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October 2, 2023

The Banking of Things Could Be the Next Technology Accountants Freak Out About

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What if your client was a car? No, not the person who owns the car, but the car itself. Absurd, you say? Not totally.

Internet of Things is old news

For starters, connecting devices to the Internet of Things (IoT) is getting ridiculously cheap. The Wall Street Journal said that last summer Onion Corp. sold an itty-bitty computer with Wi-Fi connectivity for $5. The drop in production costs means this space is evolving. It’s not just your TV and fridge that can connect to the internet. It’s much more ubiquitous now.

Payment of Things is here

Plus, things are not just gathering and transmitting data. They are being programmed to link with a financial institution to initiate transactions on your behalf — paying automatically — with or without your help.  

How about an Amazon Dash button to order new laundry detergent with the click of a button? Convenient, especially during busy season.

What’s borderline creepy is that these devices are becoming more autonomous. For example, Brita offers a Wi-Fi-enabled water pitcher that automatically orders new filters. And it’s less than $50.

The M World describes the monetization of the Internet of Things in two stages:

In the first step of the Payment of Things, you have the WiFi-enabled Dash button integrated to your washer, your printer, your water pitcher, or any connected home appliance, and you only need to push the button to order supplies. The payment is completed using your chosen online payment mode and you no longer need to go on your computer or your mobile to make the purchase and pay. In this case, the payment is still triggered by you, when you push the button.

But the system can go further. Some of your appliances are already on-boarding sensors to detect when supplies are running low. Using this data, your equipment could decide, by itself, to order the missing consumable. And, in this second case, it’s the thing itself that initiates the transaction. This is the second step of the Payment of Things.

I am all for devices that can make my life a little easier and help preempt the need for a late night Walmart run. It feels like magic when Doritos show up at your door that you didn’t know you were running low on. Seriously. Magic.

Prepping for Banking of Things

The next logical step is that we are about to embark on a new phase of Internet of Things, called Banking of Things. It’s not quite here yet, but it’s not too crazy to comprehend at this point.

HFS blogger Pareekh Jain defines Banking of Things as the era when:

Things have a legal and a commercial identity of their own and can bank on their own. They have their own existence and bank accounts. They can take a loan, generate revenue, make deposits and can do all commercial activities which humans do with banks.

While consumer appliances don’t seem primed as early entrants into this space, other devices that could reasonably generate profits without an owner directing the show like robotic manufacturing equipment and autonomous cars could logically get to the point of needing their own bank account.

What will the role of an accountant be as we start to wrangle all of these money hungry devices? I imagine the digital ecosystem will only continue to expand, which will lead to a shift in the way we think about transactions. Some of the off-the-wall implications for accountants could include:

  • Things as clients — What if a car autonomously determines that it needs an accountant to pull together a financial statement to qualify for a loan?
  • New sources of payment and transaction data — Will a car or other device contact accountants directly and be able to share the transaction processing data using some type of data interface?
  • A potential shift to our current view of the entity concept — Could we get to a point when a thing, maybe even the autonomous car itself, would become a separate economic unit?
  • Opportunity for connected devices to become taxpayers — If an autonomous car is generating revenue, would it be theoretically appropriate to tax the car as it’s own entity rather than the owner? Again, it’s pretty weird and might not work with our current system of taxation, but who’s to say it will never happen. Bill Gates seems to think it’s a good idea to tax artificially intelligent robots and he’s a smart guy.

Only time will tell. In the meantime, watch out as more devices start going on a shopping spree with your credit card.

Image: Pexels

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