerstone they require to transition from being car makers, to becoming service providers themselves.

As vehicles become “connected devices” and software-defined for their end users, having a seamless payment system at their basis is essential. Car IQ, enabled on the BlackBerry IVY platform, delivers exactly what manufacturers need to make this transition, easily and profitably.

Listen to Episode 2 of “Get In: The Connected Vehicle Podcast from BlackBerry.” 

You can subscribe to "Get In: The Connected Vehicle Podcast from BlackBerry" at the following media services:

Podcast Transcript

Steve Kovsky:
Hi, welcome to Get In: The Connected Vehicle Podcasts from BlackBerry. I'm your host Steve Kovsky and in this series, we will be diving into the future of transportation to find out what it just might look like. Today, I'm joined by somebody who's helping to define the future of transportation, and I'm going to let him introduce himself. 

Sterling Pratz:
My name is Sterling Pratz. I'm the founder and CEO of Car IQ. We've developed a payment network for cars that allows cars to pay for services autonomously. From a background perspective, you might laugh. I’m kind of a two-time entrepreneur, so I had a company prior to this that invented telematics platforms for the car manufacturers.

We were also most known for creating Wi-Fi in the car. So, if you saw a TV commercial for either Wi-Fi in the car or using your phone to start your car, that was my company. Besides that, I was also a professional racecar driver. I spent a lot of time inside the car, if you will, and feel very fortunate that in my post racing career, I can still stay involved with automotive.

A little-known tidbit is part of my retirement out of automotive was being fortunate enough to be on the board of the United States Auto Club. I’m involved with racing at a very high level now. We oversee almost 1,000 races across the country in the season – I still keep my hand in it a little bit. 

Steve Kovsky:
Actually, one of the places we'd like to start is how has transportation technology impacted your life. What are some of the changes that you see between now and then? But let's go back for a minute to when you first got behind the wheel versus today. 

Sterling Pratz:
Well, I was a little kid, you know I still can't believe my parents let me, at the age of 16 years old, go from driving a go-kart to driving USAC Midget and Sprint cars that go from 70 miles an hour, all the way up to like 160 miles an hour.

But it was a great experience because that enabled me to not only learn about technology, but it let me really learn about what I wanted to be in the future. I really enjoyed cars. I shared that passion with my grandfather and my parents. To be honest, I was very lucky as a kid. My dream was to race cars and I was very fortunate to get to live my dream. 

Steve Kovsky:
Some of the cars that are being produced today have been described as "computers with wheels". They are much different than those cars just a few decades ago. Do you still feel the passion for these new electric vehicles (EVs) that are coming out on the market that seem a little bit more disconnected from the road? 

Sterling Pratz:
As a driver, I always look to technology as an advantage. You're always looking for the newest technology – how are people doing it? How are they thinking about the car? And that always fascinated me.

Then as I switch gears in today’s world, I obviously still like cars that are powered by either methanol or gasoline, but I also now really appreciate the EV environment. They bring a different attitude though. The cars don't make noise, they have tremendous acceleration right off the get-go.

But the difference I find with an EV is, the EV is really ushered in the technology era, by the very nature of the fact that it's electric and you're plugging it into something to charge. They're also connected to the Internet right away. That Internet connectivity is bringing new services right into the car, and I think that’s good for all types of cars and all types of manufacturers. 

Steve Kovsky:
It does seem like we're at an inflection point where we've got 5G now becoming widespread. We've got high speed connectivity at the same time and cars are able to make use of that in new ways. We're going to talk about some of those new ways. Do you think that people are going to continue to look to driving their cars as something that gives them pleasure? As something that is a highlight in their lives?

Sterling Pratz:
That's an interesting question. When I was back in Italy this last week racing, that’s actually the conversation we had at the table afterwards. Some of the people at the table were former senior executives in Formula One and big auto manufacturers, and what we were talking about was, do we still have a car culture? And what kind of car culture have we evolved? I think where it used to be really based on horsepower and speed and things like that, there is still a car culture, but it’s evolved.

The car culture now is about the services in and around the car. That's what really excites people about their vehicle. I think where that’s gone or where it’s going, rather, is that it’s allowing people to extend their lives into another realm, so you can take all your content with you, you can have that home environment or the things that you like with you wherever you go. I think that’s good for the car industry - I really do.

