Skymeter: Using Connected Cars As Credit Cards

If you’ve ever used a networked road tolling service, like FasTrak in the Bay Area, then you know how easy and convenient it is. Well, what if cars had connections in them at all times that turned them into driving financial transactions and would support automated billing for parking and tolls like congestion charges? That’s the idea behind a Toronto-based startup called Skymeter.

Skymeter CEO Kamal Hassan told me recently in an interview that he thinks Skymeter could change how people use their cars and could lead to reduced greenhouse gas emissions from vehicles. Future-forward scenarios under the Skymeter scheme could include cities shifting toward pay-as-you-drive tolling for roads, and the not-that-far-away idea of SMS-based parking, which Hassan tells me is starting to catch on in Europe.

Skymeter works via a “black box” installed in the car that houses the network connection, computing device, GPS chip and software. Hassan tells me Skymeter’s customers — whether that’s a city, a parking service, or a car sharing company — determine where in the car they want the hardware installed. The cars that sign up for the customer’s service then can keep track of where they are in relation to whatever the customer is selling and can bill the driver accordingly.

For example, in the case of a Skymeter-enabled SMS parking service, a driver could park without using bills, coins or credit cards, and the parking operator could approve an automatic payment via text message. Or if your city implemented a congestion charge for its downtown area (to discourage driving during certain times), the city could automatically bill you when you drive into that region during certain hours. It’s like a more simplified version of the networked services that car-sharing companies Zipcar and City Car Share use today, and a more complex version of FasTrak.

Hassan tells me the company’s secret sauce lies in its software. However, at the same time, Hassan contests that while the company uses off-the-shelf hardware for the black box, the hardware is also not yet a commodity product. I think that’s probably the biggest hurdle for the company: the cost of making and installing the hardware piece. It seems like Skymeter could create a similar service more inexpensively, piggy-backing the GPS, software and network connection in the driver’s cell phone.

As I pointed out in my piece for GigaOM Pro, Car Data As the Next Platform for Innovation (subscription required), the center point for the network connection, software and computing in cars will ultimately either be embedded in the car itself via the automaker, or embedded in the cell phone. From a cost perspective, that makes the most sense, and Big Auto and the telcos of the world will be battling for which one will be the dominant scenario.

In the mean time, a third party like Skymeter could offer an alternative but will eventually have to pick one, or embrace both options, to play in a bigger market. Hassan tells me that he is talking to the big auto makers, and expects Skymeter to become an embedded car product in perhaps three to four years.

Founded in 2006, Skymeter has already raised around $5 million from angels, and Hassan tells me the company is currently looking to raise a second round of funding. Hassan says in 2011 Skymeter will be working on two large contracts — one for a parking company and the other for a rental car company that wants to do car sharing — in Europe that will include tens of thousands of cars.

Connected cars have been front and center at CES and the Detroit Auto Show over the past few days, but are our networked cars going to act as credit cards one day? Down the road, yes. It will probably be as easy to buy a song from iTunes (s aapl) from your car someday as it is today to buy it from your laptop (it’s already basically as easy via mobile). Companies have been showing stuff like that off at CES for years. Skymeter just combines it with the powers of GPS to open up the connected car to new services.

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Image courtesy of Alex 92287.