Merchants still scrambling to support a consistent consumer payments experience across the expanding omnichannel could be in for a shock as the next phase of payment—contextual commerce—begins to rapidly accelerate.

“We’re really moving into an era of context-driven experiences with computing (devices)…with people really wanting to buy things in the moment,” said Bill Ready, executive vice president and chief operating officer at PayPal, during a keynote address at Money20/20 in Las Vegas on Oct. 24, underscoring a broad theme dominating many discussions this week among payment networks, merchants and financial institutions.

With the rise of contextual commerce, consumers increasingly will make purchases spontaneously as they get ideas for their next meal, trip or acquisition while spending time on social media and talking to friends on messaging apps, and if merchants aren’t poised to meet their audiences there, they will get left behind, Ready said.


Image: Bloomberg News
PayPal's Bill Ready says merchants must be ready for contextual commerce.
Image: Bloomberg News

“It’s going to be important for merchants to make a fast connection,” he said, explaining why PayPal this week announced it’s extending its relationship with Facebook to include a broad range of merchants that will support payments within Facebook Messenger, like Uber and Lyft currently do. “It’s early days, but this movement is happening in an organic way and we have to ask ourselves, as a payments ecosystem, how do we enable these (purchases) in a more seamless way?”

Ready’s views were echoed by several other major executives in other keynotes throughout the day, including Pali Bhat, head of payments at Google, who said his company worked for months to build tighter integrations with Visa and Mastercard to eliminate friction for consumers making purchases with devices using Android Pay. Early next year Android Pay will enable one-touch checkout with Visa Checkout and Masterpass, he said.

“We think this is going to have a profound effect on the payments industry,” Bhat said, adding that he expects the streamlined approach to Android will expand mobile payments to more dimensions, including wearables and the Internet of Things.

Contextual commerce is still a relatively new concept for merchants, but it’s one that brick-and-mortar, mobile and Web merchants must grasp in order to survive, as consumers’ shopping and purchasing habits morph along with technology, said Les Matthews, senior vice president, U.S. Market Development at Mastercard, who participated on a panel earlier in the day examining contextual commerce and checkout.

“Merchants must be ready, creating partnerships and building the technology to support contextual commerce,” Matthews said, explaining that the role of stores is already changing as consumers draw upon a much broader range of signals influencing what they buy and when they make purchases, which increasingly happen on the go.

At Airbnb, contextual commerce is deeply woven into the service because consumers get ideas for trips when perusing the app, said another participant on the panel, Kapil Mokhat, the lodging app’s head of global payment programs and partnerships. Airbnb is in the early stages of developing more opportunities for cross-selling its services through other channels, Mokhat said.

Zilvinas Bareisis, a senior analyst with Celent, said merchants will have to retool their approach to payments to keep up as commerce increasingly becomes woven into new apps and platforms. “Merchants increasingly must go to where their customers are, and if they’re spending time on social media, using chatbots, it will be necessary for merchants to find ways to be part of those experiences," Bareisis said. "As the shopping ecosystem changes, merchants can no longer assume their customers will find them through all the usual channels, as the whole shopping ecosystem changes.”

Banks and other payments providers supporting more streamlined and secure mobile and digital payments will play a key role in helping merchants adapt to the changes, Bareisis said.

Bank of America executives said they are working more closely with merchants to help them meet the challenges of contextual commerce.

“It’s a new way of thinking for brand marketers and retailers, who need to understand that shopping and consumption are converging,” said Michael Roberts, chief marketing and digital strategy officer at BofA, in an interview. “Merchants need to take action now to begin to understand the new consumer patterns around contextual commerce, so they can support payments where and when consumers are ready to buy, in all types of in-store and mobile environments.”


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