The next generation of online payments: As brands retool to meet consumers’ growing demand for convenience and security, we explore the future of online payments in this timely series brought to you by Braintree. Check out the whole series here.
For 15 years, ecommerce provided a good framework for how merchants could accept and securely process customer payments. But the advent of new technologies — notably mobile, apps, and social media — have changed the way consumers discover and want to pay for goods and services.
Most recently, merchants looking to offer customers leading-edge payment options are wrestling with the dawn of something called contextual commerce — using data from devices, apps, and websites to provide customers with the ability to make purchases and payments wherever they happen to be online, not just on a merchant’s website.
The primary driver behind contextual commerce is the advent of massive social media platforms, exposing brands to millions of users inside their experience. The logic is: When the user is happily engaged with your product or service, why force them to switch to a different website or app, and enter their payment credentials there in order to make a purchase?
The big buy-now button
This is particularly crucial on mobile, where there’s already a gap between engagement and sales conversion. That’s why the big social media players (think Facebook, Twitter, and Pinterest) are all introducing, or planning, ‘Buy’ buttons for goods and services featured on their sites — to make it easier for the consumer to act on their impulse and allow merchants an easier way to monetize on that via secure transactions.
Let’s use Pinterest as an example. Pinterest’s 100 million or so users visit the site because they’re often interested in products featured there. When a user sees something they like, instead of forcing them to redirect to a merchant’s site to buy the product, Pinterest uses technology powered by Braintree to serve up a purchase experience right inside of their own user interface. That reduces the amount of clicks required to buy, making the entire process simpler and increasing conversion rates.
The ability to do this is a huge asset to Pinterest and it’s great for consumers as well. And, of course, those selling their goods and services on the site benefit just by being there. The solution allows consumers to use a wide variety of payment options (PayPal, Apple Pay, Android Pay, Bitcoin, etc.) and the tech is baked-in, making getting into the game a breeze for even the smallest of would-be web and mobile merchants.
Important to the future of contextual commerce (and ultimately your ability to monetize on it) are a couple of supporting technologies of varying degrees of transparency to most merchants. Digital wallets, certainly, will be critical.
Digital wallets and order management systems
Digital wallets are an electronic way of storing credit card data for when you want to buy online, or in an app, for example. The contextual commerce vision is to leverage digital wallets to allow a consumer to buy with a single click, based on their Pinterest (or other social account) login credentials, without having to enter in any further data, like a password or credit card data. The logic is, while it’s great to be able to have a product or service served up that’s tailored to the consumer’s unique experience, requiring extra actions throws a roadblock between the consumer and a completed transaction. So, having that digital wallet setup with all your stored payment data that’s tied directly to your active login takes all that friction away, and makes it very easy for the consumer to complete the transaction, optimizing the opportunity for online merchants.
Another important technical component in all of this is for payment processors to be able to tie-in to order management systems – computer software used for order entry and processing. The big platforms such as Pinterest rely on these systems to track their inventory. Braintree, which powers payments for a number of top web merchants and SMEs alike, moved to acquire a company called Modest in August, largely because Modest had great technology for tying into these big order management systems.
A victory for smaller e-tailers
So, creating a harmonious experience for both consumers and merchants that couples the 1-click simplicity of digital wallets, along with the muscle of automated orders and inventory management, is the secret sauce for delivering great contextual commerce going forward.
The good news for smaller web and mobile retailers looking to leverage the power of contextual commerce is that you have access to these same tools and technologies via the big social media platforms and outfits like Braintree — platforms that provide simple, off-the-shelf solutions that allow you to get up and running with your own secure web and mobile payments solutions in no time.
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