Payments use cases and services adapt to life and our changing commerce experiences. In the late 90’s and early 2000’s, payments evolved to meet the needs of e-commerce. In the 2010’s, payments evolved for mobile commerce. The next horizon of payments evolution is the Metaverse. In this article, we discuss the reality of nascent payments in the Metaverse today and our expectations for evolution towards a more frictionless user experience.
What is the Metaverse?
The Metaverse refers to an online, virtual, 3D universe that users can access via PC, virtual reality (VR) / augmented reality (AR) hardware, and/or mobile application, where the virtual and physical world converge. Users can play, work, transact, meet, and socialize within a virtual community. Video gaming worlds (e.g., World of Warcraft, Fortnite) or video game platforms (e.g., Roblox) are the closest analogies to the Metaverse. However, there are fundamental differences between video gaming worlds which are fundamentally proprietary and the vision of the Metaverse which is intended to be interconnected and open.
Both video gaming worlds and the Metaverse are built for virtual goods and commerce. Virtual goods in video gaming are rarely useable across platforms, however, the Metaverse assets are built to be shareable. The vision of the Metaverse is open and community governed, where users are the ultimate owners and contributors based on community, openness, and distributed ownership of virtual assets, The Metaverse is built on blockchain where virtual assets are owned through non-fungible tokens (NFTs) and transferrable across platforms. Video gaming payments are generally achieved via more mainstream rails (cards, wallets), while payments in the Metaverse are (today) driven by crypto and blockchain.
Roblox illustrates the closed nature of today’s video gaming worlds. As shown in Figure 1, Roblox, a leading online gaming platform, allows players to purchase upgrades for avatars (e.g., clothing, accessories) or buy experiences on its website. It has its own in-game currency (Robux) which users can purchase on their website using traditional payment rails (credit/debit cards, PayPal, gift cards). Roblox issued a statement on its blog in November 2021, re-emphasizing that it does not allow off-platform auctions: “When off-platform transactions occur that are tied to on-platform items or experiences, it is impossible for us to monitor the details of that event and it blocks our ability to validate or mediate any claims.”
FIGURE 1:Illustrative Transaction Process on Roblox, a Leading Online Video Gaming Platform (screenshots)
Unlimited commerce use cases
The Metaverse is envisioned as an alternative reality where virtually anything is possible. The possibilities for commerce use cases are therefore vast. The most common use cases today include buying virtual land, avatars, and play-to-earn games. Emerging use cases include wearables/clothing, experiences, business meetings, education, and much more. The meta-economy will also cover all forms of commerce transactions:
- P2P: Users can trade land or other types of assets among them
- B2C: Retailers can showcase their latest clothing collection, users can buy the clothing in the virtual world, and get it delivered at home
- B2B: Manufacturers can showcase newly developed equipment, build a mirroring version of their ‘real-life’ factory, and hold business meetings across multiple parties
FIGURE 2: The Decentralized Metaverse Ecosystem (select examples)