Volkswagen's financial arm buys Vancouver startup PayByPhone in scramble for technology
The mobile parking payment company has been acquired by Volkswagen as the German auto giant races to get a foothold in the future transport economy
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Vancouver-based mobile parking payment company PayByPhone has been acquired by Volkswagen AG’s financial services arm as the German auto giant races to get a foothold in the future transport economy.
PayByPhone, which said it processes more than US$250 million in payments each year, allows its users to securely pay for certain parking spaces with their phones and be alerted when their time expires. The app has 12.5 million registered users and can be used in several cities in the U.S., Canada, Australia, New Zealand, the U.K. and France, the company said. PayByPhone has about 100 employees worldwide.
The deal — the terms of which were not disclosed — came after discussions with Volkswagen during the past six months, said PayByPhone chief executive Kush Parikh.
“Now, being part of the overall Volkswagen family, we will probably help drive some strategic initiatives internally across their organization,” he said in a phone interview on Wednesday. “But, fundamentally, we will continue to operate independently and push our payments and smart parking agenda as quickly as possible, and (Volkswagen) will, of course, help accelerate that.”
The purchase of PayByPhone comes less than a month after Volkswagen made a massive push into mobility services such as ride-sharing and commuter pooling apps through a standalone company, MOIA, to compete with the likes of Uber Technologies Inc.
Many of the European carmaker’s competitors including General Motors Co. and Toyota Motor Corp. have also been heavily investing in mobility solutions, said Mark Boyadjis, senior automotive technology analyst at IHS.
GM in January invested US$500 million in ridesharing app Lyft, and said it planned to develop an on-demand network of self-driving cars with the service. Toyota in October announced it plans to establish a Mobility Services Platform that will support car sharing among other things.
Boyadjis sees Volkswagen’s purchase of PayByPhone as a play to address a future where fewer consumers may want to own a car.
He cites slowing car sales in urban areas such as San Francisco and the growing number of consumers who view ride-sharing or car-sharing as preferable alternatives to paying the roughly US$34,000 average price tag of a car plus insurance and upkeep costs.
“Mobility services is very, very much a big opportunity for automakers, and it’s a defensive opportunity,” Boyadjis said on Wednesday. “They’ve seen, frankly, Uber be a giant disrupter to their future sustainability.”
The purchase of PayByPhone also comes a year after Volkswagen Financial Services AG acquired a 92-per-cent stake in Sunhill Technologies GmbH, which offers cashless payment solutions for parking operations in 90 German cities.
“With our acquisition of PayByPhone, we are now the leading provider for the processing and mobile payment of parking procedures,” said Christian Dahlheim, the management board member responsible for sales and marketing at Volkswagen Financial Services, in a statement on Wednesday. “In the future we will be bundling this know-how in a separate business field around the theme of parking.”
In May, Volkswagen invested US$300 million in ride-hailing provider and Uber rival Gett, which is available in 60 cities including Moscow and New York City. MOIA, based in Berlin with an initial team of 50 people, also aims to set up an on-demand connected commuting app, the company added. The first pilot projects are scheduled to begin in 2017.
Buying up technologies such as PayByPhone allows car companies to speed up the integration of mobile service capabilities into their existing vehicles, and better position themselves for a dramatically different transportation market 10 or more years down the road, Boyadjis said.
“Most innovative automakers looking at their 10-year scenario are saying we need to invest in mobility,” he said. “Ford, General Motors, BMW, Daimler, they’re all getting very, very active in investing in ways that their business model can seamlessly change as we evolve into a more shared mobility platform globally.”
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