How to get metaverse payments right in 2023 and beyond
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The Metaverse will open up new possibilities in 2023 as well. It’s no longer sci-fi, it’s a place where top venture capitalists like Verizon Ventures are making investments and hundreds of brands are already operating and many more are to come.
With the Metaverse market projected to grow to over $426 billion by 2027 – and Meta recently announced that it will double its investment in the Metaverse – more companies are thinking about how they can leverage enhanced multichannel e-commerce Build experiences that make better use of opportunities in the immersive virtual world.
The possibilities of the metaverse are still coming into focus for payment companies. Embedded finance, open banking, and banking-as-a-service could all potentially benefit from the metaverse. This also means that the competition will be tougher than ever. By experimenting with what consumers resonate well with, companies can outpace their competition by creating new products, services, and channels in the metaverse.
As more companies venture into the metaverse, here are three observations payment processors, merchants, and FinTechs should consider when designing platforms to optimize revenue and improve customer experiences.
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Build strong platforms to gain customer trust and gain adoption
Before companies can delve into the metaverse, they must overcome certain infrastructure challenges. Executives need to understand which plugins and APIs their organizations need to support to enable frictionless consumer experiences.
Investments in infrastructure are required not only to ensure smooth consumer experiences, but also to put in place controls and mitigate cyber and fraud risks. The more data available, the greater the privacy risk. On the other hand, if companies can enforce stricter verification standards through processes like Know Your Business (KYB) and Know Your Customer (KYC), customer trust will increase, allowing companies to use data to innovate, predict trends, and improve the consumer journey.
Businesses need to remember that consumers are used to stable banking environments backed by stable financial institutions that guarantee smooth transactions. Consumers rely on this security. Of course, the still unregulated world of the metaverse raises some concerns. Until companies can make their payment platforms in the Metaversum as user-friendly and trustworthy as possible, wide acceptance is unlikely in the foreseeable future.
There are growing opportunities in emerging markets
The virtual world can create new means to conquer emerging segments across industries and countries, and help level the playing field in markets where financial inclusion is poor. Arguably one of the most valuable capabilities of the Metaverse is that it will pave the way for emerging market consumers to access this marketplace.
Digital assets can be sold, traded, and marketed through the Metaverse Marketplace, providing an alternative way to accept payment for a product or service and drive inclusion for underserved consumers. This will create new revenue streams and consumers for payment providers to tap into.
Latin America and APAC are witnessing unprecedented e-commerce growth as the number of unbanked consumers continues to decline, opening up opportunities for a much larger market in the metaverse. In some parts of Latin America and APAC, where access to cross-border goods and services is more difficult from a compliance and regulatory perspective, the Metaverse can further level the playing field and create easier participation in the global economy.
Brazil, for example, is seeing rapid advances in 24/7 real-time payments powered by PIX, the first instant payment system available to local consumers, changing the Brazilian payments landscape. Introduced by the Central Bank of Brazil, PIX is expected to grow in appeal to local and international businesses as the country’s central bank sees the growing future of PIX in the metaverse.
Consider partnering with other companies
Businesses must decide whether it’s worth the time, risk, and investment to build their own robust platforms in the metaverse—or whether it’s a better idea to partner with others that already have a presence there. While it can be attractive for companies to invest in a high-risk, high-return opportunity, corporate leaders should ask themselves if their products and services are truly beneficial to the metaverse.
Ultimately, companies should think about cooperation instead of competition. For example, OpenSea, the largest NFT marketplace, requires many services around the world. When building a new network, OpenSea still needs traditional actors to help move money, access different payment methods and comply with local regulations. Many worlds must work together for the metaverse to work.
As we wait for the metaverse to emerge from its exploratory phase, companies should consider new opportunities that create financial inclusion and accelerate growth. Rather than building potentially risky and expensive platforms in the metaverse, companies should first consider how they can most effectively collaborate with other metaverse players.
Eventually, widespread adoption of the metaverse will depend on consumer confidence. Companies that build bulletproof platforms and protect user privacy will have the most to gain in a still unknown and uncertain virtual world.
James Booth is VP Head of Partnerships at PPRO.
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