Author: David Webber
Photo sharing app set to offer peer-to-peer payment
Snapchat has officially joined the growing ranks of social media brands venturing into the payments sphere. This week, the photo sharing app provider announced its partnership with payment-processing firm Square, to offer its users a peer-to-peer payment feature called Snapcash. After registering a debit or credit card, users can send money to others via the Snapchat app by simply typing in an amount. Although currently only on offer in the US, how will it resonate with consumers when it is launched in the UK?
Snapcash and the rise of social media payment services
Earlier this year, we asked 2,000 UK consumers which brands they would use for sending money if they were to offer a payments service. Despite Snapchat boasting around 100 million monthly active users, only 2% of 18-30 year olds said they would use it as a payments service. Facebook and Twitter proved more popular however, with 19% of 18-30 year olds saying they would use a Facebook payments service and 7% of 18-30 year olds saying they would use one provided by Twitter. So where is Snapchat going wrong?
Threats and security issues
Of those respondents who said they would use a Facebook or Twitter payment service, the majority said they would do so because they trusted the brand. Snapchat, however, has been the victim of several high profile security breaches over the past year. Just last month, explicit images, believed to have been sent via Snapchat, were posted online, with hackers threatening to upload more. In January, 4.6 million usernames and phone numbers were leaked online. It is therefore unsurprising that consumers seemingly do not trust the brand.
Trying to ensure secure payments
The good news is Snapchat has addressed these concerns from the word go. In a blog post announcing the launch of Snapcash, the company said “we know that security is essential when you’re dealing with money, we have been hard at work to make Snapcash a great experience for everyone”. In fact, no financial data will be stored on Snapchat’s own servers. Instead, banking details will be entered directly on Square’s servers. According to Snapchat, this is reassuring as Square “has a ton of experience in this area”. Despite these announcements though, the company is yet to explain how exactly Square keeps financial details secure or what extra features will be put in place to ensure payments are made securely.
The future of social technology’s use of digital payments
Snapchat is just one of several social technology firms looking to offer payments services. Facebook is believed to be preparing to allow users to make transfers via its messaging service, while Twitter has partnered with French bank Groupe BPCE to allow customers to send money via a tweet. To keep up, Snapchat must convince consumers that Snapcash is a viable and safe payment method. The initial claims about security are a positive step forward, but the company must now clearly outline exactly how customers’ financial information and transfers will be protected.