I recently celebrated a friend’s birthday in San Francisco. After several hours of carousing over dinner, the 15 guests and I raised a final glass and walked out of the restaurant at ease — seamlessly handling the bill portion of the evening like seasoned pros.
Two days later, we got push notifications from Venmo to pay what was owed to our friend who had picked up the tab. No muss, no fuss.
From San Francisco to Shanghai, communities everywhere are taking to digital money transferring with gusto. And there’s a major social component to it too: Many apps, such as Venmo, integrate with bigger platforms as another way of broadcasting — or, some might say, boasting about — all of our activities.
So, as Venmo becomes to payments what Google is to search, how might this growing trend impact your business’ bottom line in the not-so-distant future? I recently took a more in-depth look at all the different types of money transfers on social. But in the bigger picture, here’s the gist of what’s in store.
The Social Component of Currency Apps
Money-transfer apps are growing in quantity and sophistication. As a result, they are blending the utilitarian aspect of the digital financial exchange with a community-driven experience commonly associated with, or in some cases directly happening on, social networks.
As a free digital wallet, Venmo turns transactions into status updates that can be liked or commented on. People can find friends by granting the app access to their location or Facebook account, and those friends’ activity is then viewable in a Facebook-like news feed in the Venmo app.
While Venmo has kept the social component in-app, on the other end of the spectrum is ChangeTip, which makes the experience inherently cross-network. The app lets users of Bitcoin (a digital currency) send and accept donations, tips, gifts, payments and rewards on a dozen platforms, including Facebook, Twitter, Tumblr, Slack and SoundCloud.
The networks themselves have gotten into the game as well. Facebook’s peer-to-peer payment feature enables friends to exchange money via the Messenger app. All people need to do is add a US debit card to their Facebook account. But unlike Venmo or ChangeTip, keeping the transaction contained within Messenger prevents it from being a visible social experience.
Twitter, on the other hand, recently began testing In-Tweet Purchases, a feature that enables buyers to complete transactions directly from a Tweet. The big differentiator: It’s actually designed with businesses in mind. Certain items from sellers, such as Burberry and The Home Depot, are available for purchase within Twitter’s timeline.
The fact is, 78 percent of people already say that social media greatly impacts their buying behavior, with 4 in 10 having made a purchase either online or in the store after sharing or marking an item as a favorite on Twitter, Facebook, or Pinterest. With the evolution of money-transfer apps and their social integrations, these exchanges could move from being purely peer-to-peer to also supporting business-to-consumer activities.
The Potential Payoff for Marketers
Unfortunately, aside from Twitter’s new feature, businesses are limited in how they can use many of these apps — for now.
Venmo can’t be used to accept payments on a website, collect funds from customers, or receive payment for goods from a business provider. Snapchat, in a partnership with Square, created Snapcash — a way for people to exchange money within the app’s Chat feature — but it remains a peer-to-peer payment system not for commercial purposes.
While these services have varied and in some cases indirect use cases for businesses, they are all making a splash in the social space in an important way: by keeping people on their platforms. Previously, if a group of Facebook friends wanted to go in on a gift, they’d have to go to another website to exchange money, leaving the social network where brands’ targeted posts and ads are reaching them. Now, people are beginning to complete the transaction in the same place the conversation started.
Twitter’s In-Tweet Purchases keep people on the social network throughout the entire buying process, creating a significant opportunity for businesses. If people are already in the buying mindset, the barrier to influencing their purchase decisions is lower, and the risk of them dropping out decreases since there is less time between discovery and purchase.
As for Venmo and Snapchat, they’re creating opportunities among a younger demographic. In fact, a Deloitte report found that social media influences the purchasing decisions of 47 percent of millennials. Although businesses can’t yet take advantage of either tool in a direct capacity, the seed has been planted. People are now associating financial transactions with their social experiences and activities.
Keeping Stock of a Billion-Dollar Industry on the Rise
For marketers, it’s worth keeping a close eye on peer-to-peer payments through social media. The idea may be new, but there’s potential for massive growth in this space, and the demand continues to grow. As the market moves, which apps will smartly respond and bring brand-friendly capabilities to the table?
Juniper Research expects the number of mobile money transfers to increase by nearly 150 percent in 2015 to more than 13 billion. Venmo is currently experiencing traffic worth nearly $1 billion per quarter. Internationally, China’s WeChat and Alipay saw users engage in more than 3.3 billion peer-to-peer transactions in just six days.
With that kind of data behind it, it’d be impossible for social platforms to ignore this growing trend and for currency apps to not expand their offerings. As with all other aspects of social, businesses should find a way to use this new functionality to their full advantage while making all of our lives — or at least paying for our friends’ birthday dinners — a whole lot more convenient.