A vision for virtual commerce
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Virtual reality is seeing significant leaps in technology, with immediate applications to gaming and entertainment that foreshadow richer applications for VR in commerce.

ABI Research recently forecast that VR in retail and marketing sectors will generate $1.8 billion in 2022, with shopping and travel listed as two categories likely to be transformed by immersive consumer experiences.

Major retailers including Walmart are exploring the potential for VR and augmented reality to change the way consumers shop. Other retailers and manufacturers are experimenting with giving users the virtual experience of visiting a prospective travel destination, virtually test-driving a car, seeing how apparel and accessories would look and trying out different furniture and home improvement ideas before making a purchase, according to ABI.

Payments will likely be woven into VR technology, but it’s too early to tell whether VR will be an enhancement or a disruption for existing payments providers. Here’s a look at recent VR activities involving payments providing some clues to the future.
Chart: VR gets real
Currently about 37 million U.S. adults report having experienced VR within the last month, but based on current trends that figure will nearly double in the next two years to 63 million, according to a March 2018 report from eMarketer.

Though those numbers seem relatively small, the adoption curve so far is steep. The percentage of potential VR users is higher among Internet users versus the general population, but VR is becoming available in more public venues for demonstrating products, exposing a wider audience to the technology.
Chart: Making room for VR
Smartphone users may be biased in favor of digital commerce, but about 25% of consumers around the world believe VR and augmented reality (AR uses a phone's camera to display a user's surroundings with furniture or other items drawn on top) will play a significant role in stores within the next three years, according to a survey mobile device maker Ericsson conducted early this year.

Twenty-two percent of consumers predict almost all shopping will be conducted via smartphones and physical stores will disappear within three years, according to Ericsson’s survey. A solid one-fourth of consumers think technologies like VR and AR will make it possible to get all the benefits of shopping in a store directly on a smartphone by 2021, and 26% predict stores will have much less floor space and use VR and AR instead to display products. Ericsson conducted a global survey of 5,048 consumers between 15 and 69 years old during January 2018.

Oak Labs has been piloting AR in stores since 2015, with touch-screen dressing room mirrors enabling consumers to directly order products using a contactless payments interface. Recently the company demonstrated contactless payments leveraging Google Pay and rewards, powered by DotDashPay. This month Oak Labs was acquired by Zivelo, a maker of kiosks, with the goal of integrating shopping and financial services with kiosks and AR.
Chart: Checking it out
A majority of consumers favor using VR to explore furniture and home décor before making a purchase, and almost half are willing to take a virtual shopping trip through a store to browse items, according to a survey of U.S. internet users IFTTT conducted last year. More than one third said they were open to trying on apparel virtually before purchasing it.

VR shopping is not yet mainstream, but retailers are working to find a place for it within legacy systems and structures. Earlier this year Walmart reportedly bought the VR startup Spatialand to “develop and explore new products and uses of VR through immersive retail environments."

IKEA has been working with AR since 2013; and Lowe’s is leveraging ARKit to demonstrate furniture in its stores. Swarovski’s VR app launched last fall with a 360-degree shopping feature powered by Masterpass, and this year in China JD.com introduced AR makeup counters enabling users to try different shades of cosmetics on without actually applying them.

Payscout has been exploring ways to integrate payments in VR experiences. Last year the company demonstrated its Payscout VR Commerce platform—integrated with Visa Checkout—enabling consumers using Google Cardboard to visit a virtual outlet of Los Angeles-based Body Language Sportswear and make purchases for home delivery.
ChartL How gamers pay
The areas where VR is most advanced are gaming and entertainment, and both segments are expected to soar in the next year with the recent gush of improved VR headsets and supporting platforms. Along with VR games, concerts and sporting event coverage in VR is rising sharply, such as with the May 30 debut of Facebook's Oculus Venues app.

Qualcomm’s new Snapdragon XR1 chip platform unveiled this week aims to support a new category of advanced portable VR headsets that consumers can take almost anywhere and experience 360-degree immersion untethered to a smartphone or a computer. The platform is expected to expand the market for lighter, more versatile headsets such as Facebook's $200 Oculus Go.

VR games connecting players in different locations are a fast-growing category of online gaming, where PayPal already is a major force. PayPal’s total gaming payments volume rose 23.5% in 2017 over the previous year to $12 billion, and it’s on track to continue with a loyal base of users and game publishers.

PayPal is the leading branded payment method for gamers worldwide, commanding more than one-fourth of all gaming payments, according to a global survey the payments provider conducted this year. Visa and Mastercard (combined) ranked second at 18%, followed by debit cards as a whole at 13%. Wire transfers accounted for 4%, and Asia's WeChat came in at 3%.

PayPal conducted an online survey of 25,000 consumers across 25 global markets in February and March of 2018.
Chart: Adding up
VR gaming is a fast-growing activity around the world and the habits consumers are establishing for making payments before and during gameplay may foreshadow payment patterns in other VR arenas.

U.S. gamers rank first in total spending, averaging $156 per quarter, followed by gamers in France and the U.K., according to PayPal’s study earlier this year.

Asked to rank the reasons they chose a specific payment method for online games, nearly 80% of all respondents said they chose the method that was easiest. About half said their preferred payment method was fast, and about 25% said they prefer a payment method that has few steps.

Apart from speed and convenience, other considerations mattered little to gamers when selecting a payment method. Fewer than 20% of respondents said security influenced their choice, and 15% or fewer cited privacy, fear of hackers and the ease of disputing errors as factors, perhaps because of relatively low per-game expenditures.