In this guest post, Massimiliano Alvisini, the regional vice president Northern Europe & Iberia at Western Union, explores the rise of social networks and messaging applications incorporating cross border payments services and covers three different aspects of social money movement.
Social network and messaging users pave the way for payment opportunity
The rise in globalisation has redefined the methods we use to communicate and digital platforms are now connecting billions of people around the world. From social networks such as Facebook and Twitter to messaging applications like WhatsApp and WeChat, we have a wide selection of social media available to connect us with friends, family and beyond. According to Statista, the international statistics portal 2016 report, there are currently 1.55 billion active Facebook users and 500 million mobile phone users. With over half of the world’s population using mobile phones and social networks, it was only a matter of time before the two would converge to offer a payment solution to the mass market. In Africa and Asia the mobile payment market has eclipsed that of traditional money transfer services in some regions and has been an important substitute where there is often limited access to traditional banking facilities. The advancement of mobile technology has created a smartphone society in many countries, with a wide offering of apps allowing us to become more accessible and more connected with our finances.
According to a 2014 MasterCard Mobile Payments Survey, the conversation on mobile payments has changed. An analysis of 19.1 million social media posts across Facebook, Instagram, Twitter and YouTube revealed that consumers are interested in “enriched experiences delivered through mobile payments, such as convenience, loyalty and rewards.” This implies that users are looking for an enhanced customer experience tailored to their preferences, with an easy-to-use interface allowing for personalised and efficient mobile transactions.
The financial institutions have a role to play
It is easy to forget the role of financial institutions in this space. However, they are not just playing the final role of facilitating the transaction but are also looking to compete with the traditional big tech players and bring their own offering to the market. India’s largest bank, Axis, has launched a co-branded app called Ping Pay allowing users to send money to each other using Facebook, Twitter, WhatsApp, email or a phone number. Additionally, Visa has partnered with Singaporean based Fastacash, who acts as an intermediary to banks to offer peer-to-peer payments to their customers across social networks.
According to the World Bank 2015, the global remittance market was worth $586 billion last year, providing a huge opportunity for financial technology companies to provide cross-border payments across social networks. Western Union has found the remittance audience to be strong and socially savvy with 65% of category users on Facebook, 30% using Skype and 9% of users on WhatsApp as a means of communicating with family and friends, according to our most recent Global Consumer Tracking Study. At Western Union, we have recognised the power of social networks and messaging apps in today’s payment landscape. For example Western Union’s WU connect platform embeds our transfer services in global messaging, social and digital networks, which we believe is important in reaching the next generation of digitally-savvy users.
The changing payment ecosystem
Recent cooperation’s including Viber and WeChat represent a natural evolution into the mobile ecosystem, enabling cross-border money transfer capabilities across social media. According to the World Bank’s Migration and Remittances Factbook 2016, more than 247 million people live outside their country of birth and the major international communication corridors seem to be driven by immigration patterns, in turn corresponding with money transfer corridors. Senders of cross-border payments typically communicate with receivers at least once a week (61%) and over one third are now using VoIP (Voice Over Internet Protocol) and messaging app platforms to do so. Our own research tells us that generally there are socially motivated reasons for cross-border money transfer such as family support or gifting (over half of category volume is for these two reasons). This behavioural motivation can often be linked to other services we use on our phones, for example a text message from a family member, a birthday reminder on Facebook or an e-invite from a friend. It’s important to understand the cognitive decisions behind money transfer in order to determine which technology and payment framework is most suitable for the money transfer service. Social networks can provide customer insights into decision-making, which enables the payment process to be more preferential and efficient.
Social payments have in a way always been on the horizon as traditional mobile wallets such as Venmo and Dwolla require users to log in with either their e-mail or Facebook account, which then connects the user to their friendship network and lays the foundation for payment exchange. A large segment of today’s smartphone users are tech-savvy millennials who are arguably impatient and looking for increased functionality with the added benefit of ease and operational efficiency. In order to create true cross-border regional reach, consumers must feel confident in the social network platforms, remittance companies and banks to provide a multi-country mobile money network. The future of payments via social networks relies on financial institutions, payment networks and mobile manufactures working closely to offer an integrated seamless service for consumers. As the modern smart phone continues to become embedded in our lives and social networks continue to advance technologically, the future of payments across social networks on mobile technology could further redefine how money moves.
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