PayByCar… how did it start?

When sitting in bumper-to-bumper rush hour traffic, slowly creeping along with all the other drivers, the mind wanders. In 2008, PayByCar founder Kevin Condon was in just such a traffic jam heading to Cape Cod (along, it seems, with every other driver in the region). Rather absent-mindedly, he wondered how it would be technically possible to make the shift to a variable per-gallon gas tax rather than the flat tax that has always been in place. A variable tax could be based on all sorts of factors, each unique to a specific vehicle and driver.

For example, the per-gallon tax could be based on a vehicle’s fuel efficiency to accelerate the adoption of vehicles with lower carbon emissions. Perhaps a disabled veteran could pay little or no gas tax. The variable rate could even be designed so that vehicles manufactured in the U.S. paid a lower per-gallon rate than those manufactured elsewhere.

For any of that to be possible, there had to be a way of recognizing individual vehicle types at the point-of-sale… in the case of gasoline, at the gas pump. The simplest way to do that was to leverage the tens of millions of RFID toll transponders already in use by many drivers–at least as a first step. An idea was born.

Identifying vehicles at the point of purchase is a pretty big idea. There are over 275 million vehicles in the U.S., and over 226 million drivers. Those drivers spend over $800 billion while in their vehicles at well over 500,000 places (gas stations, parking garages, food drive-throughs, car washes, curbside pick-up stores, express oil services, etc.) And, the notion was that once you figure out a way to recognize a vehicle at the pump all sorts of consumer-friendly uses become possible, from touchless payments at drive-thru lanes for fast food, grocery curbside pick-up, commercial parking garages, car washes, etc.

So this little idea eventually turned into a (really tiny) start-up using key influencers to spread the word. Before the company even had a name, Kevin was working at home, listening to NPR’s “Talk of the Nation”. The host announced his next guest would be then-Secretary of Transportation Ray LaHood. A chance to speak directly to the top transportation official in the country–a Cabinet member, no less–was just enough for Kevin to scramble to find a strong cell signal and place the call. Try explaining a big concept like vehicle identification at the point of sale to a talk show screener! The staffer said “Will you be able to describe this on air in 10 or 15 seconds?” Of course the answer was yes.

NPR Host: Lets get another caller in. Lets go to Kevin with us from Truro in Massachusetts.

KEVIN (Caller): Hi. I’m calling about a project that we’re working on….called Efficient Vehicle Assessor, which is in its very early stages…. And what [EVA] does is allow – at the pump – the tax to be variable, to be based on the fuel efficiency of the vehicle….And I was wondering if the secretary had any thoughts on that?

Secretary LaHood: My thought is I’d like to see the kind of work that you’re doing, and if you could email us at DOT.gov and click onto the secretary’s – I have a blog also, but – or if you just wanted to call my office. I’d like to see the work that you’re doing and look into it a little more.

Within weeks, Kevin was invited to the US DOT in D.C. to meet with a senior official in the Research and Innovative Technology Administration to solicit their feedback, and this little idea, born while idling in traffic was officially born.

As the idea was vetted, it became clear that the faster path to adoption was to focus on taking the annoying friction out of the process of buying stuff from the car–starting with getting gas. Everyone knows what that friction is like. Undo your seatbelt, fish around for your wallet, choose a card, swipe or insert it and answer a series of annoying questions before even beginning to pump your gas. Even when using a mobile app, swiping through various apps to find the one you want, often holding your phone out a window for an attendant to scan.

All of that friction is unnecessary. And it became the PayByCar mission to get rid of the friction and make in-vehicle payments seamless, quick and secure.