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Metaverse Chargebacks

This summer, Playboy announced that they will open a virtual Playboy Mansion in The Metaverse, Tony Hawk announced plans to create a skatepark in The Metaverse, and businesses are spending real money to purchase real estate within The Metaverse. While it may not always be clear what The Metaverse is, it is clear that it will soon become an important site of media and commerce. And, for merchants, that means there is value in understanding what the implications of the metaverse may be for their businesses.

What Is the Metaverse?

The answer to this question is somewhat unclear. “The Metaverse” as a real thing that is in broad use does not really exist yet. And the nascent metaverses that have been created are distinct and disconnected from each other. But the technological and business concept of The Metaverse is slowly coming into shape, even if the hype far outpaces the reality.

Conceptually speaking, The Metaverse is (or will be) a shared virtual environment that uses aspects of virtual reality or augmented reality technology, digital identities and avatars, and—in some versions, at least—blockchain-based technologies. Wired summarizes the uncertainty while at least aiming toward a loose understanding of what The Metaverse could be, from a technological and user experience standpoint:

“Broadly speaking, the technologies companies refer to when they talk about ‘the metaverse’ can include virtual reality—characterized by persistent virtual worlds that continue to exist even when you're not playing—as well as augmented reality that combines aspects of the digital and physical worlds. However, it doesn't require that those spaces be exclusively accessed via VR or AR. Virtual worlds—such as aspects of Fortnite that can be accessed through PCs, game consoles, and even phones—have started referring to themselves as ‘the metaverse.’”

Matthew Ball offers a more technical and precise definition:

“The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”

The term “metaverse” comes from the 1992 science fiction novel Snow Crash. An early example of a metaverse is the video game Second Life, an online game first created in 2003 that allows players to create avatars that exist and interact with one another in a shared virtual environment.

The Metaverse, as it is currently being conceptualized and discussed, would be like a larger version of these sorts of environments, with wide use across the population, combined with VR, AR, and blockchain-based technologies. The most significant recent news event involving metaverses was last year when Facebook changed its name to Meta, after purchasing the VR company Oculus, and announced plans to shift the company’s focus from its social media platform to creating and promoting a metaverse platform. This has precipitated a belief that The Metaverse will come to exist as a real, significant thing at some point in the near future. As Forbes writes, that carries the assumption that it “will likely influence our lives in many ways, some of them currently unfathomable, in the years ahead.”

It may seem strange that such a vaguely defined, sci-fi-influenced concept would carry significance among the leading tech businesses, but many are preparing for a culture and economy in which metaverses play a significant role. As an expert in the above-linked Forbes article explains:

“The current increase in attention to the Metaverse is partly driven by the very recent ability to fully ‘own’ virtual objects, experiences, or land. Blockchain, the ‘crypto finance hub,’ makes it possible to precisely define a virtual thing so it can be bought and sold. There are entire metaverse worlds based on this new economy. Decentraland and Sandbox, for example, are both metaverse worlds that sell virtual land to businesses that build virtual buildings. Sotheby’s, the nearly 300-year-old auction house, has a building in Decentraland that your avatar can walk around and view what is being auctioned. Republic Realm, a company that develops land in the Metaverse, recently paid $4.3 million for a piece of virtual land in the metaverse-world Sandbox.”

This sort of speculative investment in a yet-to-be-defined technology is not entirely unprecedented. As Vice explains:

“Talking about the metaverse feels a lot like talking about the internet back in the 70s and the 80s. As the building blocks of the new form of communication were being laid down, it sparked speculation around what it would look like and how people would use it. Everyone was talking about it but few knew what it really meant or how it would work. Looking back, it didn’t turn out exactly as some people imagined.”

Or, as Tim Sweeney, CEO of Epic Games, told the Los Angeles Times:

“Just as every company a few decades ago created a webpage, and then at some point every company created a Facebook page, I think we’re approaching the point where every company will have a real-time live 3D presence, through partnerships with game companies or through games like Fortnite and Minecraft and Roblox. That’s starting to happen now. It’s going to be a much bigger thing than these previous generational shifts.”

While important questions remain—What exactly is The Metaverse? Who will use The Metaverse? Who will own and manage The Metaverse? Will there be one, centralized Metaverse or multiple metaverses? What kinds of things will people actually do in The Metaverse? No, really, what is The Metaverse?—it seems inevitable that The Metaverse and metaverses in general will be here sooner rather than later.

Will There Be Payments In The Metaverse?

