NEW YORK — Every so often, banks dip a toe in the water of the hot new virtual environment — whether it's the immersive world of
Is the current iteration of the so-called metaverse any different?
Many large retail and financial services brands are betting that it is, making early moves to attach their brands to virtual worlds. There's an opportunity to go much deeper, PayPal's Frank Keller argues.
As with any payment, the goal is to remove friction while still enabling customers to have their choice of payment instrument, according to Keller, senior vice president and general manager of merchant and payments for PayPal in an interview at the National Retail Federation's Big Show this week in New York.
"You need to give people, even in that case, choice," Keller said in an interview. "Because what we're seeing is people [are] changing their funding method depending on the situation and you don't always get it right."
The financial services firms that are interested in the metaverse are not focused on Meta's virtual reality-driven vision. Nor are they treating their marketing in virtual worlds — or even the products they offer — as separate from what they have in the physical world.
Mastercard's work in the metaverse includes the development of a
Retailers have already demonstrated that there's demand among young consumers to make payments for similar products in both worlds. Tommy Hilfiger, for example, works with Roblox, an online community of nearly 16 million active users, half of which are under 13 years old.
In September 2022, the company made its virtual venue in Roblox, called TommyPlay, a key fixture of its presence at the live New York Fashion Week.
"We wanted it to be really integrated with the physical event … for people that were physical at the event here in New York, there were big projections around the venue where you could see the Roblox experience because they were running in parallel," said Chris Takkenberg, vice president of digital product for Tommy Hilfiger, in a panel discussion at the conference.
It's also an e-commerce experience, but one that allows the fashion brand to sell the same articles of clothing twice — one real, one virtual.
"People could buy the garments that were run on the runway in Roblox," in person and "for their avatars as well," Takkenberg said.
In the first three quarters of 2022, Roblox users acquired 1 billion items for their avatars, and 70% of Gen Z users surveyed take inspiration for their physical self from their avatar — and the same percentage base their avatar's style on how they dress in the real world, according to Winnie Burke, head of fashion and beauty partnerships at Roblox, citing a
There's also a role for Nonfungible tokens, or NFTs. A consumer who buys an outfit in a physical store could get an NFT that can be redeemed in a virtual world to use with their avatar — but it could also be traded. And that doesn't have to be a feature unique to NFTs, according to Jeff Lambert, head of loyalty at Visa, who spoke in a separate panel discussion.
A consumer could work for months or years to build a large balance of airline points, but if those points can't be used, they're worthless. "Conceptually, that doesn't make sense in 2023," Lambert said. "That is going to shift, and that status is going to be something that I own. And if [someone] wants to buy that from me, he can buy that from me and the smart contract is going to cover everything that goes along with it."
Lambert envisions this happening inside a wallet that holds more than just payment cards and airline tickets.
"Inside of the wallet is going to be, in the future, all of your identification, all of your payments, all of your NFTs, health care, your spend history, SKU history down to the color of the item that you bought, and you control that as a consumer," Lambert said.
In this scenario, the payment is only a piece of the shopper's identity, PayPal's Keller said.
"In the payments industry as you know, we are tokenizing, basically, cards. We need to move one step further, which is tokenizing the individual," Keller said.
Even without these problems fully solved, the demand within the metaverse is clear.
NARS Cosmetics allowed Roblox users to develop makeup looks for their avatars and provided 19.6 million virtual goods to users overall (including purchased looks and ones offered for free).
"That's a really consequential number," said Dina Fierro, senior vice president of the web3/metaverse group at Shiseido Americas, was previously vice president of global digital innovation and strategy at NARS Cosmetics.
"For me it really indicates that virtual goods present a very compelling opportunity for real-world brands in the near future," she said.
