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LAST NIGHT, SNAPCHAT unveiled a new feature called Snapcash which will allow users to transfer payments from one user to another.
Partnering with Square, a mobile payments service that is only based in the US, the service allows you to send cash by typing in an amount ($11.20), and hit the send button. It will recognise that you want to send cash once you type in the currency sign meaning you don’t have to do anything else.
The service is available to those in the US who have a debit card and are over 18. No financial information will be saved on its servers, instead it will be handled by Square.
In terms of implementation, it looks fast and smooth and requires no extra effort from the user, and considering the level of engagement it gets – 400 million snaps are sent every day – it’s going to be picked up very quickly.
But looking beyond the idea – and the obvious security concerns surrounding Snapchat despite Square’s involvement - there are a few things to take note of.
‘Seeing what sticks’
The first problem is Snapchat’s demographics. It’s safe to say that the majority of them are teenagers, over 50% of its users are aged between 13 to 17, with the main demographic being 13 to 25 year olds.
To be more specific, that means half of its user base is unlikely to have disposable income even if it didn’t have the minimum age requirement.
The other issue is that Square isn’t available outside the US. Since there is a sizable portion of users based internationally, it means that many won’t be able to use this service initially unless Square expands which doesn’t look like it will be happening in the short-term anyway.
On a broader level, it doesn’t feel like that Snapchat knows exactly how it’s going to make money. Less than a month ago, it said that it would be introducing advertisements on its service and put it in rather blunt (or refreshing depending on your perspective) terms.
Understandably, a lot of folks want to know why we’re introducing advertisements to our service. The answer is probably unsurprising – we need to make money. Advertising allows us to support our service while delivering neat content to Snapchatters. We promise that we’ll use the money we make to continue to surprise the Snapchat community with more terrific products – that’s what we love to do!
While it’s honest, it’s not the only revenue product it’s looking to introduce. It’s also working on another feature called Discover, a section within the app that will serve articles, music and videos created by companies like Buzzfeed, CNN, the Daily Mail, ESPN and Time to name a few.
And now you have SnapCash, which has the potential to generate revenue. That’s three different products that will help it generate revenue, and if you include its live events feature (which it could also easily monetise) you potentially have four.
While Snapchat isn’t hampered by having to impress shareholders (in itself a massive advantage), there is a feeling that it’s throwing numerous ideas to the wall and seeing what sticks. While these features appear to have been thought through, it unlikely that SnapCash will be a major source of revenue for the app – in the short-term at least.
Overall, SnapCash is a nice idea that won’t pay off (pun not intended) until much further down the line. But for now, it’s experimenting as much as possible to see what works and when you’re as popular as Snapchat, who can blame them?
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