How the payments industry could gain from chat bots—if it moves fast

Messaging bots represent a new greenfield for payments, attracting major players that want to make up ground lost to third-party providers using "super smart" applications.

The trend most recently focused on messenger bots, an artificial intelligence-driven application that can respond to customer queries over social messaging platforms. Bot interactions are of interest to payment companies because they attract a consumer who is engaged and interested in pursuing the transaction being discussed.

Ingenico ePayments is developing technology that gives its merchant clients the option to embed payment capabilities into messaging bots. Ingenico ePayments is an online and mobile commerce division of the French terminal manufacturer, working closely with Ingenico Labs' research and development.

Christophe Morin/Bloomberg

"We help merchants reach and engage their customers where they are, and increasingly that is on their mobile phone in messaging apps," said Ludovic Houri, vice president of product for Ingenico ePayments, which began operation early in 2016 when the company's Ogone and GlobalCollect divisions formed the new tech research unit.

"We see demand for this product primarily coming from larger merchants, both current Ingenico merchants and new ones," Houri said

When a consumer initiates a purchase within a messaging app, the bot can open an Ingenico-hosted payment page driven by the merchant, Houri added. The payment-enabled messaging bots would give Ingenico a presence on Facebook Messenger, Skype, Line, Kik, Telegram, WeChat and Slack.

"It’s a smart move by Ingenico. It’s a space that could grow fairly quickly and by developing integrations and announcing them now, Ingenico hopes to get its name out there as a go-to payment processor for bot developers," said Richard Oglesby, president of AZ Payments Group and a senior analyst at Double Diamond Payments Research. "And it should strengthen its ability to support its existing clients, many of whom are probably experimenting with bot commerce right now."

Ingenico ePayments gives the company an opportunity to transform its image as a terminal maker into more of a full-service payments company, but it has some catching up to do in the nascent world of chat bots.

Nearly two years ago, Chinese messaging platform WeChat began opening eyes to the potential of messaging apps in generating revenue — if those apps included features important to consumers, such as placing food orders or booking travel.

Apple brought its iMessage platform into the mix a year ago, indicating through a patent application that it would eventually be a vehicle for attaching payments. This was confirmed when Apple unveiled its iPhone 7 model, as CEO Tim Cook said iMessage would be part of the app store ecosystem in the Japanese market.

American Express expanded its presence on Facebook late last year, introducing an Add a Card feature to its bot on the Messenger platform. In that way, Messenger users making purchases would have the ability to do so through a linked Amex card.

"It's a land grab right now for integrating payment into these messaging systems," said Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC. "If you are hardware-based and wanted to go where the action is, you would try to get into cloud-based services if you could."

Still, any of the traditional payment companies trying to get into payment-enabled messaging bots are finding themselves "way behind" the likes of PayPal's Venmo or Facebook's Messenger platforms, Crone said.

"But there is plenty of room to improve the concept now," Crone said. "I am sure these companies are figuring they can make money the old-fashioned way by charging the merchant for completing a sale within this framework."

An application interface or a software development kit would allow a merchant to plug this type of service into their messaging platforms. What it boils down to is having "a free-form cash register that follows a customer wherever they are," Crone added.

Ingenico would not reveal its revenue expectations or fees for transactions initiated through messaging bots. But Houri said the company expects volume from the platform, while also using it to showcase Ingenico's ability to innovate beyond its core business of payments.

That innovation could lead to other projects for seamless payments as Ingenico Labs develops new user experiences such as "gamified checkout" in which consumers participate in marketing programs for a chance to win the cost of the items in their cart, Houri added.

"The payment landscape is changing rapidly, and the open innovation mindset will enable Ingenico Group to remain at the forefront of new purchasing and payment trends," Houri said.