What Is Social Payment?
Social payment is the use of social media to transfer money to another person or business. The trend was first popularized by PayPal, and other companies have since hatched their own versions, including Venmo, Snapcash, Google Wallet, Apple Pay, and Twitter Buy.
Social payment is a useful tool for not only individuals but also businesses, which can either use existing services or create their own proprietary apps.
- A social payment is a payment made between two people without the trading of cash or bank details.
- The most popular forms of social payment are apps like Venmo, Paypal, and Apple Pay.
- Social payments can be utilized between two friends or can be used for transactions either in-store or online.
Understanding Social Payment
Social payment services link directly to the user's bank account or debit/credit card information and can take the form of a website or an app. They draw money from the account when the user wants to make a payment and deposit money into the account when the user receives a payment.
Benefits of Social Payment
Social payment makes exchanging money as simple as clicking a button, and the money is often transferred immediately or within a day. The service makes it easy for a person to pay someone back. For example, if two people go out to eat, one person can pick up the check and the other can pay the other person immediately.
This is an example of peer-to-peer, or P2P payment, and common services include PayPal, Venmo, and Square Cash. A person connects with "friends" through the service and can easily select a person, type in an amount, and either pay or charge that person accordingly.
Businesses also capitalize on the social payment trend. Apple Pay allows a person to load their card information onto their phone and pay by scanning the phone or Apple Watch instead of a physical card. People aren't at risk of losing a card if they don't carry one with them.
Social Payment via smartphones contains the added security of not carrying around valuable bank access cards like debit cards or credit cards with ATM withdrawal capabilities.
Many stores now offer options at their registers that allow customers to scan a phone instead of using a physical card or cash.
Businesses can also create their own apps. For example, the Starbucks app allows a user to load money onto a virtual gift card, which can be scanned at the register. Banks often have their own versions of social payment, allowing a user to send money directly to another user's bank account.
Disadvantages of Social Payment
As technology advances and the opportunity to exchange money online becomes easier, hacking is also growing more advanced. It's imperative for social payment services to maintain the highest cybersecurity standards: If their systems are compromised, hackers can access the bank information for every user.
Also, if a person's phone is accessed by someone else, and if the phone doesn't have a password or is already logged in to the social payment app, the person can manipulate the payments on the app.
For this reason, many people choose to avoid using social payments despite the fact that they are generally safe. It's wise to use extra security on your phone if it's connected to a social payment app by installing a PIN on the phone and logging out of the app when it's not in use.