The business of paying people is new social territory for apps.
by Claire Boston
Snapchat’s video introducing its Snapcash peer-to-peer payment system has all the trappings of a social media startup’s product: it’s overflowing with kitsch and screaming to be shared.
A foray into mobile payments might seem like an unprecedented move for a company that built its name around disappearing selfies and sexts, but Snapcash suggests Snapchat is thinking ahead about how people use technology to interact and share. Snapcash is also a way to stay relevant as Snapchat users’ tastes evolve. Ten-second snaps are unlikely to pique millennials’ attention forever, but Snapchat wants to hold on to — or grow — its $10 billion valuation.
The app’s offerings had to diversify. But why mobile payments? It seems tangential at best for a photo app, and payment app Venmo (a PayPal acquisition) came first.
Snapchat has one major advantage: its user base is far larger than Venmo’s. Neither company releases user figures, but in the Android store, Snapchat has had over 100 million downloads to Venmo’s 500,000 to 1 million. Snapchat is #17 in the Apple App Store’s list of most-downloaded free apps. Venmo doesn’t crack the top 150.
By jumping into the burgeoning mobile payments sector, Snapchat is betting financial transactions will be the next big thing to go social. Sharing spending habits and financial history may remain something of a taboo, but peer-to-peer payments are already changing that.
Venmo’s app is built around a newsfeed. If you import your phone contacts or Facebook friends list, you’ll get a real-time list of your friends’ transactions. Most users add notes to their payments, and it can feel a little voyeuristic to scroll down and discover your ex received a payment for “salads in Memphis” or a high school acquaintance just paid her half of the Internet bill. A “Public” newsfeed details strangers’ transactions. Venmo founder Andrew Kortina said the public sharing became a feature in the app’s beta days “because it’s interesting.” Venmo’s privacy settings can be tweaked, but its default option is to share.
Snapcash is comparatively private, with payments coming through the app’s chat feature. But even without a newsfeed feature, Snapcash is still rooted in a desire to share with our friends. You may have opened Snapchat to send out a snap of your new haircut, so you might as well send over the $10 you owe your roommate for pizza. Snapchat’s company blog promises that Snapcash will make payments “faster and more fun.”
The company seems to recognize that some of its users might be reluctant to hand over debit card information to an app that’s come under scrutiny for CEO Evan Spiegel’s sexist comments and a major data breach. Hackers have stolen millions of card numbers from brick-and-mortar stores like Target, Home Depot and Jimmy John’s in the past year, leaving many customers wary of whom they trust with their data. Instead of creating its own security system for card info, Snapchat left the security work to Square, a company known for its financial services for businesses and Square Cash, an email and text message-based payment system. Square Cash doesn’t have a social media component, but a Square representative said Snapcash is an effective way to integrate Square into an already popular social media platform.
“We see Snapchat as a natural extension of our service and a way for customers to exchange value in the channels they frequent,” Square Corporate Communications Manager Katie Baynes said.
In the meantime, other social media networks are also vying to capture a slice of the mobile payments market that’s estimated to hit $142 billion in the next five years. Twitter acquired payment system CardSpring in July and unveiled a mobile payment service for its French users last month. A recent Facebook leak revealed the company plans on adding mobile payments to its Messenger service.
We’ve entrusted social media companies with our emails, photos and phone numbers in the name of being sociable. Adding card information may seem too invasive for most users, but if mobile payments like Snapcash catch on, it’s yet another way we’ll stay tethered to our favorite apps.
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Claire Boston is a journalism and economics student at the University of Missouri. She’s covered politics and business for newspapers in Missouri and Arkansas. Find her on Twitter @claireeboston.
