In a recent interview with PaymentEye, Open Future guru Louise Beaumont described the power that brand elasticity will hold in the future of financial services.
“If your brand can stretch to service more people in more ways – you’re called Amazon,” Beaumont said.
“Try that with Barclays, for example – it just doesn’t stretch. You might have a portfolio of brands, which is what Facebook are doing.”
Social media has already begun its spread into financial services, and vice versa. The WeChat Pay model has seen enormous adoption in Asia, demonstrating the potential of personalized services which leverage different areas of consumer data, and the centrality of brand elasticity in achieving this aim.
In 2016, the so-called ‘shoppable tags’ were introduced by Instagram – part of the aforementioned Facebook brand portfolio. However, these tags continue to take willing participants to the online shop of a merchant. In the future this step could be omitted. Instagram is currently testing a payment function that is directly integrated into its app.
Given Instagram’s power as a marketing tool for retail, based around its lucrative network of influencers, it makes perfect sense that a payment function could be implanted into the app, creating a seamless social media eCommerce experience.
“So far, the feature has only been activated for selected users in the UK and US. In addition, Instagram wants to focus on specific sectors, at least for now,” Roger Niederer, Head Merchant Services of SIX Payment Services, said.
“We can assume that the payment function will expand in the future as the ‘Shoppable Tags’ were initially introduced for a limited brand portfolio and are now an integral part of the app.”
So, how does it work?
“To use the payment feature, Instagram users must register a credit or debit card and choose a PIN number. This allows payments to be processed directly within the app,” Niederer continued.
“Until now, users who click on a buy button are directed to the online shop of the retailer via an integrated browser. There they have to log in or re-register to proceed, which of course takes up valuable time.”
“The new payment feature should significantly shorten the purchase journey and payment process. It is still unclear whether the service will be paid for by the merchants. The offer would probably be financially viable without a fee for the merchant as we can assume that companies will increasingly choose to advertise on the platform, if there is a possibility that consumers make a direct purchase.”
But how far will social media’s foray into eCommerce go? Roger sat down with PaymentEye to discuss the future of social payments.
Will digital payments soon overtake card payments as the primary payment method in the UK and US?
E-commerce is growing rapidly as consumers adopt and embrace new methods of engaging with retailers. We see e-commerce take an increasing share of the retail market as the sector evolves with a strong move towards digital payments. This is reflected in the double-digit growth rate we are currently seeing. There is also a distinct trend towards IOT Payments where we are likely to see a huge rise in digital payments, coupled with credit card payment levels remaining constant and may possibly even decrease over time.
Do you think that social media, such as Instagram, will adopt the WeChat Pay model, and gradually take over every aspect of commerce?
There is no doubt that social media will cement its place in our society with large user communities. Retailers will expand their payment offering and present a wider range of payment options to their customers. However, traditional payment methods will continue to exist within the overall payment landscape.
Does the brand strength and elasticity of social media platforms mean they will overtake banks as the dominant financial service providers in the years to come?
I do not believe the social media platforms will overtake banks as the dominant financial services providers in the future. It is more likely that social media platforms will offer a front-end functionality aimed at their customers and banks also adapt their approach in line with digitalisation and continue to invest in new methods of payment such as mobile payments, and so on.
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