Gen AI comes for online checkout, seismic shift for internet shopping

In the world of online payments, the buzzword these days is frictionless, as companies entice customers with increasingly convenient online payment options. Think the online equivalent of a biometric handwave: the fewer steps involved, the more customers will buy, experts say. With that aim in mind, the growing presence of generative AI such as ChatGPT in the shopping ecosystem may next take a shape that has a seismic impact on the economic model of internet retail.

Currently, a search for a large London Fog men’s coat on ChatGPT will bring up a purchase option, but you still have to click over to London Fog’s site to complete the transaction. But that may soon change.

Gen AI search engine Perplexity already has a deal with PayPal for this kind of function, allowing online shoppers to make purchases such as concert tickets and travel directly in chat, with payments completed with PayPal or Venmo, and PayPal handling the processing, shipping, tracking, and invoicing.

The Financial Times reported last month that an integrated checkout system is coming to ChatGPT, with partners such as Shopify, so that users can complete the transaction within the platform. Merchants will pay a commission to OpenAI. OpenAI and Shopify have not confirmed the plans. The AI company has already worked with Shopify on an AI assistant for internet sales.

OpenAI has already rolled out several features designed to enhance shopping and other consumer experiences, and experts say that in one form or another, this further use of gen AI in retail’s future should be expected, and companies need to be planning for the consequences today.

“Enabling customers to purchase without leaving the chat will have a significant impact on the sales cycle,” said Elizabeth Perkins, professor of practice of business administration and economics at Roanoke College. But she added that from a marketing perspective, any time you consolidate or eliminate a part of the purchase cycle, you get your customer that much closer to spending money. “No more time-consuming steps. Customers get what they want faster, with less hassle, and honestly, with less chance of changing their mind,” Perkins said. 

A threat to banks, Venmo, PayPal, Apple Pay?

Perikins says that payment interfaces like Venmo or Apple Pay could be disrupted. But Paul McAdam, J.D. Power’s senior director of banking intelligence, says he thinks that while AI checkout capabilities will disrupt the checkout ecosystem, big players will find a way to stay in the game.

“This is one more competitor looking for a slice of the pie. It will be fascinating to see how banks react to this. There will be a shakeout,” but he added, “PayPal, Apple, and Google are pretty entrenched, so I don’t think they are going anywhere. This…