Snapchat Introduces Snapcash: A Fast and Easy Way to Send Cash
Snapchat, the social networking site favored by teens and young adults, has teamed up with payment processor Square to offer Snapcash, a new way to send and receive cash between Snapchat users through a mobile device. The new mobile payment app is available in both Android and iOS versions.
Snapchat users who want to add the Snapcash update to their account must be 18 years or older and have a valid Visa or MasterCard debit card – credit or prepaid cards cannot be used to fund Snapcash transactions at the present time.
How Snapcash Works
- To send cash, a user simply types in the dollar amount as part of any private text message such as “Here’s the $5 I owe you for gas.”
- The Snapcash app reads the “$5” figure contained in the text and a green payment button lights up.
- A tap on the button begins the transaction process, and the money is transferred when the message is sent.
- Recipients have 24 hours to link a debit card to their account in order to access the cash. After 24 hours, unclaimed funds will revert to the sender’s account.
Square will securely store all user financial data so that no personal information will ever be accessible through Snapchat’s servers. Users opting for the Snapcash service will have to sign up for a Square account and abide by Square’s terms and conditions.
Security is a big issue with any payment processing service, and Square’s offsite storage of users’ personal financial data may help allay concerns about Snapchat’s mediocre security record. Snapchat was hacked last New Year’s Eve, affecting the privacy of some 5 million user accounts. In October, several thousand photos belonging to Snapchat users were hacked and found their way online, including a number of x-rated images.
The success of Snapchat lies in its simplicity. Primarily used for communicating basic text and graphics that disappear after being viewed by the recipient, Snapchat users share an estimated 700 million photos and videos each day.
Snapchat’s primary user group is the 14 to 34-year old demographic. According to studies by the Federal Deposit Insurance Corporation, that’s also the largest age group without a bank account. Snapchat may well have positioned itself in the proverbial “right place at the right time” with the introduction of Snapcash, according to some industry observers.
The mobile payments niche itself is growing by leaps and bounds, thanks in no small measure to the impact of the smartphone market as well as pioneer mobile payment apps such as Google Wallet and Apple Pay. According to Forrester Research, the mobile payment industry is expected to jump from its current level of $52 billion per year to more than $140 billion by 2019.
The continued success of the Snapcash app could lead to additional monetization opportunities for both Snapchat and Square. For example, users might be able to make payments to third-party merchants for the price of a modest transaction fee.
The Snapchat-Square Partnership
For now, Snapcash represents a unique value-added feature for users, which gives Snapchat a leg up on its larger social media rivals such as Facebook, Instagram, and Twitter; Square receives a small fee from Snapchat for each transaction processed.
Although Square claims it has nothing to “announce at this time,” it appears to be open to the idea of partnering with other companies, including social media networks, to expand its core payment processing business.