Social Commerce: The Future of Payments?
An astounding number of Australians love mingling on messaging apps. 10.5 million to be precise. That’s over 42% of the country’s population using messaging apps such as Facebook Messenger, WhatsApp and Snapchat.
That’s not all. A report by Datafication says that 3.4 million people in Australia use messaging apps as their primary form of contact.
However, there’s more happening on messaging apps than people making dinner plans or video-calling loved ones around the world. Social media and messaging apps are becoming the hottest new channel to make and accept payments.
Can Social Become the New Wallet?
Juniper Research estimates that globally, 2.5 billion people are expected to use their mobile phones for domestic money transfers in 2018, up from 1.7 billion in 2016. This is all thanks to the growing penetration of social media apps such as Facebook, WeChat, Snapchat, and WhatsApp alongside the dramatic uptake of mobile payments and digital wallets such as Apple Pay, Android Pay and Samsung Pay.
What’s making this trend tick?
The answer is simple: Over 3 billion social media users worldwide. While many of these people still pull out paper or plastic money for financial transactions, the growing trust they’re placing in social media platforms is evident.
Take China for instance - Alipay and WeChat Pay enabled digital payments worth nearly US$3 trillion in the country in 2016. Besides making going cashless effortless, social networks are bringing millions more into the folds of accessible banking across the world.
And these benefits are only just the beginning.
Australians Yet to ‘Like’ Social Commerce
While social network payments may be shattering records in countries like China, it’s still early days in Australia with knots in the process being evident.
For example, Westpac had to remove its Westpac Keyboard -- a feature that enables customers to pay money through Facebook Messenger, WeChat, Snapchat, and Twitter -- from their iPhone banking app on Apple’s request. However, the bank does still allow customers to share their account details via SMS directly from its banking app so they can access all of the banking features offered by Westpac Keyboard.
Nevertheless, Australians are already embracing unconventional payment methods such as digital wallets, paving the way for the uptake of social networks to honour payments. Latest data from ANZ states that Australians made a whopping 3.9 million mobile wallet transactions over the Christmas period in 2017. That’s a 140% spike over the same period in 2016.
There’s little doubt that the idea of not having to fumble with bank codes and credit card numbers seems to hold a massive appeal among customers. And banks and social networking platforms in Australia have most definitely sniffed an opportunity in social and mobile payments.
It’s now the turn of businesses to start adopting social payments to give customers the most seamless payment experience.
Going Beyond Business: Peer-to-Peer Social Payments
By 2020, nearly 3 billion people worldwide are expected to be logged in to at least one social media account. Today, millions already use social media referrals to make purchase decisions.
It’s not only about ecommerce though.
Peer-to-peer (P2P) payments are an equally big trend to reckon with. The concept caught consumers’ fancy with the launch of apps such as Venmo and Facebook’s P2P mobile payments through Messenger. It hasn’t showed signs of slowing down since.
In fact, Facebook is expected to introduce in-Messenger payments to Australians in 2018 after it was recently awarded a patent to launch the feature in the country. With over 13 million Australians hooked on to the Facebook Messenger app, this feature could create a whole new opportunity in social payments.
For now though, let’s zoom out into the global picture to look at popular peer-to-peer social payments:
Facebook Messenger: The payments service is available for leading debit cards. Users can only transfer money to people their Facebook friends. Payments are credited in 1-3 business days.
Snapcash: Only works with US-issued Visa or MasterCard debit cards. Snapcash payments are limited to US$250 week but this limit is extended to US$2,500 when the user verifies their identity.
Skype Money: Users need to have a Microsoft and PayPal account to send money through Skype in the US, UK, Canada and most Euro-Currency countries. Skype has plans to add more currencies to this list soon.
Google Wallet: Users must have a Gmail account or Google Wallet to send or receive money almost instantly when using a debit card or Google Wallet. A limit of US$10,000 applies per transaction.
Major Australian banks such as ANZ currently offer payment methods compatible with Apple and Android Pay, while other big names like Commonwealth Bank, National Australia Bank and Westpac have joined hands to create their own peer-to-peer payment service, Beem.
Time to Prepare for a Transformation with Social Payments?
As the launch of social payments in Australia (such as those via Facebook Messenger) looms, it could worry Australian banks, given their lofty hopes and investment in the National Payments Platform (NPP).
Despite this, it’s early to assess if social network payments will gain widespread acceptance as the preferred means to transact. Afterall, not all consumers trust social networks to handle their financial information, as was proven by Twitter pulling down its Buy button in 2017 and abruptly smothering its eCommerce ambitions.
For now, social commerce constitutes less than 2% of global retail, according to TechNavio, but that could soar to US$165 billion globally by 2021. The bottomline? Businesses need to gear up to keep pace with changing expectations of social media users.
Ready to discuss how you can gain a headstart in the world of social media payments? Get in touch with one of our experts today.
About the author: Victoria Galloway is Bambora APAC's Technical Copywriter, and has been writing and producing in the payments and eCommerce space for a number of years, both in the UK and Australia