Innovative payments drive better outcomes for the automotive industry

The U.S. automotive industry continues to navigate changing consumer preferences, staffing challenges and global supply chain conditions to stay competitive. Across the board, the new reality for car dealerships* is becoming clear – protecting profit margins and retaining loyal customers requires digital-first shopping experiences, vehicle servicing offerings and strong control over financial operations. With that in mind, automotive leaders are revisiting their payments strategies to boost efficiencies and cost savings – particularly, for managing inventory financing, paying suppliers and managing credit card surcharging.

In this complex and interconnected payments landscape, finance teams in the automotive industry are turning to integrated payment solutions with their dealer management systems. In fact, the latest U.S. Bank Payment Strategy Report shows that 82% of automotive organizations are prioritizing these types of payments integrations. Beyond internal systems, businesses in the automotive industry – and all enterprise sectors surveyed in our report – are turning to new payment acceptance solutions to keep pace with consumer expectations for frictionless payment experiences (62%) and to fight rising fraud threats (59%). Given these challenges, automotive companies need tailored payment solutions to their specific operating conditions and customer behaviors.

How is the automotive sector different?

Traditionally, the automotive sector has been more sales-focused than customer-focused. As customers demand seamless shopping experiences and transparent offers,* the mindset within the automotive industry is shifting. By offering flexible payment options and enhancing service departments, dealerships are improving customer experience to increase satisfaction, loyalty and earnings. To meet this moment, our survey respondents are investing most in mobile payments acceptance (47%), Buy Now Pay Later solutions (43%), real-time payments (42%) and omnichannel payments (42%).

This is a notable evolution from the invoice and check payments of the past – but there is still a long road ahead to long-term transformation in automotive financial operations. Only 40% of our respondents rate their existing payment strategy as advanced or very advanced – but payments are the key to unlocking enhanced strategies, with an impressive 70% say upgrading payments acceptance would give their automotive business a competitive advantage.

Automotive payments success relies on streamlining processes and boosting flexibility

To uncover the best tactics for enhancing payment acceptance strategies, we asked survey respondents how they plan to innovate in the coming years and what is motivating their choices. Four key areas of focus emerged:

• Streamlining accounts receivable processes
  finding and retaining skilled staff* for both the back-office and technician positions. That means automotive leaders must digitize and streamline as many operational areas as possible to save valuable staff time and reduce administrative costs. In our survey, 63% of respondents reported wanting to automate accounts receivable processes to decrease time spent managing payments acceptance.

• Investing in AI solutions
  Beyond basic process improvements, these leaders are especially interested in how AI tools can help them uncover additional efficiencies – with 69% of our automotive industry survey participants reporting that staff shortages are driving increased investment in AI and automation solutions in payment processing. Beyond work flows, AI is also playing a critical role in detecting and preventing payments fraud. Car dealerships must be vigilant against identity fraud and income misrepresentation* to protect their operations from bad actors. Given these rising fraud threats, 41% of our respondents reported improvements to their fraud mitigation efforts by implementing AI-driven solutions.

• Embedding financial services in payment experiences
  As the tariff environment* and supply chain constraints continue to increase prices for new vehicles, consumers are keeping cars longer and spending more on servicing over the life of the vehicle. This has pushed automotive finance leaders towards the convergence of banking and payments to adapt. Beyond traditional financing options, car dealerships are tapping into point-of-sale lending solutions to extend consumer buying power for servicing and parts – an aspect of the long-term relationship that customers have with dealerships that can drive loyalty and repeat purchases. In fact, auto-industry experts predict that consumer experience and brand loyalty will protect many dealers from price sensitivities over time – making embedding financing a high priority for long-term revenue growth.

• Optimizing card payment acceptance costs
  Price sensitivities extend beyond the customer’s checkbook. Auto dealers continue to manage increased inventory prices for both vehicles and parts, spurring them to look for cost savings in their operations. Our survey research reveals payments optimization is increasingly an area of investment for automotive finance leaders, with 93% of our respondents reporting that they have implemented or are planning to implement credit card surcharging in the future. By passing some payment acceptance costs to credit cardholders, dealerships can ease margin pressures on large ticket sizes for parts and servicing.

Meeting the moment – preparing dealerships for payments innovation

Our research indicates strong interest and need for payment strategy enhancements in the automotive industry, but our respondents also report several roadblocks to overcome before they can fully implement process improvements and integrated solutions. First, there is notable knowledge gap in automotive finance teams – 66% of our survey respondents reported difficulties keeping up with payment innovation and 43% indicating that their organization lacks technology skills. This means that car dealerships need a trusted payments partner to help keep finance teams educated on emerging payment technologies – like mobile wallets, point-of-sale lending and optimization programs – and to integrate payments acceptance directly with dealer management systems to reduce complexity.

Second, automotive finance leaders continue to struggle with limited budgets and legacy technology infrastructure; 51% of our survey respondents reported outdated technology as their biggest challenge to payment acceptance transformation. To justify large investments in integrated payment solutions, finance teams must demonstrate sufficient ROI and performance improvements; by partnering with a payments processor, they can receive tailored use cases and solutions to show how streamlined accounts receivable processes, surcharging programs, embedded financing options and other payments innovations can boost operational cost savings and drive new sales.

Looking ahead

On the road to payments transformation, incremental investments in integrated payment solutions and process improvements can drive significant benefits for both automotive companies and their customers. Strengthening payment acceptance strategies and updating legacy systems can help car dealerships protect margins, enhance operational efficiencies and provide a smooth shopping experience for consumers.

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