In this guest piece, Richard Harding (pictured below), director of mobile strategy at Buzinga, shares the pros and cons of jumping on the social payments bandwagon.
We’ve all taken our smartphones for granted at some point. Their ease of use means we’ve become accustomed to such a high level of instantaneous connection that we often forget to step back and appreciate how empowering they really are. Through social media, we are constantly linked to the rest of the world in real time, and have the ability to send everything from messages and photos, to videos and work documents – person to person, instantaneously.
So, it shouldn’t come as a surprise that we can soon expect sending and receiving money via our favourite social media apps.
We’ve seen the allure of social payments catch the attention of Airbnb, and Westpac is the latest business to jump on board. The major bank recently announced it will be testing Australia’s first wearable payments device and launching a new mobile chat payment service.
It’s promising to see established businesses like Westpac endorse these kinds of social payments as a response to increasing disruption in the finance sector. It’s no secret that the big four banks are struggling with customer loyalty and trust, not only because customers feel taken advantage of having to cough up hidden fees and growing interest rates, but also due to slow payment times and rigidness of transfers between financial institutions. This has left a vacuum for emerging fintechs to snatch up customers who demand a more flexible and user-friendly experience.
Enhancing customer experience by understanding what customers actually want has become a differentiator, and Westpac’s unique offering is setting it apart from the pack early.
However, jumping on the social payments bandwagon must be part of a carefully thought out strategy. Not only is expenditure a concern, but a service with no user intuition is redundant. Offering fancy wearables with which people can buy their coffee may play well in internal ‘innovation task force’ meetings, but if it’s not what your customers want, or if there is poor user experience, then you’re pay-waving goodbye to customer loyalty.
Diversifying offerings is a great way to attract new business and satisfy the growing needs of your existing customers, but is it worth the upfront investment for your business?
A seamless experience for customers
Part of the appeal of social payments is the ease with which customers can access and use their money – they can buy something in a matter of seconds. Increasingly, this sort of seamlessness will become the standard that users expect for the apps they use in their everyday mobile lives. Uber is no longer thought as a novel offering; it’s become the minimum benchmark by which users measure convenience.
The success of Facebook’s ‘Marketplace’ is a case in point. Users are able to shop amongst a large community while remaining in the Facebook app. Marketplace invites users to do more on Facebook than simply interact with existing friends and brands via their news feed. Instead, they are able to sell and shop without leaving their favourite app. It’s easy, seamless, and offers users a great way of shopping and selling.
A unique selling point
Social payments allow organisations to distinguish themselves in an increasingly competitive market. Adding social payments to an app allows businesses to grab customers’ attention and increase customer engagement, time spent in the app and user satisfaction.
Snapchat has attempted to diversify their offering by introducing ‘Snapcash’ – a service that allows users to send money to friends and followers through the app’s chat function.
By bringing novelty into play, a unique offering like this can be very effective in attracting users to an app for more than one service, as many different types of businesses look to become the one-stop shop platform their users rely on for everything, from news to social, and from shopping to banking.
Before you jump on the bandwagon, it’s important to consider that while social payments may be intriguing for many businesses, they are still a hefty financial and resourcing investment. Just like any marketing effort, you must ensure your audience is actually there before you even attempt to reach them with your service or product.
Once you’ve decided that your customers do want a social payment option, cost effectiveness must be the next most important factor to consider before integrating mobile payments into your app. Do you need to build something completely new, or can you leverage existing technology?
Take XOPO, for example. It allows customers to transfer money to their friends and followers easily without requiring bank details, and has found success by utilising existing popular social networks like Facebook. If the majority of your users already use platforms that you can develop an app for, such as Facebook or WhatsApp, this could be an easy way to solve the problem of app-fatigue and market penetration.
The future of social payments
The idea of social payments is focused on customer experience, with Apple Pay and Google Wallet leading the way with their cardless payment platforms. And with Westpac’s latest offering, the future of social payments is already hitting the mainstream.
We will find more technologies popping up all over the globe offering differentiated social payment options that businesses – from banks to retailers – can integrate into their mobile apps for a smarter and easier payment solution.