Gone are the days that artificial intelligence was a far-fetched fantasy of tech lovers. Today, we can ask our voice-enabled assistants to check the weather, play music, re-stock the fridge and even pay our bills, all thanks to AI. Amazon’s Alexa, Apple’s Siri, Google Assistant, and others are built in almost every gadget imaginable – from light bulbs and showerheads to automobiles and household appliances. Voice assistants have revolutionised the way we live, but the question for many eCommerce businesses remains: is voice commerce the future of online shopping? If so, will it also help voice payments thrive?
Join us as we discuss voice assistants and how they're shaping consumer behaviour along with payment preferences.
What are voice commerce and voice-driven payments?
Voice commerce is a functionality that enables consumers to make purchases through voice commands on portable devices, with voice payments referring to payments that are transacted using one’s voice. Users tell their mobile device what product to look for, and it searches it on the web. Smartphones and tablets built with virtual assistants, such as Siri and Google Assistant, and smart speakers such as Amazon Echo and Google Home, are the widely used devices that facilitate voice tech interaction. Big Tech companies, like Amazon and Google embed them with voice apps called "skills" (for Amazon's Alexa) or "actions" (for Google Home). Users can enable and disable them exactly as they would on their smartphones.
Many businesses across industries are proactive in revamping their processes and keeping pace with cutting-edge technology so to remain competitive and desirable to customers. To achieve this, they incorporated AI tools into their operations instead of having to reinvent the wheel with each digital improvement. Before we look at examples of brands that have integrated voice assistants into their systems, let’s explore the traction of voice commerce and voice payments.
How popular is voice commerce and voice payments among consumers?
As voice recognition technology continues to grow, so too will the number of users. A report from Statista predicts that the amount of voice assistants used worldwide will reach 8.4 billion units by 2024 – a rise of 433% from 1.5 billion devices active today. Research conducted by Vixen Labs, a voice tech agency, showed that 91% of voice assistant users across Germany, US and the UK searched the Internet with their voice in 2021, 41% of which also made a purchase using their smart speaker. Voice commerce is well-positioned in the voice platform market. Study from Juniper Research estimates that the transaction value of this burgeoning model of shopping will hit $19.4 billion by 2023 – an uptick from $4.6 billion in 2021.
Equally, the appetite for simpler and faster transactions has grown wildly in recent years. In their stead, payments made via the means of voice AI are winning ground, as 31% of US consumers are forecasted to make voice-related payments in 2022. Survey from PYMNTS indicates that 61% of respondents aged 18 to 24 pursue financial wellbeing, expecting more personalised banking and payment experiences. GlobalData predicts that retail banks worldwide will invest a total $4.9 billion on AI equipment to enhance user experience, which marks a rise from $1.8 billion in 2019 and a compound annual growth rate (CAGR) of 21.8%. It only remains to be seen how the global virtual assistant landscape across sectors will heat up.
Transforming commerce with the power of voice payments
Evidently, voice-controlled assistants have unlocked new business opportunities for brands wishing to conquer the AI market. Automotive manufacturer Honda launched an innovative in-car experience, dubbed as Honda Dream Drive, in partnership with Visa. Through it, passengers can purchase gas, parking, or order food and enjoy entertainment services only with speech. What's more, Amazon users can utilise the tech giant’s voice assistant, Alexa, to buy online. For this initiative, Alexa has integrated with Amazon Pay to enable purchases even on third-party sites via a customer’s Amazon account details.
Peer-to-peer (P2P) payments represent one of the boldest uses of voice around the world. By saying their request aloud, users can receive or send funds to a specified recipient. With over 1.9 billion active online banking users worldwide, many banks and financial institutions are progressing their AI journey and help redefine the way customers manage their money. Banking players like Santander have integrated voice payment functionality into their ecosystem, driving payment innovation. Santander's customers can vocally instruct Apple’s virtual assistant, Siri, to make payments to existing payees without having to access their banking app, type any passwords or answer security questions. Once the payment request is processed, the customer needs to authenticate the payment with Apple’s touch or facial ID recognition. Aside from paying mobile contacts, voice interaction can assist users who want to check their account balances or report a lost card.
AI is also making inroads in Asia, gearing towards a speedier customer experience and frictionless transaction processing. Singaporean DBS Bank partnered with US-based Kasisto to implement the latter's conversational KAI platform into its system to optimise consumer payment and banking experience.
With voice payments providing greater customer choice and flexibility, it’s time to take a closer look at their benefits for the retail and financial industry.
Benefits of voice payments in retail and finance
Voice interaction technology is experiencing something of a golden age at present, and its potential in the retail and financial sector is enormous. Here are a few benefits of this disruptive trend.
