For all of you Snapchat users, I’m sure you received a snap from the creators of the app informing you about their new direction for the app called Snapcash. This is the exciting new opportunity to send cash to your friends and have it disappear in 10 seconds!! Not actually, but thats what I thought when I heard of it first.
Snapchat is teaming up with Square, the company who created the mobile credit/debit payment accessory for Apple devices, to offer a payment option through the Snapchat app. Snapcash will allow users to send payments from their account to their friends as a substitute for cash. The advertisement for this new feature showed two friends in a store who wanted to split the cost of something, and one didn’t have cash on them, so she was able to pay her friend for the portion that she owed on the spot with Snapcash. This use does seem very convenient, and could become popular for splitting up things like gas money, groceries, or restaurant tabs. I think these types of transactions could become popular options for young people.
The problem that I think could arise with Snapcash are the unforeseen uses. This might be seen as an opportunity for those who would like to purchase illegal items. I keep thinking of crime movies where the cops want to get the bad guys with the product and the money in the same place. Whether this is applicable or not to real situations, it seems like it will make these purchases more convenient for both parties. The question I have is how anonymous will these payments be? If they will be easily traced back to a person, it might dissuade this type of use. I began thinking of Bitcoin, and how its anonymity has made it an attractive option for illegal purchases.
Either way, I still think it offers an attractive alternative for cash, and will be interesting to see how its use progresses. For me, it will really depend on the reliability/safety of using it, and what the markup they will be charging for using this feature. I have yet to see what they will charge per transaction when you send your friends money. I know that Square charges a markup, so I would assume that Snapchat will also have to charge a per transaction fee for the use of Snapcash. There is also the question of whether credit card companies will attempt to get in on the action. Ebay launched a similar feature to Snapcash recently called Venmo, but it is not a major profit center for them as of yet. I think Snapchat will keep transaction fees for Snapcash as low as they can in the hope of growing their brand, rather than viewing it as a profit center. I think that for Apps like this that are free to download, it is so valuable to increase the usage of their App in order to increase its market value. In August, their App was valued at $10 Billion. If Snapcash takes off in usage this number could grow significantly.
If they are teaming up with Square, which syncs with you bank account and credit/debit cards, then there will be no anonymity at all. All bank account and card transactions are traceable by law.