Opportunities within the EV charging market

Opportunities within the EV charging market

Battling the fragmented (payments) infrastructure

E-mobility is the present and the future. The future of EV charging is expected to benefit from policy support and investments in infrastructure development. Governments across Europe are recognizing the need to promote cleaner transportation options and are providing incentives for the deployment of public charging stations; driven by European ambitions. Additionally, the private sector is investing in the development of new technologies and business models that could revolutionize the way we think about EV charging.  And with a growing EV market, drivers will be more demanding on the experience around their electric vehicle. However, there are some obstacles to growth, such as accessible infrastructure and more simplified payment solutions. This gives relevant (payments) parties opportunities to respond to this and come up with innovative solutions.

One of the primary concerns is the fragmentation of payment systems. EV owners often need to navigate a complex landscape of multiple apps, membership cards, and various charge cards to use different charging point operators. This lack of standardization can lead to inconvenience and confusion, potentially deterring users from adopting EVs. Technological growth will facilitate the rise of connected vehicles, new infrastructure projects, and innovative modes of service, but payment transactions must undergo a similar transformation. Payments cannot be separated from mobility.

Consumers indicate in various studies* that they are disappointed by the number of different payment methods and apps. The average EV driver has 2–3 charging cards/tokens and uses proximately 1- 2 charging Apps, mostly for non-roaming chargers and charging abroad. This also hints at a reason behind the introduction of European regulations (AFIR) that mandate individuals to have the ability to make payments for services without requiring a subscription at DC chargers (>50Kw).

The cost of charging is also a concern. The initial installation cost of level 3 and ultra-fast chargers is high, which can be a barrier for the expansion of the necessary infrastructure. Moreover, the pricing models for charging can be opaque, with some operators starting to use complex tariffs that may not be easily understood by consumers, leading to potential mistrust or dissatisfaction.

In the Netherlands, the government has been proactive in tackling these issues through public-private partnerships and the implementation of policies aimed at standardizing the EV charging market. The Dutch National Charging Infrastructure Agenda is a key policy initiative working towards making charging easy, smart, and widely accessible, with a focus on expanding the network and ensuring high coverage of charging infrastructure.

In conclusion, while the Netherlands is a leader in e-mobility, the challenges in the EV charging payments market are non-trivial and require ongoing attention. Solutions such as smart charging, government intervention, and the development of unified payment platforms are essential to overcome these obstacles and support the transition to sustainable transportation.

There also have been instances of fraud within the EV charging payment systems, where vulnerabilities have been exploited, leading to unauthorized transactions and financial losses. This underscores the importance of implementing robust security measures to protect users’ financial information and maintain trust in the payment infrastructure.

What challenges are there to overcome?

If we investigate the current situation of the EV charging market, we foresee several solutions and opportunities in this lucrative market to address current challenges. Here is a summary of the challenges in this fragmented market:

• Market Fragmentation: Multiple Charge Point Operators (CPOs) use proprietary payment systems, diverse BackOffice systems, pricing models, and contracts, making it difficult to develop a universal payment method.
• Technical Standards & Protocols: Aligning technical standards and protocols is essential for a unified payment system, but diverse communication protocols and authentication methods create compatibility issues.
• Business Models & Revenue Sharing: CPOs’ existing business models are based on current payment systems. Implementing a single payment method would require redefining revenue-sharing models and agreements among operators.
• Collaboration & Cooperation: Achieving a single payment method necessitates collaboration among CPOs, service providers, technology vendors, and government entities, which is complex and time-consuming.

As AFIR doesn’t apply to the majority of chargers (the AC-chargers, below <50Kw), we have looked specifically into payment options for the segment of AC Chargers. These types of chargers are typically seen in most streets, at car parks and near shops.

These chargers are usually built at their own costs and managed to optimize usage. Typically, adding an open loop point of sale terminal to an AC-charger would make the business case of such a charger challenging. To overcome the current obstacles in AC charging open loop payment solutions, we have identified several options.

What are possible payment solutions for AC-Chargers?

The challenges with AC-charging can be addressed by focusing on the following key opportunities:

• Kiosk Solutions: Partner with municipalities and parking operators to install kiosk solutions that serve multiple AC charge points, reducing costs and improving accessibility.
• Tokenized Payments: Integrate tokenized card payments into existing charge apps and parking apps, providing a seamless payment experience for users.
• QR Code Payments: Implement QR code payment options at charge points, enabling users to pay easily via their smartphones.
• POS Terminals: Work with Charge Point Operators (CPOs) and Charge Point Manufacturers (CPMs) to embed POS terminals in new and existing AC charge points.

Simplifying the payment process can improve customer satisfaction and loyalty, as users prefer seamless and convenient payment options.

Talking about loyalty, as the EV charging market is expanding, new business opportunities dawn on the horizon!

How will the EV-charging market evolve?

Based on our knowledge of and experience in this market, we can distinguish several opportunities for new propositions, for example:

• Broad opportunities due to mass enrolment of EV charging points based on Open Loop payment instead of Closed Loop Payments.
• The total concept of charging has changed; consumers no longer need to go to a fuel station but can charge their car wherever the car stands still, like at supermarkets, furniture malls, cinemas and leisure parcs. This gives retailers the possibility to provide customers with full-service concepts like loyalty programs  “You charge with us and receive a ticket for the movie for free”.
• Travel concepts: charging consumer cars at fixed points during their tour through Europe, for example, gives a discount on hotel accommodation.

 In conclusion, the EV charging market is at a pivotal point, with Open Loop Payments paving the way for a more inclusive and user-friendly ecosystem. Despite the challenges posed by payment fraud, the industry is responding with innovative solutions and security enhancements. With continued support from policymakers and industry stakeholders, the future of EV charging looks bright, promising a seamless and integrated experience for EV drivers worldwide. The user experience of the payment transaction is becoming increasingly universal (compare mobile payment) and simple, and providers are going to lure the customer to their charging station through added value services.

The ongoing developments in this field are not only crucial for the growth of the EV market but also for the broader goals of sustainability and reduced carbon emissions. As the market evolves, it will be interesting to see how these trends shape the landscape of electric mobility and the experiences of EV users. The journey towards a greener future is well underway, and the EV charging market is leading the change.

How can you benefit from the EV-charging opportunity

Our organization helps acquirers, CPO’s and other EV-charging providers navigate the complexities of the EV charging market, focusing on delivering open-loop payment solutions that not only improve operational efficiency but also provide a seamless user experience.

The EV-charging market will grow into a high-volume card payment acquiring market. We recognize the challenges associated with implementing open loop systems, such as integration of POS into existing infrastructure and also regulatory compliance. That’s why we provide strategic guidance and support every step of the way, from initial planning to final execution. Our services include market analysis, risk assessment, technology consulting and project management, all aimed at optimizing the payment experience for EV users and maximizing ROI for your business.

* Sources: Shell recharge – EV Driver Survey Report 2023