Episode 83 – Settlement Systems in Detail – Carol Coye Benson, Glenbrook
Do You Want a Commerce Identity? I Do!
Every year I try to attend what I think of as the PayPal Developers Conference. This year what used to be the PayPal X Innovate Conference was expanded to include eBay app development, Magento app development, and –– most importantly –– X.commerce app development. X.commerce is eBay’s new end-to-end, multi-channel commerce technology platform. While most of the conference was focused on the X.commerce platform, this is the second of two posts reflecting on what’s new with PayPal.
I’m a good customer, I really am. I have a strong sense of what I want. I don’t like to second guess things or over think what I’m about to buy. I shop on quality, not just price. I like to be made aware of and sold relevant companion products. I don’t mind paying extra for convenience. And, when I find a seller I like, I’ll buy from them time and time again.
So when I walk into a new online store, I expected to be treated like… an anonymous dog. Nobody knows I’m a good customer, nobody knows how they could cater to my needs, and, worst of all, nobody knows that I should be treated as special!
All this may be about to change with an eBay initiative that provides PayPal users with a commerce identity they can use when shopping online.
Introducing the Commerce Identity
The major PayPal product announcement at the recent X.commerce Innovate Conference is a federated login scheme called PayPal Access. From the press release:
Available to global retailers today, PayPal Access gives consumers the ability to sign up and sign in to participating websites with just their PayPal usernames and passwords. PayPal has more than 100 million accounts in 190 markets worldwide.
Unlike identity solutions currently on the market, PayPal Access provides everything consumers and merchants need to create an account and complete a transaction – including user verification, shipping information, and payment details. By helping retailers simplify login and account creation, PayPal Access can help increase conversion and loyalty on merchants’ websites. Research shows that nearly one out of every four consumers abandon their shopping carts when they’re asked to register an account.
“There’s still too much friction in online shopping,” said Damon Hougland, general manager of Identity and Informatics for X.commerce. “Consumers don’t want to enter multiple pages of information to make a purchase. With PayPal Access, consumers can spend less time filling out forms and more time buying. Retailers can create a great shopping experience for millions of customers who already trust PayPal to buy online.”
With just two clicks or taps, a customer can sign up or sign in to a retail site. Important user information, such as shipping address, will be automatically updated. Although customers can choose to use their financial details stored in their PayPal accounts, PayPal keeps that information private and secure.
PayPal Access differs from other federated login schemes (Google, Facebook, Yahoo, etc.) in an important way – it implies something about me as a potential buyer, and it optionally (at my discretion) shares information about me that will help grease the skids and make my overall purchase experience more streamlined and more valuable.
How is this accomplished? Logging in to a website with my social identity, using my Facebook credential for example, tells the seller that I have an account with Facebook. That’s all. It implies very little and is pretty undifferentiated, as over 800 million people have managed to open an account on Facebook. But using my commerce identity via PayPal Access tells the seller that I’m a buyer. It tells them, minimally, that I’ve set up a PayPal account, attached a payment method to that account, and the account is in good standing.
Above and beyond that, PayPal Access gives me the option to share a number of commerce-related attributes with the seller:
- First Name, Last Name, Full Name
- Phone Number, Email Address(s), Address(s)
- Time Zone, Preferred Language, Gender, and Date of Birth
- PayPal Verified Status and Account Type
Sharing my name and contact information up front means I don’t have to waste time entering data that is already in my PayPal account. Sharing my time zone, preferred language, gender, and age helps the seller customize their site to better support me. And using my PayPal login credential to access my buyer account on subsequent purchases means that I won’t forget how to log into the sellers website the next time I come back. PayPal claims that 45% of consumers abandon the seller site on subsequent purchases when they can’t remember their site-specific password. So this is all good stuff.
But the really interesting part to me is the ability to share my PayPal status—whether or not I’m a verified PayPal buyer and my PayPal account type (personal, premier, business, or student). Sharing the verified status is huge. While the exact definition of being “verified” varies country by country, in the United States it tells the seller that I’ve done one good purchase using either my payment card or my bank account. In short, it tells them that I’m a known good buyer. Sharing the account type is just gravy, in that it helps clarify whether I’m buying for myself or on behalf of a company.