Steve Kovsky:
In order to be able to do that, we’re still looking at some building blocks that have to go into place to create a foundation. One of them is financial. Let's talk a little bit about what Car IQ does and why this is fundamental to having that kind of a platform and that kind of an experience as we get behind the wheel. 

Sterling Pratz:
It’s interesting. When I started really looking at the car in this new era, if you will, of my sort of "2.0 thinking", I really started looking at the vehicle regarding how you can make adding services to the vehicle easier? And then how do you enable that vehicle to communicate with other systems? That became the first thing I started looking at.

What I realized in that process was that car (owners) are already looking around for things to pay. Every single day we pay for fuel, tolling, parking, insurance, DMV, smog, and - what we’ve learned recently - a lot of tickets. What we figured out was, in the premise for Car IQ, not only are cars looking for things to pay for every day, but these things add up to a massive market. There's more than $400 million or $400 billion spent on fuel, parking, tolling and all that every year, and all of it using a credit card, right? That takes some sort of external service. You either take out a credit card, input it in your dash, input it in a phone app, or install a black box up into the top of your car so you can use it for toll roads.

All these things I found about them were difficult, right? It required the consumer, the owner of the vehicle, to have to manage multiple systems just to maintain or manage that vehicle itself. I just really thought, "there’s gotta be an easier way to do that". 

Steve Kovsky:
Let's talk about that easier way a little bit. One of the things that I really enjoy when I'm traveling to another city and sometimes, depending on the city, you still need to get into a cab and you still have a transaction where you've gotta pass a credit card back and forth or use a keypad. The cashless driving or riding experience is really attractive. In the times of pandemic, that touchless experience is really valuable as well. Are you able to bring that to the vehicle for drivers?

Sterling Pratz:
Absolutely. At the end of the day, what we’ve really developed is a payment network for cars that enables cars to pay for all types of things: tolling, parking, fuel, whatever it might be. What's important in that process is, to a certain degree we are a little bit like Stripe, right? We enable merchants now to accept payments from vehicles, which has never been done before, but we also allow vehicles to connect and pay for things. That combination is what I believe will be the game-changer for automotive today.

The result of that is now a car owner or fleet owner doesn't have to manage multiple credit cards, or multiple boxes inside the vehicle. They don't have to worry about which driver has a card, which one doesn't. They also don't have to worry about fraud. One of the aspects of when a car can communicate directly with the merchants, say a Shell gas station or Exxon or whoever it might be, is that the car now can communicate directly with that service and identify itself. There's an element of eliminating fraud inside of that. 

Steve Kovsky:
Fraud is huge and it has become part of the landscape. I remember very clearly a couple of years back, I was at a meeting at the FBI office. I wasn't being interrogated, it was a community meeting in San Diego. They mentioned, "don't go to the gas station across the street and use your credit card because it's known that criminals are skimming card numbers from that gas station". It's so brazen, I thought. This is right across the street from the FBI, isn't there something they can do about it? But that's a huge area for fraud and just one of the things that you would be protected from. 

Sterling Pratz:
Absolutely. In fact, that was sort of how the company started. Believe it or not, we got our opportunity through Citibank. When I had the idea, I was already starting to build an early working product and a good friend of ours connected us to some senior executives at Citibank.

I'll never forget. I came in to meet the CIO of Citibank, Vanessa Colella, and I started telling her about what we were doing, how we were going to make it more secure, and how we want to create a new identity that the vehicle itself would own and would use to communicate with merchants and banks. She said, “That's fascinating.” She said there are already hundreds of millions of IoT machines out there asking for service.

When I heard that, I sort of was taken aback by it. I asked her the question, "Well, how many of them are connected to the bank in paying for that service?" And she said, "Zero, because we don't trust them." Not a bank in the world trusts a machine to transact without some intermediary form of payment - like a credit card - to sit in the middle.

That was the light bulb moment that I really needed. That was the motivation and the thought process I really needed to move forward. What we learned was that fraud is a really important step in this that you have to be able to mitigate or eliminate fraud in a transaction if you're going to get a customer to adopt a new way to pay.

