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Social media payments friend or foe

Social media, like any other innovation, is likely to go through a refinement period, which seems like a never-ending process of updates and improvements. Despite its substantial list of pros and cons, social media sites and apps have been here for more than a decade and its footprint in today’s society is both profound and undeniable.  

The social media technology pioneers that have changed how we socially interact, have moved the bar again, by implementing a payment gateway within the social media ecosystem.  It has now changed how we may make payments to our friends, family and associates. If you thought that social media technology was a big disrupter to our social interactions, think about how social media payments can disrupt the payments business.  One might ponder if social media payments can be the catalyst for a cashless society one day.

Social media platforms have all the right ingredients needed for having a strong payment platform, it can reach across distant and remote locations, a huge consumer base that increases exponentially, ease of use with far better customized user interface than other mobile or web applications, social cohesion across the consumers that can easily initiate a channel of communication.

Despite all these benefits, the adoption of social media payments is considerably lower than expected, when compared to the adoption of other recent payment trends, such as real time payments and mobile payments. PayPal first popularized the trend, and other companies have since hatched their own versions, including Apple Pay, Twitter Buy, Google Wallet, WhatsApp Pay, Venom, Snapcash.

Facebook, who owns WhatsApp, a social media messenger app, with a user base of 200 million and growing, could prove to be a full-fledged social media payment platform. Given WhatsApp’s platform: broad set of payment streams, reinforcement of business opportunities via virtual offices and direct sales, ability to personalize selling opportunities based on consumer data, and quicker payment via the right consumer footprint, the use case of social media payments is vast.

Considering the massive database of users that social media possesses, and the payment capabilities readily available today via technology, it made perfect sense to bring the two together…right?

So, what are some of the challenges of social media payments you might ask… Cybersecurity?

If the systems are compromised, hackers can potentially access the bank information for every user.  It is easy to manipulate the payments on the app, all one needs is access to the mobile device with the social media app logged in. The case is similar for mobile banking, but in mobile banking the app session logs out after non usage (for a defined time interval), which is not the same in the case of social media payments. Your phone’s security features will be more important than ever, as social media payment apps will require PIN and Biometrics for authorization and authentication purposes to access your social media apps and it’s payments functions.

So, should you view social media payment as a friend or a foe?  If social media payments, like any other innovation, goes through its refinement period related to cybersecurity.  We can then expect that one day social media payments will be considered a friend to most, and consequently, drive growth of social payments.  

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Comments: (4)

Melvin Haskins
Melvin Haskins - Haston International Limited - 03 July, 2020, 09:23Be the first to give this comment the thumbs up 0 likes

Customers of banks and financial institutions are protected by law. Until the same framework is in place with social media companies, then they should not be allowed to enter the market.

John Burgos
John Burgos - Mindgate Solutions | www.mindgate.us - Boston, Massachusetts 09 July, 2020, 14:48Be the first to give this comment the thumbs up 0 likes

Hi Melvin,

As a consumer I can appreciate your point of view, we should always strive to protect our consumers. Unfortunately, technological innovation tends to move so fast, it’s hard for legislation to keep up. As an example the internet has been around for more than a decade and legislation still hasn’t caught up. Imagine how life would be without the Internet. This means that the onus initially should be on the solution providers to keep consumers safe, until legislation arrives. Social media payments are already live in other countries without legislation. Zelle payments today operate in the US without any new legislation put in place. Thank you for your point of view and feedback it’s through these type of exchanges that we will ensure we provide solutions that benefit everyone!

 

Melvin Haskins
Melvin Haskins - Haston International Limited - 09 July, 2020, 15:53Be the first to give this comment the thumbs up 0 likes

In the current environment I would not trust any of the social media companies to resolve payment issues. They are unable or unwilling to resolve the many issues surrounding their activities now, so why would I trust them when anything goes wrong with my financial activities?. I do not doubt that they have the capacitiy to run financial activities for consumers. It is when things go wrong that the real test is applied. I can resolve issues with my bank readily and easily. I remain very doubtful that I could resolve issues related to my financial activities with a social media company with the same ease.

John Burgos
John Burgos - Mindgate Solutions | www.mindgate.us - Boston, Massachusetts 09 July, 2020, 19:25Be the first to give this comment the thumbs up 0 likes

Hi Melvin,

For clarity, when I speak of social media payments, I am referring to companies like WeChat, WhatsApp and others like it. I am not aware of any consumer payment-based issues thus far on these providers. Other points worth noting is that these social media providers do not work in a vacuum when it comes to payments, for example WhatsApp Pay in India works with UPI, which is the country’s mobile payment platform for banks as well. There are currently plenty of safeguards and consumer protection laws in UPI platform. Another example, is WeChat Pay in China, whereby they implement a wallet-based solution that can leverage bank accounts or credit card rails and it leverage those existing consumer protection laws.  Thus, it’s important to understand how the social media payment provider is providing it’s service to ensure you, as a consumer, are satisfactorily protected. Again, I would like to thank you for your point of view, as it help bring light to a subject that is often misunderstood.

John Burgos

John Burgos

Vice President Business Development – US & Canada

Mindgate Solutions | www.mindgate.us

Member since

25 Feb

Location

Boston, Massachusetts

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This post is from a series of posts in the group:

Social Banks

Social Banks is a group that aims to discuss trends and debate as the financial services take their first steps into social media. Twitter, Facebook, LinkedIn etc..debate all here.


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