Snapchat’s introduction of its Snapcash person-to-person payment service in collaboration with Square is indicative of companies’ growing leverage of social media accounts as payment tools.
Snapchat’s flagship product is an instant photo messaging system that erases pictures
shortly after they are sent, and the addition of the Snapcash money transmission feature gives the service both P2P and messaging app functionality.
Facebook may be working on a similar strategy for its Messenger app, but Snapchat differentiates its approach by having little of its service built in-house by relying on Square for payment handling via the Square Cash P2P service.
Consultant Jeff Crawford says it is uncertain that Square’s participation will be sufficient to assuage consumers’ security concerns. “People are really reluctant to send money or use cards without a trusted payment provider, and that really comes down to the banks and the networks,” he said.
“To segregate that relationship can be problematic.” On the other hand, Square’s payment processing and money transfer expertise could be an attractive selling point, and consultant Steve Mott thinks Snapchat could be in an ideal position if P2P suddenly catches on.
He notes Snapchat might appeal to impulse buyers and those seeking to complete transactions in instances where “a long audit file of what they have spent” is unnecessary.