Siri, buy me a pizza.
What is it?
I really hate entering my credit card number and address details just to order something online. Shouldn’t the internet know who I am by now. I hope conversational commerce can solve this. The majority of payments in the future will be processed via a bot. This is interesting because most people don’t know what a bot is? A bot is a mechanism to connect a service, like a chat session or a voice call to a payments service, that can ultimately process the payment request.
History
To totally understand how conversations commerce can work and why the future is promising, its good to understand the evolution of communication on the mobile. WhatsApp, the company bought by Facebook a few years back, was my first communication eye-opener (nothing really to do with payments but cool). It was at a stage when SMS text messages were expensive. WhatsApp made it free and was sent over the internet (rather than the networks) and what that conceptually did, was open my eyes to future possibilities of using our mobile phones and the power of the Internet was endless. Then there was Siri, which is voice activated search and command service. So, it made it easier to do a search on the interested and use features on your phone.
Following the lead from Apple, Amazon launched Alexa or Echo (depends on who you talk to) which is a framework for a connected house and connected purchasing avenue. Amazon have the customer base and experimental power to try different things with the Echo. The first step is to embed payments to the flow via voice, which can be done in several ways. The risk banks will see, is that the transaction is not authenticated by the user, so how does Amazon ensure security?
How does it work?
How does conversational commerce or bots actually work? A bot is software that performs an automated task over the Internet. More specifically, a bot is an automated application used to perform simple and repetitive tasks that would be time-consuming, mundane or impossible for a human to perform (like shopping). Bots are programed user agents that can provide pre-defined answers to questions that are provided by an input mechanism, like a voice command or chat bot.
Voice Initiated Payments: Amazon.com are the most likely to make this available via their Echo home services device. Currently with Echo, you are able to ask certain questions, like latest news updates and current weather conditions. Soon, they’re make a purchase request possible via a simple request.
Similarly, Facebook and Facebook Messenger: David Marcus is building a commerce platform that is laying the groundwork for a fundamental change in the way we interact with businesses. For a context, there are 600 million people using Facebook’s chat application, Messenger, each month. A great example of this is Everlane. Everlane are one of the initial merchants to integrate into the Facebook Messenger platform to communicate to consumers when their products have been shipped and in transit. Sounds like a small thing, but is great for consumers to just understand where their product is at any time.
The next step for Messenger is to include the payments capabilities into the consumer experience. Image that you are wanting a last minute hotel booking and you can simply chat with hotel via Facebook Messenger and then book it in the same thread.
Security
Security is a massive decision making process in defining this type of product. The second factor authentication, like the provisioning process for mobile payments is an important component of current security architecture and common for users to apprehend. However, I have a feeling Amazon will create something really sophisticated and user friendly and frictionless with less risk than the current 2nd factor authentication process.
The majority of consumers using a voice command for payments or conversational commerce, will typically have a smart phone. I would say 99% of the user will have a smart phone. So leveraging the phone for security purposes is a pretty easy way to allow consumers to authorize a transaction. Similarly, with voice command payments, can a user interact with the user agent to confirm a password or create a specific question that is only know to the owner of the account. This could be very difficult to build, because the of speaking out-load a password or an answer to a secret question is really counter-intuitive to make a secure transaction.
Liability shift — Another major unanswered question regarding the liability shift of the payment, is who owns the liability. Will the payment networks certify the authorization mechanism where they’ll take the liability on these tokenization transactions? I think so, the networks will need profile a framework that will allow new payment channels to be certified.
This is important for the evolution of retail consumer payments because people want easier ways to pay and companies want more people buying their goods/service, less fraud and higher conversion rates. Its already so hard for countries like the US to convert to Chip/EMV transactions in the retail environment, so changing to something, that is easier but the requires a massive leap of faith on the side of consumer to trust the service. The success of the current retailer POS consumer transactions process is that consumers can actually see the swipe and signature, so there is actually evidence that the transactions went through. Whereas, a voice command or message in a message box doesn’t provide the same level of evidence.
Fast forward ten years down the line, maybe voice-activation and chat-bot payments will become the standard for making a transaction online. Maybe not in the retail space, but more likely at home. With a connected home not too far away, the home could be the validation point for family members (even children) to buy something by just talking to a fridge. Visa and MasterCard can also validate the transaction via mortgage records and approve transactions based on house validations and level of average income in the postal code.
Conclusion
What does it mean for consumer payments? Well, nothing in the short term. Consumers in the US don’t like too much change. The introduction of the mobile payments has been a huge deal, but not broad adoption its it first two years. Similarly, the introduction of a more secure payment, EMV Chip and Signature has been slow to roll out across the US, mainly due to merchant’s high cost of implementation.
Authentication options? Consumer Beauvoir / interaction with merchants?
Consumer Behavior — Can these help consumers buy more, have a better experience at the checkout? Does it allow the merchant to know more about the customer?
Reference
http://fortune.com/2015/03/26/facebook-messenger-business/
Internet Bot Definition - An Internet bot, in its most generic sense, is software that performs an automated task over…www.techopedia.com
����/w