Almost certainly, yes. In fact, the creation of metaverses and the driving force behind The Metaverse is the effort to open up new sites of commerce. It’s not clear that the public actually has any need or desire for The Metaverse. But, as the business world finds less and less profitability in extracting resources from the natural world and fewer and fewer places to create new markets in the real world, corporations are turning to the digital world as a site for accumulation and expansion. So, while it remains uncertain what forms The Metaverse will take, who will control it, and how people will use it, it is a virtual certainty that some form of commerce will take place within it. Indeed, that seems to be the primary force driving its creation.

Returning again to Matthew Ball, the commercial elements are an essential part of The Metaverse:

“The Metaverse has been positioned as both a successor state to the mobile internet, as well as a platform for human leisure, labor, and existence at large. The success of this vision depends on whether the Metaverse has a thriving economy. And we know what makes for a thriving economy: competition and a constant cycle of disruption/displacement, a large number of profitable enterprises (especially small-to-medium businesses), capital mobility, strong consumer spending.”

There will be some form of digital currency in metaverses. Those could take the form of tokens that are connected to traditional payment cards and bank accounts or they could be more closely related to blockchain-based cryptocurrencies. Or there could be multiple payment options from one metaverse to the next and even within individual metaverses.

Many Metaverse theorists and proponents seem inclined toward cryptocurrencies and blockchain-based payments systems. For example, Ball goes through the “different requirements, merits, and demerits” of existing payments rails—”ACH (‘Automated Clearing House’), Fedwire, CHIPs (‘Clearing House Interbank Payment System’), Credit Cards, PayPal, and peer-to-peer payment services like Venmo”—before settling on blockchain as the payments system best suited to metaverses. He writes:

“Blockchain’s permissionless, trustless and financial systems also enable their networks to be widely decentralized in operations and adoption. The former minimizes control, increases performance time and liquidity, while decreases gas fees, while the latter increases network effects and utility. Programmable tokens, meanwhile, enable developers to easily issue governance rights to their users and reward contributions.”

The speed, interoperability, and lack of intermediaries also seem to favor cryptocurrency as the best option for The Metaverse.

The closest thing to proto-metaverse environments currently in use are online multiplayer video games such as Fortnite, Roblox, and Call of Duty. All of these games have their own currencies which are purchased from the game or platform providers through traditional payment methods. If The Metaverse is to ever become the sort of generalized, persistent, large scale environment that its proponents imagine, it will likely need more generalized, broadly used currencies.

The connection between Metaverse currencies and real world currencies remains uncertain. Another advantage of cryptocurrency is that it is ideally both a digital currency and a real world currency, meaning it won’t require the sorts of exchanges that rule current video game currencies such as Roblox’s Robux. Additionally, blockchain-based exchanges allow for something like true digital ownership rather than platform-controlled use of digital assets. Indeed, this aspect of blockchain technology is already a part of some proto-metaverse video games in the form of the use of non-fungible tokens (NFTs) for in-game assets. Ultimately, like much about The Metaverse, the details of metaverse payments will be determined over time.

Will There Be Chargebacks In The Metaverse?

That is harder to answer. Since metaverses do not yet exist in any meaningful way, the payments systems for them do not exist. If the dominant digital currencies in metaverses become those which are implemented by and tied to the existing, mainstream finance system, it’s possible that those currencies will be tied to payment cards and susceptible to chargebacks. But if the use of blockchain and cryptocurrency becomes the dominant form of metaverse payments, then it is possible that chargebacks as we know them will not be a significant concern. But the reality is that if metaverses are built to scale, if major businesses, banks, and mainstream institutions are involved in metaverses and if the public is making purchases at large scale and volume, there will be some mechanisms for payment disputes and returned payments. It is entirely possible and perhaps likely that those mechanisms will favor consumers over merchants, much like the chargeback system of today.


It is unsatisfying to analyze a significant development such as “The Metaverse” and come to the conclusion that we can only wait and see how it develops. But that is the only honest conclusion to be drawn for how merchants can prepare for the coming era of metaverses. Due to the fact that some of the most powerful corporations in the world are pushing the development of metaverse technology without really doing much to gauge public interest in the technology, it seems likely to be an uncertain environment even after it is more widely implemented. Managing uncertainty may well be a permanent feature of navigating the metaverse for merchants. At the very least, if merchants believe that their business may be well-suited to The Metaverse, they should familiarize themselves with the concepts behind it and make every effort to follow the trends as metaverses develop.

Payments Industry

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