Why Contextual Commerce Needs to Be on Your Roadmap

Published originally on PaymentsSource

Every business that uses apps or online platforms to connect with customers knows there’s a major transformation underway in how you do business. Customer convenience is a top priority, while the mechanics of sales and payment transactions are moving out of sight where they are less likely to cause friction that costs sales.

To take advantage of this confluence of technology known as “contextual commerce,” you need to know what it is and what it requires. If your business development plans don’t include reimagining how you will sell to your customers, you risk losing out to competitors that are thinking beyond the traditional e-commerce experience.

Why Contextual Commerce Needs to Be on Your Roadmap

The defining idea behind contextual commerce is giving your customers the ability to buy something within the flow of another activity that they’re engaged in. It’s presenting a product or service right at the moment when the buyer might naturally want it, without making them go through a separate commerce or payment experience.

"Easy payments are critical"

Easy payments are critical — the transaction must occur in the background, relying on stored payment methods rather than making a buyer key in card details. But there’s more to it than that.

Uber — which won its massive user base partly by making payments invisible and freeing riders from worrying about fares and tips — is building out its contextual commerce vision by striking partnerships. For instance, its deal with Hilton to link the Uber app with the hotel chain’s loyalty app makes it easy for travelers to arrange their rides when they are reviewing hotel reservations.

The WeChat messaging platform, which is hugely popular in China, is another example of how users can engage in all kinds of transactions without ever leaving their preferred environment. WeChat users can shop, buy movie tickets, and even pay bills from within the app.

Looking beyond these examples, we can expect opportunities for new contextual commerce business models to arise as stored payment technology finds its way into other environments. Given how much time many Americans spend on the road, one particularly promising new area is the connected car. GM’s OnStar Go platform, which will roll out in automobiles starting in 2017, will feature integration with Mastercard’s Masterpass digital wallet, allowing drivers to buy goods and services from behind the wheel.

"Customer trust in the security and privacy of stored payments is essential"


Customer trust in the security and privacy of stored payments is essential for contextual commerce to succeed. The growing use of various kinds of e-wallets and mobile payment systems is also helping to put consumers at ease.

The back-end infrastructure to support a contextual commerce ecosystem is taking shape. Tools and interfaces will be needed to easily connect a variety of components, including: The merchant’s payment and order management systems (including inventory, logistics and returns); the “context” in which the customer is found; partnerships merchants strike with complementary businesses, content providers and others; and the customer’s stored payment and shipping information, such as e-wallets

All of these pieces will need to connect seamlessly so that the customer receives the service they expect, while the payment transaction takes place out of sight. 

Coming up with compelling ways to engage your customers through contextual commerce will require you to do three things well:

1. Gain a deeper understanding of your customers. How, when and why do they buy? Now is the time to make investments in ramping up your data and analysis game. Understand their behavior and what else is going on around their transaction with you, and you may see opportunities for partnerships.

2. Respect customer preferences. Not everyone wants to be presented with buying opportunities everywhere they turn. Businesses will need to be thoughtful to avoid alienating customers with overly intrusive offers, especially as predictive analytics seek to anticipate consumers’ needs. Remember that what’s convenient to one person may be creepy or annoying to another.

3. Be alert to all contexts  virtual and real-world. Right now, a lot of focus is on connecting on the virtual plane: Businesses are looking for opportunities to sell within online content such as information, entertainment or gaming, as well as within social experiences such as messaging and social networks. Location-aware and augmented reality technologies will open more opportunities for reaching customers in their real-world contexts as well.

It’s an exciting time to be engaging in tech-fueled commerce. As the contextual commerce revolution begins to get into full swing, make a plan to put your business in the game.

Contact me or your SVB Global Treasury and Payments Advisor to get started.

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Read more in our series on how to optimize your company’s payments tools and processes on SVB’s Payments Trends and Insights page.

The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates. This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. You should obtain relevant and specific professional advice before making any investment or other decision. Silicon Valley Bank is not responsible for any cost, claim or loss associated with your use of this material.

About the Author

I lead a team of talented and dedicated SVB colleagues who develop unique, client-focused global account and payment solutions. Part of my team focuses on our clients' Global Treasury and Payment needs by providing counsel and ideas relative to their A/R and A/P needs - including credit cards, global account structures and our SVB merchant services. And speaking of merchant services, I also manage the sales team that delivers our SVB Global Merchant Services solutions. Using First Data as our global utility, SVB layers on our market knowledge, risk understanding and SVB service to provide a truly global card acceptance solution. Let's talk!