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Stepping foot into the metaverse: how will it change the way consumers pay?

The Fintech Forecast with ACI Worldwide

The Fintech Forecast is a series of guest articles published each month from thought leaders at ACI Worldwide

Author: Elise Thrale

The metaverse is set to change the way we socialise, work, and play. Backed by major technology players including Microsoft and newly branded Meta, formerly known as Facebook, the window is open for domination of the new virtual reality world. Digital payments have boomed during the pandemic and the metaverse offers more opportunities for us to interact online and pay for services. How can banks prepare for the potential real-time metaversal payments? There is opportunity here for banks and merchants to offer innovative customer experiences and prepare – before they miss the boat and fall behind new fintech’s.

Market opportunity in the Metaverse

Thanks to new technologies like blockchain, cloud and 5G communications, and enabled by the global pandemic and national lockdowns, the metaverse continues to become more of a reality. Companies like Microsoft and Meta are not the only ones that stand to benefit from the new virtual world. There is an $800 billion market opportunity. Industries including gaming, media and entertainment, eCommerce and retail, and of course payments and banking will all have a part to play. The proof is in the pudding – there is demand for online channels for making purchases. Amazon gained 50% of the entire eCommerce market in 2020 because it provides ease and convenience. On Amazon, statistics show that 78% of searches are unbranded. If brands put effort into making themselves visible, they will get more interest. If we learn from the past, the Metaverse opens up the door to new players in eCommerce, who tap into consumer demand for convenient shopping experiences, and for brands that establish themselves in the 3D internet.

How might the evolution of payments look in the metaverse?

Blockchain technology is the backbone of metaversal payments. It enables the flow of NFTs (non-fungible tokens) and digital currencies such as cryptocurrencies. Meta is already bringing payments to mainstream social media, testing out connecting a digital wallet and sharing digital collectibles for certain Instagram users. The next step as governments and companies work to build a trusted online marketplace, will be the exchange of fiat currency. We should see metaversal payments will transform the world of remittances and solve customer pain points that consumers have around cross-border payments today, such as high fees and charges, delays, and a lack of visibility. We already have the technology to make it possible to make payments anywhere and everywhere, we now need to establish the appropriate level of trust and governance.

The importance of security

Security should never be forgotten when developing new, exciting ways to pay. As we saw the internet begin to revolutionise commerce 30 years ago, with an influx of new fraud types, we can expect the same to happen in the metaverse. The challenge will for banks and regulatory bodies to implement the right safeguards in place to stop fraudsters taking advantage of our vulnerabilities and to protect our privacy by encrypting our large amounts of personal data.

What could a future virtual payment look like?

Let’s take a step inside the future of the online immersive marketplace in the Metaverse. A consumer can have a completely enriched customer experience and be introduced to virtual versions of physical products, or completely virtual products. This is an opportunity for businesses to easily collect new customer data and support free-flowing payments. However, we will only see the real opportunity when we have interoperability in the metaverse. This will allow consumers to transition seamlessly throughout different experiences.

The metaverse is not just the evolution of gaming – it brings with it huge opportunity for a thriving digital and global economy. If companies take advantage of this new way of doing business in the virtual world, they will reap the benefits. The key to success will be working together to create the most immersive, interoperable and secure consumer experience. In a world where you can do anything or be anything, the sky is the limit (virtually, that is).

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