Digital Transactions Authoritative, insightful and timely information for payments professionals
By John Stewart
@DTPaymentNews
As payments firms seek to commercialize emerging online marketplaces, they’re starting to leverage automated routines that promise to overturn traditional transaction methods and, just possibly, deliver on the long-sought goal of so-called frictionless payments.
This week, both MasterCard Inc. and PayPal Holdings Inc. announced new initiatives that rely on Facebook Messenger, the Facebook Inc. application that lets users communicate with each other and, to a limited extent, exchange payments.
MasterCard is working with a New York City-based technology firm called Kasisto to deploy so-called chatbots on Messenger that will simplify banking chores. Once these bits of code become available early next year, Facebook users will be able to instruct the bots to retrieve such data as spending history, account balances, and available offers.
A second bot wave coming later and developed by MasterCard will allow Messenger users to interact with merchants that advertise on Facebook to buy goods through MasterCard’s Masterpass wallet. Consumers will use the bots to specify parameters for such products as clothing or airline tickets—destination, range of airlines, type of seat, price tolerance, and so on. The bots will crawl data made available by Facebook advertisers and generate results fitting the instructions, James Anderson, group executive for platforms and emerging payments at MasterCard, tells Digital Transactions News. Some 4 million companies currently advertise on Facebook, according to a spokesperson for the social network.
PayPal is also working with chatbots on Messenger, but while it is providing a wallet for users interacting with specific merchants it is not providing the chatbots themselves. These will come from PayPal-accepting businesses seeking to leverage Messenger to reach PayPal accountholders.
The new arrangement extends a relationship PayPal announced last year that lets users order and pay for rides on Uber through Messenger. Earlier, Facebook adopted person-to-person payments for Messenger users. The service allows users with a debit card to send funds to any other user who also has a debit card.
Anderson views MasterCard’s decision to exploit bot technology as a tryout, but one with promise for the company’s digital wallet. “There’s not much bot commerce today, so it’s a great time to be experimenting,” he says. “We’ll make sure Masterpass is fit and ready.”
Part of that promise involves the long-awaited ability to push the payment function off center stage. Instead, the consumer’s wants, as expressed through the bot, take precedence. “This paradigm shift is happening,” Anderson says. “You’ll invoke a chat session with a merchant you want to do business with through Messenger. Payment as a background service is becoming real.”
Key to the chatbot experience for MasterCard is tokenization. The MasterCard Digital Enablement Service masks cardholders’ account numbers with tokens that only the network can map back to the actual credential. “Now we can put the token in all kinds of places,” Anderson says. “As we saw the power of the mapping table in the network, we saw other use cases. MDES is spreading in all kinds of directions we hadn’t anticipated.”
Payments providers that establish a beachhead early with marketplaces like messenger apps could have a two-fold advantage: the apps’ growing popularity with consumers and the opportunity to grow into a preferred brand, experts point out.
“The sheer volume of consumer attention that is directed towards chatting and/or texting apps simply demands commercialization efforts,” notes Rick Oglesby, principal at AZPayments Group LLC, a Mesa, Ariz-based consultancy, via email. “The potential is huge, and MasterCard is smart to jump in early to enable this high-potential commerce platform. Emerging market environments are the ones in which payment preferences change most quickly. Consumers will rapidly adopt the payment solution that works the best in the new environment, so early enablement is the right strategy.”