Our next stage that was not only did we realize we were on the right track on identity verification and how to enable a machine to communicate with the bank, but what we really started to do is rethink what a transaction looks like.

What we realized was that if there’s no human in the process, you’re relying on a machine-to-bank or machine-to-merchant communication, so you had to figure out how to automate that system and make it secure so there couldn’t be any fraud.

The first thing we figured out was that in a typical transaction today, there's a process called “Know Your Customer” (KYC), and it’s a human based identity verification process that every single one of us have gone through. Every time you go somewhere and buy something, it knows who Steve is, it knows the prior purchasing acts of Steve, and that this is the area Steve should be in. And then it allows you to transact.

But when a machine transacts there was no method for that, right? 'Cause it’s not human. It’s a machine, so we invented a process called “Know Your Machine” (KYM), where we use the data from the machine and we created a behavioral curve around that data to enable that machine to communicate directly with the bank. But equally important, it allows the bank to trust that machine to transact. That became sort of the genesis in the beginning of Car IQ. 

Steve Kovsky:
Let's look into the future. Where do you see this in five, ten, 15 years, in a world where our vehicles can do business on our behalf? And how does that change the experience? Let's start with consumers. Let's start with the people behind the wheel and in the passenger seat. How does it change their experience? What will they be able to do?

Sterling Pratz:
I think it simplifies the payment process. As much as I’d like to say, "Hey, we’ve created some really cool technology and it’s cutting edge" – which it is – the end user in the application is, I think, what’s most important. We simplify payments and we make them more secure. So here's a good example. When you purchase fuel through us, we now have cars that can connect directly to a fuel pump and pay for fuel without a credit card.

But what’s interesting about it, is that it’s not done through an app. It’s simply the fact that we’re connected to the vehicle so we know when you enter a gas station, we can simply push to either your phone or to your dash, a pump ID. All you do is enter the pump number that you’re at, you put fuel in the car, and you drive away. It creates this whole new experience around purchasing that you can’t do with a phone or with a credit card today.

Steve Kovsky:
That's a good point. You've partnered with BlackBerry as part of the BlackBerry IVY™ platform, and I'm interested in hearing the reasons why you chose to do that. There are phone-based platforms, there are other platforms out there. What did you see as some of the advantages, and what led you to seek that partnership?

Sterling Pratz:
The BlackBerry partnership fascinated me from day one. I was actually quite excited about it from the moment BlackBerry reached out to me. There are a couple of reasons why. One is that BlackBerry® is the operating system for a tremendous number of vehicles. They are truly an automotive supplier and they build the operating system for these cars that controls a safer network in the vehicle. They're connected directly to the sensors of the vehicle itself, and they manage all that architecture and all that data inside the vehicle.

The first and foremost thing that excited me was the ability to not only connect to the vehicle, but to connect directly to the sensors in the vehicle and use that sensor information to create a unique ID. That's important because it creates for the first time in history, data provenance. We literally will have 100% data provenance in a transaction because we can go from the sensor, all the way to the merchant, all the way to the transaction, in one fell swoop.

And the number two thing that's important is the shift in liability. As soon as you know "who" that vehicle is, you now can shift liability away and transact – for lack of better words – a card-present type transaction which no machine can do today. We think that's really important for building a base. Today, it's all about cars paying for things. Using that data inside the vehicle to secure the identity of the vehicle and validate that vehicle has a service need.

But two, I think it is also the base that we need to start adding financial services to the vehicle. So, imagine not only can vehicles pay for things, but we now have vehicles with a wallet associated with them. That means the vehicle can receive money and pay for things at the same time. We think that's really the future where automotive goes. Especially if you're a fleet manager where you have multiple drivers inside a vehicle. Instead of the company paying the driver and managing the vehicle itself, they can reverse that mechanism. They can now start allowing that vehicle to receive payments, so every time it drops off a package or drops off a customer, it's receiving the money. But then at the end of the day, it can then pay out what it's earned or who's earned, say the driver, fuel, and things like that. 

Steve Kovsky:
Talking about fleets, it's such a huge part of our economy now, you know, you mentioned delivery trucks. I mean there are more of those on the road in my neighborhood than there are neighbors these days. What are some of the ways that it really impacts fleet operations?

