Dive Brief:

• Mega payment processor Global Payments has teamed with the auto retail service company CDK Global to offer car dealerships better digital tools for collecting payments from their customers. The tie-up comes less than two weeks after Hoffman Estates, Illinois-based CDK disclosed on June 2 that it had purchased the dealer digital tools company Roadster for $360 million.
• Atlanta-based Global Payments and CDK said in a press release Wednesday that they’re kicking off the new service in conjunction with Fortellis, a CDK payments software system with virtual and contactless payment options. It’s designed to “help dealers create a frictionless customer experience with end-to-end seamless payment technologies and expanded payment options,” the release said.
• “Technology has transformed payments in recent years, but many industry sectors are still catching up,” said Bob Cortopassi, president of the Global Payments Integrated unit, said in the release. “We believe it’s our responsibility to provide businesses and consumers with state-of-the-art payment technologies and commerce-enablement solutions.”

Dive Insight:

CDK is principally targeting the new payment system at dealers' auto repair and parts sales, but the company expects about a quarter of the new business to come from taking deposits on the sale of cars, said Fred Fordin, CDK's vice president of dealer management systems and related solutions. CDK currently has 9,000 dealer customers for its software, and it aims to sell the new tool to at least half of them, Fordin said.

The partnership shows how companies are seeking to court car dealerships in selling a new generation of payment tools to the industry. It also underscores the growing allure of digitizing sales, financing and payment processes for big-ticket items like cars.

With showrooms shut down last year due to the deadly COVID-19 pandemic, car dealers stepped up digital retailing efforts and they’re expected to stay the course, according to a report from Automotive News.

Customers are also making clear that they want more digital options for buying cars. Some 70% of consumers want all, or at least part, of their car-purchasing experience to take place online, according to 2020 data published this year by online research and marketing company Cars.com.

“Stay-at-home consumers are driving advancement in these platforms and shifting them from merely communications tools to selling tools,” Cars.com said in a January release of trends driving the automotive industry. “As dealership adoption of digital tools and technology increases, car shoppers can expect more of the purchase process to take place on virtual selling platforms such as chat, video and dealer websites.”

Another company catering to car dealers’ payment tech needs includes Cleveland-based Electronic Merchant Systems.

Similar payment trends are touching dealership's repair operations. The fintech Sunbit raised $130 million in May in a bid to bring its digital buy now-pay later payment options to car dealerships, financing auto repair expenses. It shows competition building to partner with car dealerships and sell a new generation of payment systems tailored to the dealers’ needs.