The logos of Google Gemini, ChatGPT, Microsoft Copilot, Claude by Anthropic, Perplexity, and Bing apps are displayed on the screen of a smartphone in Reno, United States, on November 21, 2024.
Jaque Silva | Nurphoto | Getty Images
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 will affect the upstarts the most, some of which will probably get gobbled up by larger competitors.”
At eBay, AI checkout is not being viewed as a threat, but as a sign of further innovation in the industry.
“AI is proving great at speeding up workflows and generating ideas. We believe the true magic lies in blending that speed and scale with trusted, expert, enthusiast communities,” said Blair Ethington, vice president of the company’s focus categories and buyer experience division.
Ethington says that eBay will be investing heavily in an increased AI experience at checkout that delivers real-time, hyper-personalized product picks and guidance tuned to each buyer’s shopping preferences. “Ultimately, we believe our scale, unique inventory, and trusted community position us extremely well to thrive in an agentic commerce future,” Ethington said.
PayPal pointed to its deal with Perplexity as a sign of its embrace of the gen AI feature rather than viewing it as a threat. “We’re partnering with some of the biggest players in this space, like Perplexity, to deliver personalized, secure, and seamless payments and commerce experiences to our network of more than 400 million consumers and merchants worldwide,” said a PayPal spokesperson.
In one form or another, the checkout experience online is ripe for change, according to Dee Waddell, global managing director of travel & transportation industries at IBM. “Consumers are no longer satisfied with the status quo,” said Waddell, citing a recent IBM study that shows only 14% of consumers say they’re satisfied with their e-commerce experience. “They’re demanding seamless, hyper-personalized experiences across every touchpoint, and retailers must lean into AI to meet those expectations,” Waddell said.
IBM‘s retail clients are prioritizing AI to deliver a seamless experience throughout the entire customer journey. “I believe we’re on the cusp of a revolution, where generative AI platforms like ChatGPT will act as ‘personal assistants’ to streamline the digital shopping experience from product discovery to fulfillment,” Waddell said.
Controlling the pre-sale of the future
The online shopping experience of the future could feature a consumer going into ChatGPT or Anthropic’s Claude to ask for gift ideas. Then, Waddell says, without ever leaving the chat, they’ll receive personalized recommendations, confirm their payment method easily, verify their shipping address, and complete the purchase.
“In this new model, the AI personal assistant becomes the marketplace. This means retailers will need to solidify their ecosystem and channel strategies,” Waddell said, adding that companies will either need to partner with channel providers that want to work with generative AI companies or go directly to AI providers themselves. “This will be a key part of staying relevant and delivering the integrated shopping experiences that consumers are demanding,” Waddell said.
Alex Graf, co-founder and CEO of digital commerce platform Spryker and author of “The E-Commerce Book,” says this is the beginning of a seismic shift in how people will shop online. But he says the focus on the threat to payment processors misses the biggest disruptive outcome from the shift.
“We’re witnessing a structural shift in the e-commerce value chain, and ChatGPT is right at the center of it. The old game was about who could close the sale. The new game is about who controls the pre-sale and gets the user’s attention first,” Graf said, adding that this is where the LLMs will disrupt the incumbents. Increasingly, Graf says, it will be ChatGPT and Claude that will guide discovery, curate choices, and compress decision-making for customers.
“For ecommerce players who’ve relied on ‘watch time’ to keep users browsing, like Amazon, Etsy, or even Shopify storefronts, this is an existential threat,” Graf said.
“Users who previously started their search on e-commerce platforms are now starting with AI. And here’s the kicker: selling the product isn’t where the margin is anymore. It’s selling the eyeballs,” Graf said, noting that ads that appear inside ecommerce ecosystems have become a $50 billion market globally.
“Amazon’s most profitable business isn’t Prime or AWS, it’s retail media,” Graf said.
Amazon is investing heavily in its own generative AI features for shopping and has made significant investments in gen AI companies including Anthropic.
Graf says that when a gen AI like ChatGPT becomes the “new homepage” of commerce, it doesn’t need to sell products directly.
“It just needs to own the watch time, then monetize via paid placements, affiliate links, and product recommendations, just like Amazon does internally. This re-routes billions in potential retail media revenue toward whoever owns that conversational layer,” Graf said.
Amazon’s ads business has been a bright spot within earnings in recent quarters.
Graf says fintech players like PayPal or Zelle, the online payment app run by a consortium of major banks, will be impacted, but indirectly. Once ChatGPT, or similar AI agents, corner end-to-end shopping, there’s less space for third-party payment tools.
“Integrated systems or AI-native wallets may eat that slice of the pie over time,” Graf said.
The ultimate winners, he says, will be those who can monetize attention and intention, not just transactions.
