By Sascha Münger
Worldline Merchant Services
The metaverse has been front and center of discussions since 2021 when Facebook surprised the world by rebranding to Meta—in direct reference to metaverse—and began promoting this new "digital reality." During media interviews Meta CEO Mark Zuckerberg confirmed the business would shift focus from a mere social media platform to a "metaverse company" over the course of the next five years.
Just months later, other brands announced they were working on their own metaverse, and slowly, more organizations became strong advocates for the topic. Fast forward one year, and many companies are looking at how they can be a part of this new universe and, more importantly, generate revenue from it.
And what better place to start the conversation than at the very heart of revenue generation: payments. Essentially, payments providers are enablers for the monetization of this new metaverse and, with that in mind, an abundance of opportunities and challenges require consideration.
The metaverse refers to a virtual world in which physical cash has no place. Living and doing business in this environment requires a proper virtual system to facilitate seamless, effective transactions, and digital payments are the primary vehicles for doing so.
Combining the words "meta" and "universe," "metaverse"the term is a portmanteau used primarily to denote an anticipated future iteration of the internet. It refers to both current and future integrated digital platforms focused on virtual and augmented reality. It is widely considered to be the internet's next frontier and a significant business and financial opportunity for businesses across all sectors.
If we are to understand how it works, based on the vision set out by social media and technology companies, devices such as virtual reality headsets, digital glasses, smartphones and other devices allow users access to 3-D virtual or augmented reality worlds. In these environments, users here work, connect with friends, conduct business and access learning opportunities – all in an environment mediated by technology in original and immersive ways.
But the metaverse is not just one type of experience. It refers to a continuum of immersive digital experiences – from participating in a virtual reality multiplayer game accessed via headset or experiencing digital content via visiting businesses using smartphones or digital glasses.
The metaverse isn't a singular digital space but several that are being created by companies to offer more realistic and immersive digital experiences. From a business perspective, the technology has a range of potential functionalities designed to facilitate better levels of collaboration and productivity.
The development of the metaverse is often associated with "web 3.0," and both are expected to be critical to the future of ecommerce. At present, we are at the stage known as "web 2.0" where the internet is the primary entry point for those looking to access information and services, communicate and socialize, sell goods, and experience entertainment.
Meanwhile, the metaverse is predicted to replicate the value proposition of the internet itself. The metaverse adds a new, three-dimensional, immersive layer that provides users with a more authentic, seamless experience, enhanced by the advantages of blockchain technology.
Paying for digital assets will hold the ultimate key to creating a seamless user experience in the metaverse. And to ensure effective ecommerce and a fully functioning metaverse, each digital environment must create its own digital economy of sorts with robust payment methods.
Just as in the physical world, payments in the metaverse can be made in various ways, but the most common is through blockchain or digital currencies, which can be used to purchase merchant goods and services. Thus, payment providers must look to proactively explore how to build in metaverse payment products and services, to create the ultimate virtual payments experience complete with new merchant sales channels and virtual showrooms.
Cryptocurrencies have an important role to play in the development of the metaverse as they represent the monetary connection between the physical and virtual worlds. Users looking to purchase goods in the metaverse can exchange their local fiat currencies into cryptocurrencies by setting up a crypto wallet and using an exchange like Coinbase or Binance to make the conversion.
This technology remains under development. For example, goods and services, whether virtual or physical, can only be purchased in the metaverse through each provider's own cryptocurrency. For example, if you connect to Decentraland, you can only use MANA. This is a demonstration of the role payments providers can play, by enabling the purchase of goods and services in the metaverse regardless of whether the user owns cryptocurrencies.
At this stage, it's difficult to determine the effect the metaverse will have on the development of cryptocurrencies. That said, this technology is already playing a large part in making crypto and blockchain technology more mainstream, and a harmonious co-existence of these and traditional currencies is likely not far away.
No less significant than crypto are non-fungible tokens (NFTs). Each NFT represents a unique item, with blockchain records that store information about the digital file. NFTs are becoming increasingly popular already as a form of payment, as they can be easily transferred between users.
Since they use blockchains in the same way as crypto, NFTs are an effective way to give owners proof of ownership, to transfer value securely, and provide accessibility and anonymity.
The potential opportunities presented by the metaverse are incredible, but it is not without its challenges. Still at a highly embryonic stage, the concept presents several obstacles for merchants, financial institutions or any business that wants to reach this new world. When it comes to payments, issues regarding data privacy and payment fraud are concerning while consumer behavior and shopping preferences may represent a big adaptation challenge for some businesses.
While the metaverse is primarily expected to transform the technology sector, where many companies will be creating the infrastructure to power this version of web 3.0, it will also affect organizations beyond the technology sphere since it is proposing to transform everything from the way people shop, navigate themselves from place to place, view real estate, seek entertainment, and interact with businesses.
For fintechs and payment providers, the metaverse appears to be a natural pivot as it aligns nicely with their inherently digital-first, flexible nature, and they are well positioned to push the market forward.
But taking advantage of the opportunities the metaverse has to offer in the future means cementing brand awareness and engagement now. If it is a success, payment providers will have an entirely new market to cater to where the most familiar and trusted brands will have the advantage.
While it remains to be seen whether visions for the metaverse will come to fruition or fizzle out over time, the concept has the potential to disrupt the global economy by requiring that businesses, across all industries, invest in better technology and drive competition to provide effective metaverse experiences to consumers. 
Sascha Münger began his career at SIX Group in 2007 in accounting and treasury prior to moving to the payments division at SIX Payment Services, where he was, among other roles, product and project manager for the launch of the Swiss mobile payment solution TWINT. Following the acquisition of SIX Payment Services by Worldline in 2018, https://worldline.com/en/home.html, Münger has held the role of senior product manager, with a particular focus on special topics such as crypto payments, web3 and the metaverse. https://www.linkedin.com/in/sascha-münger/
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