In 2018, the number of Social media users in the world surpassed the 3 Billion mark. Social media platforms built their massive audience on the promise of connecting people with their friends and family, meeting new people, and strengthening relationships. Today, they are doing far more, amongst which is a revolution in digital payment.
These platforms are making it possible to not only like products on the social network but also purchase them at the click of a button. Conversations on cash jointly spent with a friend on social media no longer need to lead to a request for an account number since a direct payment can be made during the course of the conversation. Leading among these social media payment platforms are WeChat, Twitter, Facebook, etc.
WeChat’s “WeChat Pay” has 40% of the Chinese mobile transaction value as of 2018. “Snapcash” from Snapchat makes it possible to make a peer to peer payment by clicking the snapcash button that shows up when the dollar symbol is typed.
Twitter’s “Tweet Purchase” makes it possible to purchase a product from the tweet account by clicking a purchase button. Facebook, which has relatively been conservative in its effort in driving mobile payment has also launched a peer-to-peer payment system through its Messenger app. Another key player in this space is PayPal whose Vennmo product syncs with a User’s facebook and phone contacts.
Though some argue that these social media platforms are not actually powering payments, they are only using payment networks to move money from one point to another, the users, however, are not really bothered. The users are not concerned about how they do it, but instead are adopting them because of their convenience, ease of use and the network advantage that the platforms offer by providing an ecosystem of people with transactional relationships.
A deeper look into the growth of social payments presents a wide array of opportunities for individuals, merchants, Fintechs and financial institutions.
Powering Social Commerce
Social media platforms have always been a place to discover new products, follow and join conversations on them, and read the review of other customers before making a final purchase at a physical store, e-commerce site or any other arrangement made by the seller.
In spite of the possibilities though, the inability to make payment has always been a missing piece.
The situation now seems to be changing because, with the emergence of social payments, it is now possible to complete the whole customer journey right from discovery down to purchase on a social media platform.
A PayPal survey of 4,000 consumers and 1,400 merchants in key Asian markets revealed that 57% of those surveyed said that it is “easier to set up their business on social media”, while 48% liked the idea of “leveraging their network of friends and relatives.”
This may be the time to tell your friends to not only like your pictures on Facebook but to start buying from your Facebook store.
Connections between Customers and Merchants
Though several innovations such as NFC, QR codes and contactless cards have revolutionalised mobile payments, this has been mostly transactional. Social payments go beyond transactions to relationship building. Merchants can leverage these social media platforms to have continual conversations with customers for better engagement. This, in turn, leads to an extended lifetime value of the customer.
Merchants now can compete for the attention of consumers through content generating activities that put them prominently on the news feed, they could also specifically communicate with customers who have shown interest or made a purchase based on the options offered by the platform of their choice. In addition, they could leverage this platform to promote their new offerings, build loyalty for their products, and provide support to their existing customers.
Easier and Expanded Services for Customers
The global spread, ubiquity, and ease of use of the social media platforms are gradually making them become an obvious platform of choice in delivering financial services. For example, in some parts of the developing world, Facebook has become synonymous with the internet. This, therefore, has made several Fintechs and financial institutions to start deploying their payment solutions on social media platforms.
Leveraging chatbots, social media-based personal assistants have become a major trend. Startups such as Kudi and well-established financial institutions such as Diamond bank and UBA have deployed chatbots that run on Facebook messenger to provide banking services to customers.
Also in well-developed markets, players in those markets have joined the social payment revolution, with Barclay’s Bank’s Pingit allowing people to pay each other via a twitter handle or a phone number.
These benefits have not come without some challenges. Prominent among these challenges is security. Another challenge could be the need for all users in the transaction to be on the same social media platform. In addition to the list of challenges is the concern regarding lack of privacy resulting in consumers’ distrust in social media companies. This stems from the fears that user transactions could be harvested by the companies behind these platforms.
Nevertheless, with an ever-growing and well-engaged user base, there is no doubt that social payments have come to stay, presenting opportunities to leverage massive user base, build payment solutions, and swiftly conduct and conclude business transactions online.