Sterling Pratz:
You see the biggest impact upfront with fleets. We've already signed up three of the seven largest fleets in the country, where they want to start moving from card-in-hand processes to vehicles making the transactions. And it's really simple. They want to eliminate friendly fraud, right? The fact that somebody might put gas in their own car but use the company credit card. They want to have tighter controls on the financial element of the vehicle itself. So, what are the vehicle expenditures and can they see them in real time?

One of the attributes of a vehicle transacting is it's a natural real-time transaction. As soon as that car pays for fuel, pays for a toll or parking, it automatically goes into a real time ledger that the fleet operator can track. Imagine today they spend 30 to 90 days settling and accruing all their vehicle expenditures, and they really have kind of a high-level view of that. Now, it automatically goes into the ledger in real time, and they can actually go through and scan it and sort it by make, model, brands, delivery type, vehicle type, you name it. They can separate it out so it gives them a much more granular view of their payment history and what their expenditures really are.

Steve Kovsky:
Another thing that you mentioned briefly is citations, and you know, for a consumer, if I get a ticket it ruins my day. It's a big deal. I try to avoid it at all costs, but these are realities for fleet drivers, and it can add up to a significant amount of overhead on the back end. Probably, adding to what is already a painful cost. 

Sterling Pratz:
The three biggest things that fleets are telling us today are: one, we'd like to eliminate the card-in-hand process because if you have 1,000 drivers, that means you have 1,000 credit cards, which also means some are getting lost or stolen or whatever it might be. So, you're constantly in this flow of refreshing those cards. The second thing they want to do is simplify the payment process - fuel payments for instance, are really, really important to fleet operators.

Then you have citation management. Something I didn't know anything about until about six months ago, when a customer raised their hand and said, hey, can you help us with this problem? We've got thousands and thousands of cars that are doing last minute delivery services in Los Angeles and there are 12 counties in Los Angeles, and the car typically will go through 12 counties over the course of one week, but it receives one to two tickets per week on average.

The result of that is they spend anywhere from ten to twelve hours for every thousand cars, to find which county the car received the ticket, and to pay that ticket. It becomes kind of a massive overhead for them and expenditure for them. In our case, what we're starting to do is, they've started to figure out how to leverage our system to do real time payment capabilities.

With our system, they can automatically see which county it received the ticket in and automatically pay that ticket. They cut it from ten to twelve hours, down to less than 30 minutes using the system. 

Steve Kovsky:
That's great and we still get our package at the end of the day, even if they had to double park to do it. You know, because of a reasonable cost of operations, perhaps.

Sterling Pratz:
Yeah, absolutely. The fleets are looking at how do they manage their cost of operations? How to get a more granular view into their expenditures around the vehicle? These are really big issues for them. Some of these fleets that we've signed up have anywhere from 100,000 vehicles to as much as 400,000 vehicles. If you can just think about the sheer volume of credit cards, fuel expenditure, time in vehicle citations, it's really a big deal to these guys. 

Steve Kovsky:
What about auto manufacturers? Are they looking to derive income from all of the transactions that are going on in cars? And how do they get in that revenue stream to add value and to be able to fund their activities?

Sterling Pratz:
Yeah, the manufacturer is starting to take a big interest in what we're doing. I think their relationship with BlackBerry is really driving that now. One is to implement our system through BlackBerry. It's all software based. There's not a lot of implementation that the manufacturer has to do.

Two, we’re also an issuer. It allows the auto manufacturer to essentially white label our issuance and offer their own payment services to their customers. By doing that they can pick up a little revenue on every transaction. That's something that hasn't happened before for the manufacturer. They typically have branding relationships with a bank, which is a great relationship when you're extending a credit card to your customer. 

But in this case, the manufacturers are also rethinking what payments look like. Now they're realizing that using our platform in combination with BlackBerry, that they cannot only add payment services to the dash in the car, they can start looking at adding financial services to the overall platform of the vehicle.

Cars can: one, pay for things like fuel and tolling and everything we talked about, but now the manufacturer can start offering it within the services or the loan of the vehicle as well. Imagine your car could come with six months’ worth of tolling, three months’ worth of fuel, whatever it might be, as an incentive to purchase that vehicle through them and that's what our platform now offers the capability to them to do. 

