Social payments are payment methods that incorporate aspects of social media. These kinds of payments are typically made via an app or website. Those involved in the transaction exchange usernames, phone numbers, or email addresses rather than financial information.
Learn more about social payments, including some popular examples and ways to keep these transactions as secure as possible.
What Are Social Payments?
Social payments are digital payment methods that allow people to exchange money without sharing sensitive financial information. While many social payments take place via a smartphone app, social payments can also go through non-app websites. By substituting card numbers with usernames, social payment services work aspects of social media into financial transactions.
Examples of social payment services include PayPal, Venmo, Apple Pay, and Google Wallet.
How Do Social Payments Work?
Consider that you're out for dinner with four of your best friends. After the meal, the bill comes, and you realize that none of you discussed how you would split the bill. At this point, you could ask the restaurant to split the bill for you, or you could simply take out your phone and offer to use a payment app to send money to the friend the picks up the bill.
Using an app to pay your friend is an example of social payment. You don't need your friend's bank account information to send them money, and they don't need to swipe your credit or debit card. Instead, you use the app to send them your portion of the bill as easily as you would send a direct message.
Social payments aren't just for settling dinner bills between friends. Many businesses also use them as an easy way to accept customer payments.
PayPal was among the first social payment services. It launched during the late '90s and grew during a time when online purchases were also growing. PayPal allowed people to make purchases on sites like eBay without providing their credit card information for each purchase.
These days, PayPal is no longer the only player on the block. There are several different social payment companies, and traditional banks now offer their own version of social payment services, as well. Big tech companies like Google and Apple have also introduced their own social payment systems.
Social Payments at Brick-and-Mortars
While the bulk of social payments take place digitally, some brick-and-mortar establishments incorporate aspects of social payments into their point-of-sale (POS) systems.
Some stores may accept app payments, but there are also physical POS machines designed to make social payments easier. Any POS that accepts contactless payment, for example, will allow customers to use social payment services like Apple Pay and Google Pay. PayPal also offers POS systems for businesses, allowing them to accept both social payments and traditional credit or debit card payments.
Social Payment Security
Digital security is always a concern for people trying new digital products. It's wise to be cautious, but all of the major social payment services incorporate stringent security measures.
Strong security measures only go so far. It's still your responsibility to ensure that you never give your log-in information to anyone. Only send money once you're sure that you have the correct username, email, or phone number for the payment recipient.
Enabling two-factor authorization will help protect your account from being hacked. This security measure sends a unique code through email or text message anytime you try to log into your social payment service. You can also require payment apps to trigger a security measure on your phone, such as requiring confirmation via facial recognition, thumbprint, or PIN entry.
Keep your social payment apps updated. Companies update apps regularly to fix bugs and close security loopholes. If you don't update your app, you could be leaving yourself more vulnerable to security flaws.
- Social payments are digital payment options that make it easier to pay someone without sharing sensitive financial information.
- Many social payments take place via a smartphone app, though any digital payment system could be a social payment if it allows the buyer to provide a username, email address, or phone number instead of a credit or debit card.
- Popular examples of social payments include PayPal, Cash App, Venmo, Apple Pay, and Google Pay.