What is a Social Payment?
We’ve all been there. Sitting in a restaurant with a bunch of our friends and all of us only having credit cards or debit cards to pay our bill. A lot of restaurants are good at “breaking up” the check and giving each individual at the table their own bill. Even if a restaurant is willing and able to do this sometimes it takes a long time. And most people don’t want to sit around and wait.
Social payments are set up to help solve this problem, and these services are becoming more and more mainstream.
Social payments typically take one of two forms. They are either ways to transfer money between people easily and electronically or to buy goods and services with a single click – usually online.
PayPal really pioneered this field, allowing people to both make purchases and transfer money quickly and easily – without having to dig out their wallets and enter in credit card numbers, write checks or go to the bank for cash.
But PayPal is no longer the only player on the block. There are several different social payment companies as well as traditional banks now offering social payment services.
Who is Offering Social Payment?
Google Wallet, Twitter Buy, Snapcash, Amazon Pay and Apple Pay are all big Internet companies developing social payment systems. All of these platforms started out as something else but are starting to integrate social payment into their platforms because they can see where the trend is going.
PayPal and Venmo (owned by PayPal), as well as the major credit card processor Stripe, also have social payment features. Major banks and credit card brands are also starting to adopt social payment features into their systems as well.
With the way the trend is going, I expect to see more and more financial institutions launching and testing different social payment solutions to make transferring digital currency easier and more convenient.
Are Social Payments Only Accepted Online?
You can easily find places that take Google Wallet, Amazon Pay, Apple Pay, and PayPal on the internet, but can you use these services to pay for things in the brick-and-mortar world?
The answer is sometimes. There are stores that take these types of payments in the real world, and we’re seeing more and more options at registers that allow the scanning of a phone to take payment. Sometimes this is set up through a traditional credit card and sometimes it’s set up through social payments.
Right now, we’re in a development stage of this technology. So, not all stores take payments like this, and even when they do they don’t always work with all of the types of payments made on the market. It’s wise at this point to carry cash or a traditional credit card as well to make sure you are covered.
What are the Dangers a Social Payment?
With more and more different technologies allowing money exchange to happen digitally through peer-to-peer services and through direct payment merchants, hackers are becoming more interested in the “opportunity” to steal from people.
Digital security is always an issue with digital currency, so it’s important that companies that offer social payments have topline security features, which the ones listed above do.
Consumers who use their phones for social payments also should have biometric or password-protected phones that make getting into their social payment features more difficult for casual thieves.
That being said, social payments are generally safe and are less risky than carrying cash, and many payment and security experts claim that digital payment technology is more secure than using traditional credit cards.
One downside right now is if you store your money in the form a digital wallet, you won't collect any type of savings interest on the account.
What’s the Future for Social Payment?
No one can predict the future with 100 percent accuracy, but social payment seems to be becoming more and more popular. My guess is that we will eventually see two or three social payment companies rise to the top of the heap, much like MasterCard, Visa and American Express are the top credit card companies.
Right now, the technology is still pretty new and is not always compatible across platforms. We should see more compatibility develop over the next several years as the technology matures.
Social payment solves one of the most vexing problems of digital currency over cash––the ability to transfer funds from person-to-person easily and securely. I expect to see the industry grow over future years.