Purchasing a new car should be a great experience. You get that shiny new car feel and wonderful new car smell. Years of trouble-free motoring, with the latest safety features to protect you and, if you're at that stage of life, your family. It should be a fantastic day when you take that new car off the lot, so why is it such a headache to pull the transaction together to make it happen? And how can advancements in payments technology be utilized to improve this process?
When I purchased a car a few months ago in the US, I had to engage in a transaction that involved me, the dealership, and the financing organization. The financing transaction itself took place in the matter of a few minutes. After that, however, the dealership had to submit paperwork with the DMV stating that the car was sold to me. I then had to go stand in line at my local DMV branch to pick up my new license plates within the 60 day grace period. Finally, I had to pay the registration fee, state tax, and county tax to obtain tags for the plates.
I couldn't help but think about how much easier the whole experience could have been. With the way we're headed with next-generation payment platforms (look at Australia and the UK), the DMV could easily have been part of the initial transaction right as the money exchanged hands. They could have done the registration transfer right at that point in time, and it could simply have been a matter of getting the plates in the mail (or potentially picking them up in person).
As it stands now, the DMV gives buyers a 60 day grace period. The twelve-month registration doesn't begin until the customer picks up their tags and completes the transaction. There's no reason why all these transactions couldn't take place at the same time. Not only would it be more convenient for the consumer, but it would also be beneficial for government entities and businesses. From the dealership's perspective, there's less work to be done and a smaller opportunity for error. From the DMV's perspective, revenue could be collected as soon as possible.
Thanks to the advancement of payment technology, we now have the ability to improve transactions involving multiple parties. We've all probably made multi-transactional payments without giving much consideration to how they could be made easier, more efficient, and even more secure.
We're already well-equipped from a technological standpoint. The technology exists to perform secure transactions that are connected on the back-end from the dealership to the DMV. If we can send payments around the globe nearly instantaneously, we can also build a connected system that gives the DMV information about car dealerships and individual license holders. It's definitely not rocket science to put the system together.
The security landscape would definitely change if this type of multi-transactional payment became a reality. Fraud prevention wouldn't just be about making sure money was exchanging hands. A primary concern would also be to prevent money laundering transactions from taking place. The DMV would become an active participant, ensuring that the vehicle actually exists and the VIN is valid.
At the same time, it would be nearly impossible for someone to sell a car that they didn't actually own. The buyer wouldn't make a visit to the local DMV days after the purchase only to find out that the vehicle was stolen. Instead, every party involved would have several checks in place to immediately make sure that the transaction is valid.
Of course, the biggest hurdle may be public policy. Local regulatory agencies and government organizations all need to get on the same page (and most of us who've been to the DMV know they're not usually on the cutting edge of technology). How could we get everybody on-board? I think it's mainly a matter of getting all parties to become aware of the benefits.
Until multi-party transactions are improved, we'll continue to experience a two month window of uncertainty. The vehicle purchasing process will involve unnecessary paperwork and delays. Car buyers will have to drive around with no license plate and a temporary tag hanging in their window. It really doesn't have to be that difficult, if only everyone could agree to take the simple step of putting better systems in place.
