Snapchat, the social photo sharing service popular with teenagers, is partnering with mobile payments provider Square to launch Snapcash, which allows users to transfer funds by sending them a chat message containing a dollar sign and an amount.
“We set out to make payments faster and more fun, but we also know that security is essential when you’re dealing with money,” an announcement by Snapchat read. “Square has a ton of experience in this area and our teams have been hard at work to make Snapcash a great experience for everyone,”
However, the service will, at least initially, be limited to Snapchat users in the US aged 18 and over. They can use Snapcash to enter their debit card payment information securely and message their friends a dollar amount to be directly deposited into the recipient’s bank account. None of a user’s personal financial information will be stored on Snapchat’s servers.
Snapcash is expected to build on Square’s own money-sending service, Square Cash, which launched last year. While Square charges business owners who accept payments through its Square Register platform a 2.75% charge on each card swipe. Square Cash, which is closer to a digital wallet than a company cash register, is free to use.
Snapcash will be competing with eBay, owner of market leader PayPal and Venmo, as well as Google, which added a payments feature to Gmail earlier this year. Social network Facebook has indicated that it may also offer a peer-to-peer (P2P) payments service.
Last year Snapchat’s chief executive (CEO), Evan Spiegel, turned down a US$3bn bid approach from Facebook, which led to analysts commenting that the service was unlikely to produce significant revenue opportunities. However, the move into the payments market follows Snapchat embarking on a strategy earlier this year to attract advertisers.
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