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From mobile wallets to new lending platforms, from buy buttons to one-touch payments, 2015 saw the world of digital commerce advance in innovation and increase in popularity. What does 2016 hold? Based on emerging technologies and industry trends, here are five predictions we see changing ecommerce in the coming year.
Lending startups will become banks for the millennial generation
While 2014 was all about peer-to-peer lending, 2015 saw the rise of alternative lending platforms that follow a more traditional model, with lending apps like Earnest and Affirm raking in money to create credit and lending tools targeted at millennials. The question that these financial service providers will have to answer is, how do you get a generation that shies away from credit to warm to debt? A study earlier this year found that more than half of millennials don’t even have a credit card.
Affirm is trying to entice young consumers with small loans that can be paid off within a specified time frame. The idea is that if consumers have their monthly payments spelled out for them and know how long it will take them to pay off debt, they’re more likely to take out a loan.
More broadly, the new lending companies are focused on becoming bigger banks that consumers can turn to throughout their lives. “It’s the purpose of a bank to help people realize their hopes and dreams, so they can be able to go to school, buy a home, maybe purchase a car, and borrow money in a time of need,” Louis Beryl, cofounder and CEO of Earnest, told me earlier this year. “We want to expand to really be able to serve professionals over their whole lives.”
In 2016, we’ll likely see startups working to integrate their offerings more deeply into the lives of millennials with services that help them buy cars and homes.
Mobile wallets will give you more reasons to use them in-stores
This year Apple Pay and PayPal pushed their ecommerce technologies into brick-and-mortar stores, convincing merchants that mobile is the new way to pay. Smaller startups fixed their aim on changing the way we shop.
While Apple paved the way for NFC payment acceptance at major brands like Macy’s and McDonald’s, there’s still more work to be done. Mobile-wallet companies need to make the case to consumers for using these payment apps in lieu of swiping a credit card.
With its March acquisition of Paydiant, PayPal is becoming a payment option at storefronts like Subway. Paydiant is also the app maker behind retailer association MCX’s CurrentC mobile wallet. The app was designed as both a payment method and a loyalty card.
Whether MCX will offer PayPal as a payment option isn’t certain. The retailer association seems more interested in cutting out third parties like Apple and Visa and debiting money directly from consumer bank accounts for purchases. Even so, in 2016, we’re likely to see PayPal appear as a payment method inside more merchant apps if not in CurrentC.
At the end of last quarter, PayPal said it made Venmo a payment option for PayPal merchants online. The move is significant because Venmo is largely used by a coveted demographic — millennials. If PayPal can execute “Pay with Venmo” in a compelling way and allow consumers to buy online and in stores with Venmo, it has the potential to capture a sizable and active demographic of mobile consumers. Pay with Venmo has already started rolling out, but remains relatively under the radar. Expect to see Venmo in more places in 2016.
Let’s not forget about Square, which recently went public. While the company has made several unsuccessful attempts to entice consumers into paying for purchases with Square, it has developed some popular tools for small merchants — from its in-store point-of-sale terminal to its delivery platform for restaurants. It also recently opened up its peer-to-peer payment app Square Cash so that users can pay for merchant services. In 2016, Square will likely try to close the loop between its consumer products and merchant services, perhaps finally nailing a mobile wallet that consumers want.
Beyond how we pay for things, some startups are looking to bridge the gap between online and offline shopping. Oak Labs introduced a touchscreen fitting room mirror, giving real-life shopping an online feel. Expect the startup and others to continue on that trend, further blurring the lines between digital and in-person transactions.
Automatic shopping will be everywhere
Amazon’s Dash button may have seemed like a joke when it arrived earlier this year, but the truth is Amazon isn’t alone in trying to integrate a shopping interface into the home. For those who need a refresh, Dash is a clickable button that can be placed around the home. Tapping the button automatically orders frequently used home products. MasterCard is also looking to build payment functionality into just about anything, from key fobs to jewelry.
In 2016, we could see actual appliances (stoves, microwaves, refrigerators) come equipped with order buttons and other shopping mechanisms.
Competition will heat up in the P2P payments space
While Venmo, the long reigning king of peer-to-peer payment apps, is expanding into a more traditional e-payment model (see above), Apple is hoping to take on Venmo’s dominance in P2P payments. Apple is reportedly in talks with banks to craft a rival to Venmo, joining Google, Square, and Facebook as companies angling for a piece of this market.
Mobile wallets in general are aiming to become holistic payment tools, encompassing everything a user needs in a financial app. In 2016, anyone already working on mobile wallet will surely try to expand their services to be all inclusive.
Facebook will become the WeChat of the West
As Facebook continues to build out its Messenger platform, it will likely include more shopping opportunities. Recently, the social network teamed up with Uber to launch in-app ride hailing. Already, Messenger helps consumers and select businesses connect as a sort of customer-service platform, where people can contact retailers about product availability, shipping, and returns. If the program proves successful, Facebook M, an AI-powered personal assistant inside Messenger, could take the company’s ecommerce ambitions to the next level.
Through its relationship with PayPal, Facebook has ample opportunity to bring more on-demand services to the Messenger platform. Of course, the company still has relationships with other ecommerce companies. Earlier this year, Facebook partnered with Shopify to add a Shop section on their Facebook pages, helping them reach consumers more directly. In 2016, Shopify stands to bring even more retail experiences to both Facebook and Messenger.
What this all means is that digital financial products are maturing and getting ready to take on legacy institutions more aggressively. And while the bulk of shopping will continue offline in brick-and-mortar stores, players like Apple, PayPal, and Google will be offering more customer rewards programs to lure customers to use their digital wallets.
These five predictions suggest there is still innovation to be mined inside ecommerce. 2016 will show how well consumers and merchants alike will take to these new offerings.
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