Retail brands constantly look for ways to make their shopping and payment experience more convenient for customers. With the increasing importance of mobile commerce among younger shopping generations and the rapidly developing artificial intelligence (AI) technology, conversational commerce, a new tool in the e-commerce field, has been born. Let’s imagine: you want to purchase a new pair of shoes. You log into a messaging service or app and make your request to a specific brand or retail company, along with your size, color preferences, and style guidelines via chat. In return, you get a message containing a recommendation for shoes of your exact specifications along with the payment and delivery information. This is the future of e-commerce: a personalized shopping experience that feels just as easy as sending your friend a message.

What is Conversational Commerce?

The term conversational commerce was first coined by Chris Messina in 2015 and can be defined as the use of chat apps, such as Facebook Messenger, or voice technology products, such as Amazon’s Echo, for communication in real-time between companies and customers. With conversational commerce, you can open a common messaging app to ask about a specific product or service a brand offers. But instead of customer support technicians that cope with questions, a chatbot can take over the interaction with the customer. Currently, third party messaging services are the top vehicles for the deployment of chatbot technology. Facebook Messenger is by far the most popular, with one survey in the US indicating that 69% of text chatbot agents in regular use are based on its messaging platform. Different industries, from fashion and electronics to food delivery, have launched their own chatbots.

Another tool that serves a similar purpose in conversational commerce, just in a different way, is a virtual assistant. These tools, which often look similar to a desktop speaker, operate similarly to a chatbot, but with the added convenience of not even needing to open an app or go online. Customers access the AI technology by their voice rather than by text. Other companies are launching their own virtual assistants to compete with Amazon, including Google with Google Home and Apple with its Homepod device.

Conversational Commerce: Potential for Payments

Modern chatbots and virtual assistants, however, are not simply machines that respond to customers with a pre-determined response for only specific questions. They use the latest advances in AI and machine learning to intelligently respond to ever-changing customer requests. An emphasis on natural language processing (NLP) is the true key behind conversational commerce. NLP capabilities allow the chatbot to intuitively ask follow-up questions to lead the customer through the whole shopping process. To do this, they also communicate with various other parts of a business’ online presence, such as confirming inventory or informing customers about deals and loyalty programs.

The biggest benefit of NLP capability is being able to seamlessly converse with the customer through all stages of the purchasing process, including payment. Ideally, a chatbot could lead a customer through the entire payment process within the messaging platform, so that the customer never has to be redirected to another page to submit payment information. This in turn can increase the efficiency of the overall checkout process and boost conversion.

The most successful example of payment integration into conversational commerce comes from Chinese company WeChat. The company has become an all-encompassing part of their users’ lives, allowing them to play games, message, send money to friends, pay their bills, or even make doctor’s appointments. Two of the most popular functions within WeChat are the ability to make peer-to-peer (P2P) payments and to pay for goods ordered without ever leaving the app itself. Additionally, in 2016, eBay’s ShopBot launched via Facebook Messenger to help customers search for desired items on its marketplace. Once customers are prepared to purchase an item they’ve discussed with the chatbot, they can pay by entering their credit card information directly in Facebook Messenger.


Incorporating Conversational Commerce in Payments

One of the most important things for businesses to consider when setting up payment possibilities via a chatbot are the preferred payment methods of customers who use conversational commerce. Many consumers prefer to use payment methods that are already stored with the company or messaging service. Having the ability to store payment info for later maintains the convenience of such a service, since customers don’t need to break their conversation with the AI device to manually enter payment info. With the option to store payment data, customers must also be able to trust that their stored payment data is safe. This requires strict security agreements between communication platforms and commerce providers. Lastly, payment options should be optimized for the type of device and platform being used. Mobile phones are the top tools for accessing conversational commerce, with 49% of US consumers using mobile for text-based tools and 61% using them for voice-activated ones.

One of the biggest challenges for payment providers in the coming years will be keeping up with all the various combinations of devices, services and payment methods that could potentially emerge. While mobile phones and laptops are currently the most frequently used devices to access conversational commerce tools, smart speakers and wearables are also raising the bar for voice activated conversational commerce. When this is combined with the multiple communication platforms planning to enter the market and with various up and coming payment methods, such as digital wallets, contactless cards, and the Internet of Things, you have an endless list of possibilities for payment combinations in conversational commerce.

As AI and machine learning continue to advance rapidly, conversational commerce tools will only continue to increase in importance for e-commerce. Offering payment via chatbots and virtual assistants gives customers ultimate payment convenience and helps to create a dialogue between consumers and brands. Customers who can connect with a brand via AI without leaving their conversation will be more likely to return in the future.