Snapchat ties up with Square on Snapcash to launch payments service
19 November 2014
Messaging service Snapchat is partnering with payments company Square on Snapcash, which would allow users to quickly send money to friends or other users.
''Now there is one more way to send money to friends, Snapchat,'' USA Today reported.
The payments would be processed by Square and once users added a debit card account, they could start sending and receiving money by swiping into chat, typing a dollar sign and amount and hitting the green button to send. The payment service is only available in the US.
Square hosted a payments app, Square Cash, which essentially performed the same task: allowing users to quick pay their friends via smart phone or tablet. Similar services were offered by other services such as PayPal and Venmo.
The service launched in September 2011, had become one of the hottest mobile apps available. Though the company had not disclosed user numbers, according to a report from The Wall Street Journal, in August the service topped 100 million monthly users.
Snapchat already counted 100 million monthly active users, mostly tech-savvy people in their twenties who grew up with smart phones, expect instant gratification and trust the internet to safeguard their personal and financial data, Marketwatch reported.
The virtually seamless service allows users to quickly upload their debit cards and make payments to their peers by simply typing a dollar sign and payment amount in the chat box. Square, partially backed by Goldman Sachs has a $6 billion valuation.
However, according to Siva Narendra of mobile payments company Tyfone, users would bail immediately if Snapcash experienced a breach or regulatory hiccup.
He also questioned whether Snapchat had the resources to prevent the use of the app for money laundering. Several Twitter questioned the app's security and visualised a host of potential illegal uses for the app, such as trading money for nude photos.
The security angle that had come up was no surprise in the backdrop of Snapchat recent security breach and reported the theft of tens of thousands of supposedly ''vanished'' messages.
According to Trip Chowdhry, an analyst at Global Equities Research, the app lacked a ''secured element.'' The company's view was that Snapchat mobile payment was dead-on-departure (DoD), he added.