Snapchat announced the release of a new payment service called Snapcash on Monday.
Snapchat allows peer-to-peer payments
Snapchat has entered into the mobile payments business in partnership with Square. The joint-venture’s new service, Snapcash, allows users to send and receive money easily through messages. To use the payment feature users simply type a dollar sign and then an amount. Snapcash will then process the transaction and send money to the intended recipient, according to CBS News.
According to Market Watch, Snapchat has 100 million monthly active users, most of which are in their twenties and grew up with smartphones. The company is valued at an impressive $10 billion.
With regard to Snapcash, the company expects the same users who find their messaging app appealing, mainly the millennial generation, will also enjoy using the new mobile payments app. Ben Woolsey, president of Credit Card Forum, said that Snapcash will benefit from having a parent company that is already well-established.
“People are obviously using Snapchat to a huge extent, especially that demographic … So it’s easier to segue,” said Woolsey, according to Market Watch.
Snapchat entered into a partnership with Square – the company that will be doing the actual processing – to bring this app to consumers. Snapcash allows users to save their debit card information and store it on Square’s secure servers, and then send and receive money without having to enter in their financial information each time.
Square is a mobile payments startup with a $6 billion valuation, and is financially backed by investment bank Goldman Sachs, according to Market Watch.
Security is a key issue
In a public announcement, the company mentioned its dedication to security. Snapchat has previously experienced security issues, when the personal information of 4.6 million users was leaked. Since that time the company has taken action to make the app safer.
“We set out to make payments faster and more fun, but we also know that security is essential when you’re dealing with money. Square has a ton of experience in this area and our teams have been hard at work to make Snapcash a great experience for everyone,” the company said, according to CBS News.
Snapcash may not have appeal for sophisticated users
While Snapcash may have appeal to young users, it is questionable whether more sophisticated users would consider using the app to send money. Snapchat has a reputation for being an app that is used to send sexually explicit messages. Because the company supposedly deletes messages as soon as they are viewed, users do not worry about embarrassing photos or videos being leaked and circulated on the internet for years. However, recent events show that this has not always been the case.
With other companies like twitter and Facebook also getting into the mobile payments game, it is clear that the industry holds potential. Who will carve out the largest market share in peer-to-peer payments is yet to be seen.Back To Blog