On Monday, the mobile messaging company announced a partnership with payments startup Square, saying you can now use the Snapchat app to send money much as you would one its ephemeral text messages. The app now recognizes a dollar sign typed in to the messaging field and serves up a green button for sending the money from a connected debit card. Behind the scenes, Square will store the card’s number and handle the transaction.
Messaging services are an obvious way to handle peer-to-peer payments, though Snapchat CEO Evan Spiegel told Recode that he doesn’t see his company competing with the likes of PayPal or Venmo in the suddenly red-hot payments market. At least for the moment, it doesn’t look like Snapchat is charging a fee to use what it calls Snapcash.
Still, the deal allows Snapchat to get the jump on Facebook, which seems likely to merge messaging and payments at some point down the road. And if the new Snapcash service catches on, the company could easily pivot in this direction. Such a move might be particularly attractive because the three-year-old company is just starting to figure out how to generate revenue.
Snapcash is powered by Square Cash, which Square also offers as a standalone service for sending money via an email.* Users who sign up for Snapcash are signing up for a Square Cash account. In both cases, the products are designed to pare down the payments process to as few steps as possible.
Though many options are available for sending someone else money using a smartphone, no one app has become dominant. Unlike many of those apps, however, Snapchat is already used by an enormous number of people. With millions already sending Snapchat messages every month, a nudge might get them sending money as well.