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Twitter may have advantage over Facebook in mobile payments

The role of social media giants Twitter and Facebook in mobile payments is expanding even as Apple Pay’s launch looms.

French bank Groupe BPCE has introduced a solution enabling account holders to tweet a payment to a friend or charity from their Twitter account. While Facebook has the larger user base, at this point it is only in the planning stages for a solution enabling users of its Messenger app to exchange money.

“While Facebook will likely make a big push for users to use the social networking platform as a peer-to-peer money transfer service, all this will do is give Facebook more data to sell to their advertisers (their real customers) and for consumers who value their privacy, this should be a major concern,” said Nathalie Reinelt, an analyst at Aite Group

“This is where Twitter might be at an advantage over Facebook, because they aren’t nearly as cannibalizing when it comes to user data,” she said.

Consumer preferences
Facebook is reportedly working on a strategy that would enable users of its Messenger app to add debit cards and PIN codes to send money.

The social media giant also recently hired David Marcus, who had been the CEO of PayPal, to head up its messaging team. This suggests that Facebook is looking at ways to bring payments to its messaging apps, which include WhatsApp as well as Messenger.

The Twitter solution has been introduced by Groupe BPCE in France, enabling account holders to transfer money through their Twitter accounts.


Facebook’s Messenger app

The Twitter payments solution is an example of how banks are building on the popularity of mobile banking to extend reach into payments.

“Banks are actively trying to enable customers to conduct transactions according to the customers’ preferences, not just the banks’,” said Peter Olynick, card and payments practice lead at Carlisle & Gallagher Consulting Group.

“We should expect to see more banks looking to partner with other companies outside of traditional banking boundaries to leverage each other’s strengths,” he said.

Commerce-related engagements
There are several reasons why social media and payments could make sense.

First of all, one of the most popular activities on mobile is engaging with social media.

Secondly, some of that engagement is already focused on research for purchases, including sharing photos of items of interest and looking for product reviews and recommendations.

Twitter is testing a “Buy” button

Giving mobile social users the ability to extend this activity enabling purchases would appear to be the logical next.

The strategy could also help Facebook and Twitter diversify their revenue streams, which are currently heavily weighted towards advertising.

Both are already working with brands to enable commerce-related engagements.

For example, Anheuser-Busch is testing two Facebook promotions through which friends can buy each other a beer using the social network, redeemable only via mobile vouchers (see story).

Last year, Twitter teamed up with Starbucks for a tweet-to-buy program integrated with the coffee chain’s popular mobile loyalty program (see story).

Both social networks are also testing “Buy” buttons, enabling users to complete an online purchase without having to leave.

Brand repositioning
Despite the potential benefits of mobile social payments, the strategy faces some potential hurdles.

Perhaps the biggest is convincing consumers to share their sensitive personal information with social media sites, which do not have the best reputation for protecting consumers’ privacy.

Twitter and Facebook will also have to work hard to recondition consumers to think of them as commerce engines, something they are not currently thought of as.

These developments from Facebook and Twitter are the latest signs that the mobile payments space is heating up, following Apple’s announcement of Apple Pay last month as well as eBay’s plan to spin-off PayPal to support its growth potential.

Apple Pay could launch as early as this week at some stories, according to reports. Apple Pay is expected to have a big impact on mobile payments given how many consumers are already iTunes users.

“Payments is a crowded space right now and tech companies seem to think that because they managed to get users to share their family pictures, political views, and social commentary, that they can also convince them to hand over access to their bank account and payment card data, which truly comes across as a solution in search of a problem,” Ms. Reinelt said. “These announcements from tech companies have a very ‘me too, me too’ ring of desperation to them, but the real test is whether they can actually put their money where their mouth is and report respectable adoption rates.

“Seemingly overnight, payments has become the ‘it’ thing in Silicon Valley, but we have yet to hear any true success stories from companies who aren’t dedicated to payments itself,” she said. “Time will tell what consumers will ultimately decide.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York