The future of payments: Programmable payments for the Internet-of-Things (IoT)

Jonas Gross
4 min readJul 22, 2021

Authors: Maximilian Forster, Jonas Gross, Anja Kristina Kamping, Serkan Katilmis, Dr. Mario Reichel, Prof. Dr. Philipp Sandner, Philipp Schröder

Digitization is taking hold of entire industries, including in Germany. The area of the “Internet of Things (IoT)”, in particular, promises revolutionary, new types of business models. In this context, the term IoT refers to the increasing connection of machines and devices to the Internet. These devices are equipped with digital identities to communicate with each other and execute processes autonomously without human intervention. This trend will become increasingly relevant in the future. For example, the total number of IoT devices is expected to rise to 75 billion by 2025, according to estimates.

Download the English paper here (German version here).

In this context, the distributed ledger technology (DLT) will play a key role. A DLT can be used for the underlying IoT business models as a trustless, standardized, and highly automated infrastructure on which IoT devices can act autonomously. However, to realize the full potential of the digitization of the industry and the IoT, the entire payment process must be optimized and adapted to the needs of IoT payments. Consequently, the payments associated with these new business models must be processed efficiently, automatically, and in real-time. In this context, it is essential to enable programmable payments. The current conventional SEPA payment system cannot meet all these requirements, as transaction processing is often delayed, and micropayments cannot be processed efficiently. However, using a DLT to manage and process euro payments can provide such a required payment solution. Euro-based smart contracts can be implemented to automate business processes, significantly increase process cycles, simplify payment processes, and enable IoT payments from machines to machines or other devices.

In this paper, we analyze the status quo of IoT payments and explain the limitations of using the SEPA system for IoT payments. Furthermore, we discuss how DLT-based euro payment solutions can be beneficial for IoT. In particular, we analyze a trigger solution — connecting the conventional SEPA system with a DLT –, stablecoins…

--

--

Jonas Gross

Jonas Gross is Chairman of the Digital Euro Association (DEA) and COO at etonec. Further, Jonas holds a PhD in Economics.