Facebook Messenger’s ‘Bots’ Could Give Payments an Inside Edge

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The technology behind the snazzy new “bots” Facebook is rolling out for its Messenger chat app has enormous potential to internalize payments within social media experiences like shopping, travel and entertainment in new, more relevant ways.

But payments industry experts also foresee a long road to broad consumer adoption of bot technology, which relies on software utilities to create interactive messages within instant-message chat services.

Chat apps are on the rise in the U.S. as an alternative to texting and are very popular in Asia, with examples such as WeChat supporting robust mobile commerce.

Combining the power of artificial intelligence and big data to log users’ moves—and moods—on mobile devices, chat-app bot technology could come close to mind-reading by anticipating consumers’ needs and preferences for everything from making reservations and searching for specific items to making instant connections with customers service, to name a few use cases.

Facebook, which hired former PayPal President David Marcus in 2014 to run Messenger, has been gradually increasing Messenger’s payments capabilities. That includes a person to person feature and transaction collaboration with Uber. Other companies, such as PayPal’s Venmo and Snapchat are also pairing social networking and payments.

Taking advantage of Bots to expand payments would be the next step for Messenger.

Saying or typing an idea into the search box of Facebook Messenger eventually will bring up a plethora of relevant bots, and the most significant factor of the technology is its ability to improve customization, as the bot factors in past behavior to refine results, Facebook said this week at its meeting in San Francisco..

Starting with just a few bots from CNN and 1-800-Flowers, Facebook Messenger aims to eventually expand its bot universe by inviting developers to create bots for companies ranging from merchants like Walmart to airlines, the company said.

Using a bot on Messenger, for example, a consumer no longer has to download an app or enter payment card details to order a service like flowers, Facebook CEO Mark Zuckerberg explained, hinting at plans to ensure payments will be embedded in many bots as they populate the chat service in coming months.

“I find it pretty ironic…now to order from 1-800-Flowers you never have to call 1-800-Flowers again,” Zuckerberg quipped.

The promise for merchants driving sales through Facebook Messenger is significant, as the chat service has 900 million users, up nearly 30% from 700 million last year. Facebook also owns the chat service WhatsApp, which has 1 million users, but the company hasn’t indicated it’s adding bots there yet.

Facebook this week made bot-development tools available to more than 50 million businesses, the company said.

And though details are scarce about the process of making direct purchases through Messenger, embedding payments into bots on Messenger will be key to monetizing the service, said Richard Crone, a payments analyst with Crone Consulting LLC, who closely tracks mobile commerce and payments.

“Algorithm-based interactions that marry consumer interactions through social media could be explosive for mobile commerce, because it’s harnessing big data that didn’t exist before through the mobile channel, and unlike many other models, it’s all happening with the consumer’s participation because they can opt in or out, as they wish,” Crone said.

Millennials will likely be a prime target for the emerging bot audience, Crone speculated, and there will be plenty of competition as other chat services develop bots.

But broad consumer adoption of bots will face all the usual hurdles that already plague mobile payments, warned Brian Riley, research director with CEB TowerGroup.

“Payment bots will be an interesting addition to consumer purchasing options, but they will likely face headwinds,” Riley said. “If you look at mobile payments adoption in general, takeup is still slow and the bots are likely to face issues similar to what we’ve seen with Apple Pay [and other mobile payment wallets].”

Existing payments providers will likely keep a grip on customers as bots gain visibility, Riley predicted.

“Facebook will have to work to monetize bots, and because the company is unlikely to try to displace financial institutions or PayPal, it will likely work through partnerships, so it doesn’t distract from its core business,” he said.

Payments providers have plenty of opportunities to expand revenues through bots, and those that move early could see advantages, Riley suggests. “There are a handful of issuers with the potential to make the new bot options work.”

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