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The sharing economy has rapidly evolved into one of the most popular business models in the e-commerce space and is projected to reach $335 billion in revenue by 2025. This has largely been fueled by the massive success of platforms like TaskRabbit, Wag, Upwork, AirBnb, and of course, Uber, which essentially connects individuals who need a certain asset or service with other individuals, who can help them.
This win-win scenario has certainly transformed entire e-commerce industries, with specialized startups like Turo, Tulerie, and BabyQuip popping up to help people monetize their various belongings or even major institutions like Marriott going head to head with Airbnb and Urban Outfitters becoming a competitor of Rent the Runway.
A possibly more remarkable bi-product of the sharing economy’s impact on e-commerce is the way it is transforming the way people pay. And just like the business models itself, this trend is based on customer demand.
Payments With The Customer In Mind
Platforms like Uber offer frictionless payments with intricate features like “split payments” to accommodate multiple passengers riding together, while vacation home marketplaces like VRBO and Kigo address the needs of international travelers by allowing them to pay with alternative payment methods, popular in specific geographic locations.
“Platforms and marketplaces have become the tip of the spear for disrupting industries, as the sharing economy clearly illustrates. As more platforms innovate, they set a new ‘bar’ for accommodating the customers, and then another platform comes forward and tops it,” says Kurt J. Bilafer, Chief Revenue Officer of Yapstone, which has developed payment technologies for platforms and sharing economy businesses.
It is literally a race to provide the best customer experience. If you disappoint a customer through a clunky on-boarding or payment process, it’s not likely they’ll give you a second chance.
Customers Demand Both Privacy And Instant Gratification
According to a recent study by IBM’s Institute for Business Value, 81% of customers have become increasingly concerned about how their personal data is used.
“These days, privacy is at a premium – and yet customers demand curated, or bespoke payment experiences, which are based on their preferences, geography, platform, and desired payment methods,” says Bilafer. “Given this complete juxtaposition, it is difficult to know when and where to use customer data and what is crossing the line.”
Payments provide a powerful data source, but businesses must approach with caution. Data integrity must play a key role in all customer initiatives, if online companies want to survive.
As Industries Evolve, So Does Fraud
The job of a platform economy businesses is to enable two strangers to transact without any friction, while ensuring ensuring the transaction is safe. If the merchant or customer on-boarding process isn’t impeccable it would be quite easy for a fraudster to come into a marketplace and wreak havoc. And as online marketplaces evolve, so too, do fraudsters.
“Platforms are at high risk for fraud and as they evolve, they become a bigger target,” adds Bilafer.
Online Payments Should Conform To Real Life
Voice command payments, device fingerprinting, and eWallets are just a few online payment technologies that illustrate this trend: customers want to pay how and when they want to pay and their methods will change by the day.
“Think about how you as a user have a set of expectations for how things should work on a mobile device, versus when you are on a browser, never mind when you use your voice or want to transact in person,” suggests Bilafer. “Each form factor, and even experience, what I call critical moments of engagement demand an experience that is tied to what the customer wants to accomplish, not what is easiest for the payment provider.”
New online payment methods will continue to crop up and customers will most certainly adopt them and actually trust a business more if it accepts their preferred payment method. This is why online companies can never become complacent or assume that customers will want a product bad enough to use a less desirable payment method.
According to Bilafer, “We are firmly in the age of the customer and this means they have tremendous expectations. As Jeff Bezos says, they are divinely discontent and their expectations for improved experiences will continue to evolve.”
May 30, 2019 at 11:29AM
Forbes – Entrepreneurs