Introducing next-gen products that streamline shopping and payments experience
Customers put their convenience first; they want to complete tasks in just a few taps, let alone when they can only rely on the power of their voice. Think of the hassle-free way virtual assistants take care of routine actions on behalf of users. UK-based online grocery retailer Ocado debuted an app for Amazon Alexa that enables customers to add to their basket, track their order or find the best deals via the tech giant’s smart speaker, Amazon Echo. The function helps customers shop with ease by spoken demand.
More merchants can adopt the same comforts for their customers by integrating voice controls into their processing capabilities. Voice-operated payments could lessen the friction and time needed to complete transaction, as users won’t need to press any buttons.
Higher inclusivity – reaching out to a wider audience
Allowing hands-free and voice-only access to smart speakers or virtual assistants enables users to engage in multiple things at once – namely, cooking, watching TV, driving, etc. There are also issues of practicality for certain age and social groups (e.g. elderly and people with visual or other impairments) that voice assistants can resolve to benefit their way of living and/or paying. It is no wonder that 68% of respondents in the Smart Audio report published by National Public Media admitted that voice-activated assistants have made their lives easier.
Mitigating fraud risks
Voice payments should not just be about what’s “fast and frictionless” but also about what’s “secure and accurate.” Voice authorisation is a reliable method of biometric authentication that verifies a user's identity based on vocal modalities (e.g. pitch and intensity) before letting them perform any financial action. HSBC UK’s voice ID technology is a great example of a robust biometric security system given that it managed to prevent £249 million worth of fraud. Cybercriminals cannot easily replicate biometric identifiers such as voice recognition, which could help minimise the volume of online fraud, which saw a 61% rise in 2021 according to Veriff, compared to password-enabled security.
The challenges of voice payments
Despite the exciting prospects lying ahead with the maturity of AI and the proliferation of voice assistants, online businesses must also have a realistic grasp of the risks attached to such technology.
Privacy and cybersecurity threats
Opinions are split on whether voice payments are a blessing or a curse in instances of combating fraud, as private information exchange remains a consumer concern. To be precise, it’s one of the reasons that many brands and consumers haven’t en masse adopted voice tech yet. The fact that only a quarter (27%) of consumers feel comfortable disclosing personal and financial information online fuels the scepticism over virtual assistants. This works in tandem with the necessity to safeguard sensitive data. Cyber criminals are rife in the fields of finance and eCommerce, with the increased Covid-19 driven phishing attacks compounding the issue.
Contextualisation and nonstandard voice recognition
Each voice is unique. Intonations, cadence and articulation differ from individual to individual. Voice software is not advanced enough to identify, analyse, and absorb the myriad of dialects, accents, and other patterns of speech. A whopping 95% out of the 501 consumers surveyed by the Manifest confessed they were frustrated when using voice search, with the voice assistants' lack of understanding as one of the most cited reasons.
What’s in store for voice commerce and voice payments
The capabilities of voice assistants look well on their way to improve over time. Consumers can expect better word detection and more seamless interactions. With IoT (internet of things) devices on the rise, voice assistants will be more widespread and available across various touchpoints, from the car to the smart fridge. In fact, Alibaba is in talks to invest $1.4 billion to bolster its AIoT (artificial intelligence of things) interface for its voice assistant – AliGenie – and smart speaker – Tmall Genie.
The advancement of machine learning (ML), a subset of artificial intelligence that enables machines to learn and improve from the contextual data they possess without human intervention, will find even greater favour in retail and payments. Data is useful for companies and customers if there are actionable insights derived from it. Machine learning actively partakes in the stages of data collection, analysis, and prediction to help businesses make more informed decisions, especially when it comes to fraud management.
Machine learning could also be applied as a form of predictive data analysis that may help businesses make more informed decisions. Specifically, as a core machine learning application, natural language processing (NLP) algorithms will be able to infer customer behaviour and buyer intent so businesses can curate more tailored shopping and payment experiences.
Takeaway
It wasn’t so long ago that smart personal assistants that respond to voice commands were viewed as outlandish, but they’re now becoming commonplace in our everyday lives. AI has never been more crucial in the field of retail and payments, spurred on by the tide of digitalisation and the need for a smoother customer experience. Brands like Sainsbury's, Ocado and JD Sports have built Alexa skills to enable smart speaker owners to shop their groceries or sportswear via their device. By venturing into the ‘voice space’, retailers and eCommerce businesses will be able step up their AI game and win customer loyalty.
Moreover, retailers' familiarity with AI functionality, including features such as machine learning, will enable them to predict consumer attitudes and customise checkout journeys that set them up for higher conversion and revenue rates. However, machine learning isn't just limited to the retail industry. In fact, the successful implementation of this innovative feature came to fruition in the field of fintech. ai Corporation (ai) has proven to a powerful weapon in the hands of us, emerchantpay — a global leading mobile, online and POS payment service provider. In view of fraud attacks spiking, we applied aiFraud Managed Service, supported by ai's automated machine learning to ensure heightened payments security.
Contact our team of payment specialists to discover how emerchantpay can help your business offer a secure and smoother transaction journey.