Entering the Metaverse: How it is shaping the future of payments

To discuss how the rise of the metaverse might shape the future of payments, drive the development of new technologies & support emerging industries, and how customers and consumers might expect to benefit, we sat down with Johan Maes, Head of Trust & Intelligence Lab at Worldline.

The Metaverse: what is it?

The metaverse as a concept can be described as a merging of the physical and digital worlds, combining various technologies into one interconnected space. Incorporating evolving technology such as augmented reality, virtual reality, AI and traditional video and audio, the metaverse is envisioned as a collaborative, immersive space where users can engage virtually in everything they can do in the physical world. Imagine digital commerce, social interaction, events such as concerts and keynotes, and much more. 

"There are many worlds/experiences/solutions that can be categorised as Metaverses," says Johan. "They exist at the point where three technological evolutions merge; breakthroughs enabling 3D immersive experiences, new applications driven by the power of cryptocurrencies and the focus on decentralisation within web 3.0." These technological evolutions enable users to interact with the metaverse and allow the development of services and products within the digital world. Devices such as virtual and augmented reality glasses and the continuously increasing processing power of end-user devices are bringing the possibilities of an immersive digital world to an ever-larger market. 

What opportunities are out there?

It might have become somewhat of a buzzword in the tech industry, but the metaverse does represent a genuine opportunity for a new era of interconnectivity, interaction and commerce. Global powerhouses are recognising the potential, with companies such as Facebook (whose rebrand to 'Meta' may offer insight into direction), Microsoft and Amazon making forays into the digital realm. According to a recent JP Morgan report, $54 billion is spent each year on virtual goods, clearly showing the modern demand for virtual transactions and digital goods.  

In theory, the metaverse incorporates several virtual worlds, meaning that activities can be both specific and general. This creates an opportunity for expanded customer service channels beyond traditional apps and digital platforms or for distinct immersive experiences regarding products and services exclusively available in the virtual world. In turn, this provides a platform for emerging forms of digital transactions, such as cryptocurrency payments, NFT asset transfers or other digital payment types. 

It's unlikely that the metaverse will become the dominant way in which we interact; however, it offers consumers and brands many exciting opportunities. We have already seen virtual concerts held in video games, such as Travis Scott and Ariana Grande's well-publicised virtual performances in Fortnite. Businesses are also looking at the potential of shared virtual workspaces, galleries, shops and commercial environments. From education to entertainment, a whole host of household brands are entering the metaverse in various ways. The same report from JP Morgan suggests that market opportunity is estimated at over $1 trillion in yearly revenue in the coming years. 

Plenty of opportunities but plenty of challenges

While a new digital world of opportunity is on the horizon, embracing such a technologically diverse landscape brings plenty of challenges.  

"Complexity in the world of payments continues to rise, while alongside this, merchants and consumers demand simpler, more immersive solutions," explains Johan. Businesses will also have to face the question of whether they will accept cryptocurrencies or even introduce and create their own unique digital currency.  

How can a business increase its presence within virtual worlds or invest in augmented reality experiences that maximise customer interaction and enjoyment of its services? "It's part of our role as a leading PayTech to simplify all of this complexity and to enable integration of new payment means and immersive shopping experiences," says Johan. "By providing a simple and uniform interface and empowering frictionless and trustworthy payment processing, Worldline can help its customers meet these ever increasing challenges."

With the great market potential at the horizon, competition between metaverse initiatives is likely to be huge. With many big players focussing on this new virtual paradise, interoperability and openness will be key challenges. How can a business provide added value that others can't? What opportunities for joint growth are present? It's essential that users and businesses identify these opportunities and challenges and ensure they have the support of a payment provider capable of navigating the swiftly evolving digital world. 

What does this mean for digital payments?

As the metaverse offers immersive experiences and commercial opportunities, businesses and merchants can engage with their customers more interestingly and personalised. With these digital services, effective forms of payment are needed, especially to ensure a smooth user experience. As these virtual worlds can be both specific and generic, users can often use a wide variety of payment types. The development of the virtual world also drives the adoption of emerging forms of payment. 

"Many platforms, of which virtual worlds are a visual example, create their own ecosystem, managing identity and access, ownership, advantages and payment in their closed environment," explains Johan. "Cryptocurrencies and blockchain technology create cost-efficient digital currencies that customers can use for online monetary and other asset transactions." 

The virtual world is one in which emerging forms of payment and other rewards such as using NFTs can thrive. As in the true web 3.0 philosophy, anyone can generate content and be involved in the running of platforms, remuneration can be made in whatever form those individuals request or agree to. All of this leads to a more complex landscape of payments and other asset transfers between individuals, small businesses and platform owners in multiple currencies and digitised assets. Not only is this generating a lot of fun, personal and business value, but it might equally lay the foundations of the internet and the workforce of the future.  

This can be seen as being part of an overall shift in the future of payments, in which technology and social demands are opening new avenues and possibilities. "Technological evolutions definitely influence the payment experience," agrees Johan. "They create new channels and ways of interacting, for instance, ordering goods via Alexa or when using video live shopping solutions.

Technology also removes friction. It makes a payment more convenient while keeping a high level of trust. The expansion into the metaverse is an example of a new wave of technological evolution that will bring fresh opportunity for both the merchants and consumers."

Is there a reason for caution?

As with any emerging technology or revolution in how society communicates and interacts, concerns have been raised regarding several potential issues around the metaverse. Often cited concerns share common themes with previous technologies; worries over health, child protection, and general impacts on society. Several have financial and payment implications, such as questions about privacy, identity theft, or fraud. 

Another concern stems from the somewhat vague ability to govern and introduce effective laws within the metaverse, a sentiment that Johan echoes. "With credit cards, we have become used to well-managed exception handling, but with many new payment solutions and options focusing solely on the payment transaction - what happens once these providers step out of the picture?" Indeed, the trustworthiness of cryptocurrencies and other emerging payment types has been questioned on many occasions. Decentralised platforms are notoriously difficult to regulate or implement laws upon.  

The intrinsically anonymous and accessible nature of some virtual payment methods means that anyone could be on the other end of the transaction. “It's essential to assess the level of consumer protection available," suggests Johan. "The ability to dispute a transaction and get your money back is an important trust element - how can this be guaranteed within such an unpredictable and decentralised environment?"

One solution is to use a payment provider that directly helps handle this complexity and adds an element of trust to transactions. Payment providers that embrace innovation and new forms of digital payment, such as Worldline, will become invaluable to businesses and individuals seeking to use the metaverse for e-commerce or daily activities.

In a trustworthy environment, face, finger, palm, voice or behaviour-based identification and authentication can help provide secure and seamless payment solutions. Incorporating advanced biometrics on robust platforms such as those offered by Worldline can build a network of trust with customers. Combining the openness and freedom of the metaverse with a solid foundation of trust, reliability and ease of use may be key to getting the most from this brave new world.