What’s the deal with social media payment processing?
People spend 30 percent of their time online on social networks, according to Global Web Index. Facebook leads the way in mobile ecommerce traffic, accounting for 50 percent of social referrals and 64 percent of social revenue. The Silicon Valley giant still reigns supreme, but payments are taking off in other corners of the social media world as well.
Once known as services for connecting users with friends and family, social media has increasingly become a platform for connecting companies and brands with customers. That means more targeted ads, brand promotions and greater revenue opportunities.
More than 4 billion people worldwide use the internet, and three billion of them use social media every month — gaining a million new users every day. Even more importantly, 71 percent of people say social media referrals influence their purchasing decisions.
Given these blockbuster stats, many social media companies have launched payment features, ranging from peer-to-peer payments to direct online purchases.
Online payment systems and e-wallets have certainly come a long way since Venmo led the way in 2009 — allowing users to sync their e-wallets with their social media and broadcast their transactions in Facebook status form.
No longer new technology, social media payments are maturing and becoming part of users’ everyday lives. Though some social media payment platforms are now defunct — Amex Offers on Twitter and Twitter Buy Now — many new ones have come online.
Sending money through social channels is here to stay. And that’s why we’re highlighting two of the biggest social media payments players — Facebook and Snapchat — to show how the services work and how secure they really are.
How Does Facebook Pay Work? Think Facebook Messenger is passé? Think again. Users can send money via the application. All the user needs to do is enter their debit card information and type the amount they want to send. The money moves from the user’s checking account to the recipient’s, as they have entered their account information as well.
Is Facebook Pay Safe? Facebook payments are encrypted and systems are in a secured environment that is separate from the original Facebook network. However, the trouble with sending money through Facebook is that the primary form of security is your username and password. Users can enable password protection of individual payments, which prompts users to enter their Facebook password again before making a transaction. However, Facebook is rife with fake accounts, which poses a significant security threat for those who are transferring money.
So, avoid clicking on links in messages from people you don’t know, and never send money to someone you haven’t met in person. Make sure your password is strong and don’t send money if you have any doubt as to whether the recipient is legitimate. Also, be sure to log out of your account after each use. Despite the risks, Facebook’s payment system hasn’t suffered a single security breach since its launch in March 2015.
Upsides to Facebook Pay:
- Encryption backed by Facebook
- Fingerprint-verified transactions
- Simple and easy to use
Downsides to Facebook Pay:
- Limited to debit cards
- Transactions can take days to complete
- Not compatible with business transactions
How Does Snapcash Work? The irreverent app known for its friendly ghost logo got serious with Snapcash — a peer-to-peer payment system built into Snapchat. A fast and simple way to send cash to friends, users simply tap on their profile settings and add their debit card information.
After their card is entered, users can start a chat or send a message with a dollar sign and the amount of money they want to transfer. Once the system recognizes the dollar sign, a green “add cash” icon will appear so you can transfer funds. Snapcash even has a fun “swipe-to-send” feature that allows you to virtually flick dollar bills at people.
Is Snapcash Safe? For added safety, users can require that their CVV number be entered before each transaction. Snapcash is also powered by Square — a pioneer in mobile payment technology that follows strict encryption and PCI Data Security Standards.
Unfortunately, Snapcash doesn’t offer buyer or seller protections, so as soon as you send cash, the money is gone for good. This can be particularly troubling if someone gets a hold of your Snapchat account and starts sending money without your approval.
Upsides to Snapcash:
- No fees
- Backed by Square
- Easy and fun to use
Downsides to Snapcash:
- No credit cards allowed
- You can’t request cash
- Recipients must also use Snapcash
- Irreversible transactions
Cash in the Palm of Your Hands
Mobile, peer-to-peer payments could exceed $65 billion by 2021 — up from $14.9 billion in 2015. Consumers are getting more and more comfortable with payment apps. After years of seamless Uber rides, customers don’t want to go through the trouble of typing 16-digit credit card numbers. Nearly a third of millennials now use their mobile phones for peer-to-peer payments.
Social media payments have arrived, and they are sure to only grow in popularity. It’s the consumer’s responsibility to be diligent and protect their data.
To learn more about security and data encryption, contact Bluefin today.