Steve Kovsky:
It's interesting as we're going to be talking about all types of automotive and transportation advances in the course of this show. I had a chance about a week ago to ride in my first hydrogen powered car. One of the things that comes with it, because, you know fuel, there's not that many places where you can gas up. They offer you a year's worth of fuel, but the ability to offer some services bundled with the car, whether you buy it or lease it, is going to have an impact on consumers and on vehicle sales. 

Sterling Pratz:
Absolutely. It's really bringing in a new era of rewards and loyalty, right? Because now the car can come with services baked into it and that will automatically help that customer seek out and find those partners to purchase fuel, to transact with. We think this opens up a whole other area of services for the manufacturers. That's why I think the relationship with BlackBerry and what we're doing is so important. 

Steve Kovsky:
In that BlackBerry IVY platform, of course, Amazon Web Services (AWS) is a partner in this as well, because one of the goals is to build out an ecosystem that app developers can utilize, just as they do app stores today for your phone. How do you see that evolving?

Sterling Pratz:
We are starting to put our toe into that water today. We see that a little bit differently with our platform where we're looking at more of merchant services, in allowing open APIs so that people can program or connect vehicles directly to a merchant. That's an important one in our world because today, if you look at all the in-dash services that are offered, you have to actually download an app for each one of the merchants, and so it's a little cumbersome for the customer to use. Typically, three to five steps in the process by the time you download the app, pick it, sort all the information out, and add your credit card information.

What we want to do is open up our APIs so that people can connect to any merchant globally, which we can do today. That process of open APIs in allowing that merchant to connect directly to our vehicles, will cut that three to five step process down to one, or even less, because a car can come preset with that merchant connectivity already in it.

What we're seeing is there's a whole other world opening up. What other things do you want to purchase? We've already had people coming to us say, hey I'd like to write some API so that I can offer food services to fleet drivers, right? I know they're in a gas station, now I want to connect them to Loop so they can go inside the store and purchase food. We have truck drivers or trucking agencies that want to offer incentives to their drivers for on-time drop offs or waystation pickups, where they can now get showers or beds or things like that. We're just starting to see these types of thinking or these types of services coming to the surface. 

Steve Kovsky:
There's a lot of utility in being able to access (vehicle) sensor and location information. When you're in the car in an area that you're not as familiar with, that could be a real lifesaver and a real benefit to the consumer. 

Sterling Pratz:
That's a benefit to the consumer and a benefit to the merchants as well, because creating trust between the vehicle and the merchant is 50% of that. Here's a good example of how it can help the consumer. There are two really big applications. One is tolling. The fact that the consumer doesn't have to add a toll-box to their vehicle, the car automatically knows where they are, what direction they're traveling in, the speed they're going. The customer doesn't really have to worry about the lane.

But here's the cool thing. Working with BlackBerry, we can actually go one step further. Tolling wasn't the big problem to solve, it was High Occupancy Vehicle (HOV) systems. In this case, when you're attached to the sensors in the vehicle, you actually know how many people are in the car. You can automatically add HOV capabilities to that vehicle, and then the consumer can drive in any lane and cross that toll without having to worry. The tolling agency will have peace of mind because they know that car is HOV-legitimate. It's currently a huge challenge for the tolling agencies today.

The second thing that's really important, and why merchants like us is, fuel is a good example. In our world, when a car drives into a gas station, as I mentioned earlier, we know it's there so we automatically could push a pump ID to it. But what happens in the background is probably equally important. We know "who" that car is. We know the last time it filled up. We know how big the gas tank is and we know how much fuel is in the tank. We can send that information to both the merchant and to the bank to say, "Hey, this car has a 10-gallon gas tank, but it only needs 5 gallons of gas", and it really mitigates the risk on the merchant side about how much they need to pump.

