With the last few months seeing some rapid developments in new consumer tech, Rob Gatto, Chief Revenue Officer at Paysafe discusses the current state of consumer payments in AR and VR and how we expect buying in the metaverse to unfold.
Consumers have become increasingly accustomed to Augmented Reality (AR) and Virtual Reality (VR) technology, mainly thanks to their adoption in retail and other experiential settings. With excitement building around Apple’s Vision Pro headset we only expect this tech to grow increasingly popular.
However, despite the growing prominence of AR and VR, our Lost in Transaction 2023 research report – a survey among 14,500 consumers in Europe, North America and Latin America – found that there’s some way to go before consumers fully embrace paying for products while in an augmented or virtual world.
So, why is this, how can payments in AR and VR benefit businesses, and what can we expect the next great tech trend – the Metaverse – to bring for customers’ buying experiences? These are developments we have been tracking.
How AR and VR are being used today
The first strong use case of AR and VR in retail was in 2014 by the clothing chain Topshop and home improvement company Lowe’s. Fast forward to today and countless other merchants are embracing this technology to enhance the shopping experience, from Ikea, to Amazon and ASOS. In these settings, but using AR and VR, customers can ‘try’ products or ‘see’ them before they buy.
It’s not surprising that the success of AR and VR in bringing new experiences to customers has seen the technology proliferate through other industries, such as travel, online gaming, iGaming, sports, cinema, and other entertainment products and services.
Due to this interest, payments are being integrated into AR and VR to ensure consumers can complete their purchases without disrupting the experience. But according to our research, customers are yet to respond, with only 3% of respondents having ever used AR or VR to purchase goods.
However, there are signs of progress. With the growing demand for AR and VR-driven experiences, appetite for AR and VR payments is growing too.
Low consumer security concerns surrounding AR and VR payments
When it comes to any new payment technology, security often poses the greatest barrier to consumer adoption, and understandably so – financial data is arguably the most sensitive of consumer data. It’s therefore no surprise that customers want full trust in a technology before sharing this information.
However, while VR and AR payments are still relatively new additions to consumers’ lives, our research found that security concerns around them are not presenting a significant barrier to adoption.
While older respondents, and especially over 65s, are more likely to say AR and VR doesn’t seem safe than younger respondents, concern about the technology’s security is low in general. Just 12% of respondents across all age groups say they wouldn’t use AR or VR to purchase goods because they don’t seem safe.
What is exciting to see is that there seems to be growing appetite for payments in AR and VR. In our report, we asked if respondents see themselves using VR and AR to purchase goods in the next two years. Over a quarter (27%) of respondents see themselves using VR and slightly more than that (28%) see themselves using AR if these technologies become more widely available and they learn more about them.
Taking this into account, it’s clear that expanding the availability of these technologies is essential to greater payments usage.
Commerce in the Metaverse
While AR and VR are both relatively new technologies, the Metaverse is even newer. This single, shared, 3D version of the internet is still technically hypothetical, even if some online videogaming universes have been described as forming part of it.
However, this nascency doesn’t seem to have impacted consumers’ views on the security of their payments.
While the number of consumers who say they wouldn’t purchase goods in the Metaverse because it doesn’t seem safe is higher (17%) than those who wouldn’t make a purchase using AR or VR, the number is still relatively low. Much like AR and VR, this tells us that security is yet to become a barrier to adoption for payments in the Metaverse.
Of course, this is something that could change when the Metaverse is officially released, but the current appetite for making payments on the platform is encouraging. Just over a quarter (26%) of respondents see themselves making a purchase in the Metaverse in the next two years if the technology becomes more widely available and they learn more about it.
With the growing adoption of AR, VR and the Metaverse, there is little doubt that payments will play a significant part in how businesses evolve their customer offerings and deliver more seamless experiences of the latest and greatest tech.