Purchasing goods and services via social media is a fast-growing trend. Mohamed Dabo reports on consumer attitudes in the UK related to this remarkable phenomenon
Social payment is the use of social media to transfer money to another person or business. From concerns about ‘dirty’ cash to the need to access services from home, the payments industry has seen vast changes in the way people pay.
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By GlobalDataThe trend was first popularised by PayPal, and other companies have since hatched their own versions, including Venmo, Snapcash, Google Wallet, Apple Pay, and Twitter Buy.
Social payment is a useful tool for not only individuals but also businesses, which can either use existing services or create their own proprietary apps.
Online shopping, easy
Social media payment makes exchanging money as simple as clicking a button, and the money is often transferred immediately or within a day.
The service makes it easy for a person to pay someone back. For example, if two people go out to eat, one person can pick up the check and the other can pay the other person immediately.
This is an example of peer-to-peer, or P2P payment, and common services include PayPal, Venmo, and Square Cash. A person connects with “friends” through the service and can easily select a person, type in an amount, and either pay or charge that person accordingly.
Businesses also capitalise on the social payment trend.
Apple Pay allows a person to load their card information onto their phone and pay by scanning the phone or Apple Watch instead of a physical card. People aren’t at risk of losing a card if they don’t carry one with them.
Many stores now offer options at their registers that allow customers to scan a phone instead of using a physical card or cash.
Businesses can also create their own apps. For example, the Starbucks app allows a user to load money onto a virtual gift card, which can be scanned at the register. Banks often have their own versions of social payment, allowing a user to send money directly to another user’s bank account.
Social media payments
The increasing use of social media platforms like Facebook and Instagram for online shopping may be viewed as the climax of the retail revolution of the last decade.
Researchers at Vocalink (a UK-based payment systems company, owned by Mastercard) set out to learn more about attitudes towards social media. They wanted to find out whether there was an opportunity for further expansion for social media companies and messenger apps like WhatsApp into the payment space.
When they asked ‘how appealing, or not, would it be to be able to pay a friend in your social media contacts list using your mobile banking app?’, a fifth of respondents (20%) said they would find this either fairly (15%) or very (5%) appealing.
Perhaps a better indication of how likely this idea is to succeed is the 38% of respondents who found the prospect of payments via social media ‘not at all appealing’.
Alongside this, 38% of respondents said they were ‘much less likely’ to use a mobile payment service provided by a social media company than any other type of provider we asked about.
This chimes with sentiments heard in the focus groups, where many participants said they were reticent to share their financial data with non-bank third parties, and many alluded to the Cambridge Analytica scandal.
Platforms for businesses
When they probed participants in the focus groups as to whether they would consider making a payment via social media messaging apps, or other messaging apps like iMessage or WhatsApp, some agreed, reasoning that it could be convenient to do so.
However, most participants in the groups’ response was one of inertia at best: “Social media doesn’t answer any problems for me; it’s not faster, simpler or more secure,” said a respondent.
“They don’t have the security and the expertise for me to want them to have my bank details,” said another.
However, some small business owners they spoke to in the focus groups could see the benefit of social media payments to their businesses. “Whatever way people can sell their services and make it most convenient for their clients, then we should be exploring that as an option,” said one.
There’s clearly an appetite for social media to help small businesses. But social media companies need to overcome existing barriers to bring payment solutions to market.
Social media has come a long way since being introduced as an innovative method of communication. What started as a medium for connecting with peers across the globe has morphed into a business tool for ads and brand promotions.
Social media pioneers will continue to innovate, and the latest evolution involves the implementation of payment gateways within the social media space.
