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11/02/2022

Navigating Payments in the Metaverse

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Payments in the metaverse

The metaverse. Everyone is talking about it. But is it a good channel for consumer goods businesses?

While still emerging, the metaverse presents opportunities for consumer goods companies. Consumers will always require physical goods like clothing, food, drinks, healthcare products, etc. In the metaverse, many of these items may be “needed” as well. 

For example, consumers can purchase clothing, equipment, accessories, etc. inside of games in this virtual world, presenting an option for consumer goods companies to sell their branded digital products. This crossover between the physical and virtual worlds also provides ways for businesses to market their goods.

[Read more: Mischief in the Metaverse: Cheetos Ventures Into VR, But Are Visitors Engaging?]

But, there are hurdles to overcome for consumer goods businesses to be successful in the metaverse. One of those obstacles is around payments.

Payment Options

A business may think it needs to accept virtual payment transactions in this virtual world and very often connect cryptocurrencies like Bitcoin to it, but, in reality, all payments (other than exchanging cash at the POS) are virtual now. In fact, cryptocurrencies for payments in the metaverse present many challenges that traditional payment methods don’t. What are those?  

The value of cryptocurrencies like Bitcoin changes. Also, they are not regulated. And, with cryptocurrencies not largely used or trusted by consumers, they are not a preferred method of payment for them.

There are other digital currencies like stablecoins, but they, too, are not regulated at this point. And while there are countries developing central bank digital currencies, they are not yet moving forward in the U.S.

Conventional payment methods are an effective option when it comes to payments in the metaverse. And these payment methods can be authenticated using biometrics in this virtual world.

According to Juniper Research, about 1.4 billion people are expected to use facial recognition technology to authenticate a payment by 2025, more than doubling from 671 million in 2020. And the use of biometrics technology makes sense, particularly when it comes to the metaverse. 

It is a lot easier for consumers to pay using their voice than to somehow type out complex passwords in a virtual world. And consumers welcome convenience and speed — and consumer goods businesses want to meet consumers’ desires and support secure payment transactions to minimize potential fraud — so it is clear that biometrics should be a key component in supporting payments in the metaverse.  

From a payments perspective, what should consumer goods companies keep in mind? Above all else, payments will need to be simple and seamless for consumers to complete. How can businesses support this?

  1. The payments platform used should be able to recognize devices consumers are using in the virtual world.
  2. Include payment options with a simple user interface like PayPal, Apple Pay, and Click-to-Pay.
  3. Consider payment solutions that enable consumers to use voice recognition and/or eye scans (once 3D goggles support this) for authentication.

Next Steps for Consumer Goods Businesses

With companies like Mastercard recently announcing it is piloting new technology that is designed to work in the metaverse and lets shoppers make biometric payments with their face or hand, it is apparent that investments in this virtual world are increasing. 

This is further supported by Capital One’s recent announcement that it is set to enter the metaverse with virtual credit cards and non-fungible tokens (NFTs). Adding to that, Meta has renamed its Facebook Pay to Meta Pay, potentially aiming to become the predominant payment method in the metaverse. With all of this activity, payment solutions providers are sure to follow the path to the metaverse as well.

While it is possible to accept payments to make the metaverse a more powerful channel for sales for consumer goods companies, it needs a well thought out approach and implementation – all ultimately focused on the user experience. And biometrics will likely be a driving force behind that. Consumer goods businesses should look out for alternatives to Meta Pay at an early stage to prevent the new virtual world (and themselves) from becoming dependent upon just one payment gatekeeper.

Ralf Gladis, Founder and CEO, Computop

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