AI in payments

The stats on e-commerce are telling a promising story. According to a recent survey by Square and Mercury Analytics, 51 percent of Americans prefer to shop online. In fact, 67 percent of Millennials like to shop online over in-store, and both Millennials and their younger counterparts, Gen Z, spend 50 percent more time shopping online than their elders. Finally, a staggering 80 percent Americans with internet access made an internet purchase within the last month.

It’s clear that the future of ecommerce is bright. And in order to keep the shoppers they already have (and attract new ones), more merchants are looking into new and exciting innovations in this space, one of which the new type of transaction known as “conversational commerce.”

What is Conversational Commerce?

Conversational commerce is the name given to the trend of interacting with businesses through messaging and chat apps. Coined in 2015, “conversational commerce” can refer to a someone getting customer support through Facebook Messenger, getting personalized makeup recommendations through WeChat, or ordering a pizza by text. More businesses are offering services through some kind of messaging platform. It’s a timely shift: a recent Business Insider review found that people have been using the top four messaging apps (Facebook Messenger, Viber, WeChat, WhatsApp) more frequently than Facebook, Instagram, Twitter and LinkedIn since 2015. Depending on the service and company, users might be chatting with a human customer service representative — or a chat bot.

The Future of Chatbots

A study by Oracle found that 80 percent of businesses said they use a chatbot or were planning to use one by 2020. That’s because bots are a great fit for certain tasks, and with the right programming they can eliminate the need for humans, freeing up personnel for other, more complex tasks that require a human touch. An example of this are bots that are programmed to handle basic troubleshooting or customer complaints. By handling the most common or easily addressed troubles, these bots can liberate human employees from repetitive and simple tasks to focus on more complicated matters that the bots aren’t sophisticated enough to handle yet.

But the possibilities don’t stop there. Some businesses also offer order confirmation and shipping information to customers directly through Facebook Messenger to streamline purchases and checkouts. Customers instantly receive all the information in one message on a platform they likely use multiple times every day.

And a chatbot’s utility doesn’t end with a completed transaction. Analyzing data from previous visits, some chatbots can make personalized recommendations tailored to the customer. Because these recommendations are driven by data and delivered as a personalized message, some merchants have reported up a conversion rate of four times more than traditional email marketing.

Voice Commerce

Conversational commerce encompasses more than just text chatbots. Conversational commerce is actually possible on platforms with that support voice commands. That means devices like Amazon’s Alexa or Google Home can now double as personal shoppers, without the need to leave the house. With this technology, customers can place orders or ask questions without even opening their laptop or lifting their phone. A customer could place an order for flower delivery, make restaurant reservations, and ask for gift ideas without getting up from the couch.

With voice-enabled conversational commerce, buying something online is easier than ever. That’s a big benefit for both consumers and merchants, which is why this is a space that’s set to grow exponentially in the next few years. According to strategy consultants OC&C, US consumers will spend $40 billion through voice commerce by 2022.

Conversational commerce is also set to reshape the way customers use payments. Because more conversational commerce customers prefer to use a credit card on file rather than add payment at the end of checkout, it’s possible that these transactions will create customer habits that increase the chances of repeat purchases. This possibility can be improved by streaming the checkout process and storing customer’s payment information.

Major players in the payment industry are paying close attention to this trend. MasterCard recently commissioned a study focused on conversational commerce with an eye to what customers are expecting out of their conversational commerce experiences. They found that customers highly value convenience over all else, and meeting customers’ expectations of service will be essential for successfully operating in this space.

Chatbots and voice bots are an exciting new dimension of e-commerce. By understanding what customers want out of this technology and how they use it, merchants can make better and more informed decisions about when and how to implement conversational commerce for their business.

Merchants looking to innovate and stay ahead of the ecommerce curve are best advised to work with a trusted payment processing partner that fully understands their business model, fraud profile, and technology needs.