The benefit to the bank in working with us is that when a treasury underwriting kicks in, meaning, "Hey, Steve just pulled into this gas station and he wants gas", we're gonna underwrite $125 in reserve and allow him to pump gas and close out the transaction. But imagine to the bank, every time Steve pops into a gas station, they have to send $125 dollars from their accounts into escrow. Imagine it's like a trillion dollars a day for some of the bigger banks. In our case, we could send a message to them that says, "Hey, Steve only needs 3 gallons of gas so instead of underwriting $125, you can underwrite $15". If you can start to imagine having access to this information, you'll see how everybody begins to benefit from it. 

Steve Kovsky:
Something that I find inhibits me from accessing a lot of apps is it's one more entity that you have to trust with your financial information. We've put trust in our auto manufacturers. We put trust in certain vendors. This is a way that you don't have to have all of your data in yet another place, perhaps, in order to take advantage of the incredible variety of applications that are going to be available in your car. 

Sterling Pratz:
Absolutely. I think one of the things that stands out to me, as I mentioned a little bit earlier, was our relationship with BlackBerry allows us to create a more secure environment for payments. One of the attributes of our identity verification and our ability to communicate directly with the BlackBerry IVY platform, is our ability to use an unlimited number versus a credit card number. If any data gets exposed, there's actually nothing someone could use to hack an account with. It essentially eliminates things like man-in-the-middle (MitM) scenarios or friendly fraud scenarios, and I believe that's really important. Especially to the manufacturer, because the manufacturers are hypersensitive to the data in their vehicle. They too, do not want their vehicle data to be accessed by the dark web, if you will. They don't want their customer information to be accessed by the dark web either.

This puts another layer of security on top of that platform, that not only blocks people from getting to it, but even if they do, there's actually nothing in there that someone could use to do nefarious things with. We think that's really important to not only consumer adoption, but it's also important to OEM and auto manufacturers’ adoption. 

Steve Kovsky:
Now, I've never seen figures that tie fraud, credit card fraud in particular, directly to travel. But it seems like every time I've had to stop a card and just deactivate a card and have them send me a new one because there are unidentified charges, it always seems to correspond with travel. I’ve been in a different city, I've been outside of my normal pattern, and suddenly somebody is charging a great vacation for themselves (to my card) somewhere else in the world that I've never been. 

Sterling Pratz:
Yeah. That happens more often than one would think. One of the things that we see isn't so much travel, but we've been very aware of fuel fraud. That's the number one thing that we're seeing. Fuel is the first major service that we're offering, because cars can go into a gas station and simply connect directly to the pump and pay.

What we've seen is the current providers of fuel cards, which there are three majors, they're very vocal that about the fact that 3% to 7% of the time, fraud exists. Imagine if you're generating $90 to $100 billion in revenue and 3% to 7% of that is fraudulent. That sort of gives you an idea of the scale of that market or that condition. 

Steve Kovsky:
Well, you've mentioned several things that I think are going to be really transformational for traveling in your vehicle. One of the things that blew my mind is the idea that you could have the equivalent privilege of driving in an HOV lane, in any lane. I think that that alone is worth another show. In your opinion Sterling, as we close on this and everything that we've talked about, why should automakers be excited about this and why should consumers be excited about this?

Sterling Pratz:
That's a great question. I think that for two reasons. I think the manufacturer should be excited about it because it’s designed for OEMs. It’s designed to be embedded in the car. It's an OEM grid financial platform for vehicles that allows them to generate revenue on every transaction. I think it's pretty clear. Manufacturers are moving away from just simply being a car manufacturer or master assembler if you will, and they want to become services companies, and the golden rule around services, is that you have to find a way to collect on the payments. This enables that.

I think the value to the consumer is simplification. I mean, right now the services that are offered through the dash require a lot of steps for the consumer and they have to download an app for each merchant. In our case, it totally simplifies that process. They just simply drive into the merchant, connect directly to them and it transacts without them having to pull out an app, use their phone, pull out a credit card or any cumbersome service at all.

Steve Kovsky:
Well, that's the end of our episode for today, but if you’d like to get more information on the topics or our guest, check out Get In: The Connected Vehicle Podcasts from BlackBerry is available wherever you get your podcasts, and don't forget to subscribe to keep up to date with our latest episodes. 

* NOTE: Interview transcript has been lightly edited for clarity.

Steve Kovsky

About Steve Kovsky

Steve Kovsky is former Editorial Director at BlackBerry.