The first question here is about privacy, and, in that regard, PayPal makes two important points. First, no attributes are shared unless explicitly approved by the user—which specific attributes are being shared and what website they are sharing them with. And second, sensitive payment data is never shared. In fact, PayPal Access completely separates the sign-on processing from checkout processing. A buyer could use PayPal Access to establish their account with the seller, and then use another payment method (unrelated to PayPal) during checkout.
PayPal Access is available now for sellers to start implementing, and the company indicates that people should start to see the PayPal Access login option appearing in January on eBay properties and various seller sites that currently accept PayPal as a payment option. They think it is highly unlikely that PayPal Access will ever be used as a general-purpose single sign-on solution that is unrelated to commerce.
Enhancing My Commerce Identity With My Reputation
PayPal Access is a good start for helping me take my good buyer status with me as I go from site to site. But there’s more reputational things being contemplated.
PayPal Access is only one of several products from the “Access and Informatics” group inside eBay’s X.commerce business unit. There are two other companion products, that have just started alpha testing: X.commerce Segmentation Service and the X.commerce Prospect Score. These are directly tied to the user’s behavior as a buyer.
- Segmentation Service – “Segmentation Service APIs enable you to know more about customers such as average spending value, average frequency of using PayPal transactions online, recent transactions, and level of purchasing activity.”
- Prospect Score – “This API enables you to know the purchasing potential of a user visiting your site. Users are classified into Gold, Silver, or Bronze based on their average spending value, frequency, and online transactions.”
The data passed back through the Segmentation Service and Prospect Score are indicative, not absolute. So a user’s average spending value returned as part of the Segmentation Service might be high, medium, or low. Their recent transaction level might be bustling, active, engaged, or passive.
The Prospect Score is dynamic and reflective of the buyer’s behavior in the category. If the user is a frequent online shoes buyer, for example, they would be a Gold prospect when they logon to a site that sells shoes. The same user might only be a Silver or Bronze prospect when they logon to another type of site. The score is a composite drawn on purchases made with PayPal and purchases made on various eBay properties. It’s not yet clear exactly how this will work, but we suspect the seller categories will somehow map to the same category topology used in the eBay marketplace.
Motivation and Final Thoughts
PayPal Access is free with no plans to charge for usage, according to the company. PayPal’s belief is that it’s a good way to project the brand and drive higher subsequent usage of PayPal as a payment method. This is believable to us. While the use of PayPal as a payment method is not required, we think it will be an obvious choice for most users.
PayPal believes that sellers may very well want to give special treatment to known good buyers – and that many good buyers will want to proactively share their fine reputation with sellers. They believe the Segmentation Service and the Prospect Score will be used by sellers to:
- Recognize their best potential customers when they walk in the virtual door
- Better personalize the shopping experience to meet their needs
- Optimized offers and incentives for targeted customers
- Provide enhanced reward programs to their most valued customers
One interesting aspect of this model is how it reinforces PayPal preference. PayPal users today don’t always select PayPal as their payment tender, and as a consequence, PayPal doesn’t have a complete profile of their buying behavior. In a subtle way, people might begin to favor PayPal over other payment options as they begin to think about how a purchase might positively influence their PayPal user reputation.
So what’s missing? PayPal needs to figure out how to tell a seller when the user’s PayPal account was created. The account creation date reflects the time-based value of the credential, which is exactly why American Express puts the “Member Since” date on the front of the card. Who might a seller treat better? An AmEx cardmember since 1991 or an AmEx cardmember since 2011?
Taken together collectively – PayPal Access, Segmentation Service, and Prospect Score – begin to lay the foundation for good buyers to finally take their reputation with them as they move from seller to seller online. The key question over the coming years is whether good buyers will find value in a portable reputation or prefer to remain dog-like in their pseudo anonymity.
Do I want a commerce identity? Yep, I sure do.
How about you? Do you? Share your comments below.