Meanwhile, everybody outside the US is trying to figure out how it's taken so long for easy person-to-person payments to happen there.
Here in NZ, you've been able to pay directly to someone's bank account number for free for as long as I can remember, and my bank introduced payments to mobile numbers, facebook accounts, and email addresses 3 years ago. (Oh and it's totally safe to broadcast your account number to everyone, most companies have it listed on their website. No way to pull money from it through ACH without their permission).
As someone else from NZ I would like to second this. We got a US bank account for our company and I was surprised how archaic the US banking industry is.
Another thing very interesting in NZ/AU is EFTPOS. EFTPOS is like the credit card system only with no transaction costs. Any shop in NZ/AU will take it.
The original business model for EFTPOS was that the user pays a fixed charge per transaction. I think it was something like 20c originally. However, because each bank was free to charge it's customers whatever it pleased for EFTPOS, price competition very quickly reduced that cost to zero (Which to be fair is what the actual cost of a purely electronic transaction should be).
There is no reason not to pay for even the most trivial purchase with EFTPOS so I haven't carried cash around in my entire life.
The only reason everyone still uses credit cards as well is for online purchases. EFTPOS is in person only. The number on the front of the card has no ability to be used for making a payment.
I think the place where VISA is starting to get more inroads into the NZ market is with NFC. NFC is getting more prevalent, and we are also starting to see things like this turn up as well: https://www.asb.co.nz/paytag/
Even more to the point - Kenya and Tanzania have had M-Pesa (which allows payments and transfers via mobile phones) since 2007 (http://en.wikipedia.org/wiki/M-Pesa). Note that this is not necessaries smart phone stuff - just a plain 'ol mobile phone with text capabilities will do.
Also, I was visiting that region in 2006 and was struggling to add some phone credits to my phone that I had just purchased. Some random guy in the queue offered to send me credits from his phone, and I was pretty much blown away with how easy it was.
> Oh and it's totally safe to broadcast your account number to everyone, most companies have it listed on their website. No way to pull money from it through ACH without their permission
Totally second this; I'm from India. It's bit scary to know that in US "account number + routing number" is sort of secret key to the account, this is from my limited knowledge of course, but I don't think I'm far off.
And yes, account to account transfer has been around here for ages; though they were bit late to get it right now we have a whole range of options; pay to debit card, IMPS and what not.
Sometimes I wonder if banking in the so called third-world countries are is evolved than in the US, I could be wrong though.
It's primarily a regulatory problem with how the US financial system is set up and overseen by the Federal Government. It's a hyper regulated industry. Trying to do anything even slightly different in the world of moving money, banking, finance etc is simply a nightmare.
Payment innovation would have been drastically faster, were it not for the obscene regulations that are in place at both the Federal and State levels. PayPal ran into this brick wall while traveling at a high rate of speed, very early into its existence.
Same here in Brazil. Bank accounts are "push-only", though utilities companies can "pull" if I allow them to. My bank even has a slick app to send money to others using their mobile number.
Credit card fees still exist and are pricier than the US, though. All chip-and-pin so POS fraud is much lower than Card Not Present.
I think the primary challenge is convincing users that it's secure. Snapchat has a relatively poor reputation in security (whether that's deserved or not), and everyone I know just uses Venmo. Venmo has Facebook integration, so if you're Facebook friends, it's really easy to send money.
It seems like integrating into a platform that's supposed to be ethereal is a weird fit, but who knows -- maybe it'll catch on.
Even if the users of snapchat were particularly concerned with the security of this feature, they alleviated that concern in the post by stating that all of the financial security will be handled by Square which is building it's reputation of security in mobile payments.
Whats that old jwz quote: "Every program attempts to expand until it can read mail. Those programs which cannot so expand are replaced by ones which can."
I think there is a corollary too, though I cannot attribute it: "Every social media site attempts to expand until it becomes a bank. Those companies which cannot so expand are replaced by ones which can."
How old are you geezers? Do any of you actually use Snapchat/know people who use it? If you did you would know that nobody actually uses it to send nudes because if people get nude photos they would actually like to keep them because surprise surprise - there isn't much you can get done in 10 seconds. The whole sexting thing is a load of drivel concocted by the media because like any good story, it strikes fear into the heart of middle america.
The actual reason it got popular, which a lot of other people in this thread have mentioned as well, is because it was much faster than MMS because the photos were low quality(and at the time I don't think Apple had introduced iMessage), and the photos didn't stick around on your phone after they'd been sent, so it was perfect for sending silly/mundane things that don't need to be preserved.
....Because that's not possible today with current technology?
edit: I seriously don't understand how you immediately jump to that being the new functionality when sending payments today is as simple as logging into paypal or any numerous other payments sites.... Not to mention the age requirement of 18? This comment is just fear mongering.
Maybe I'm crazy (and admittedly a little old) but I like the separation of my social and financial software "zones". I know there are tremendous reasons to incorporate this directly into a social product but I just can't shake that feeling.
Am I alone in this or does everyone here on HN embrace this with arms wide open for actual use (vs experimenting or playing around with new products)?
I don't think people who desire this separation are the target audience of this update. It seems to be a pretty solid business move for both parties. Snapchat has a feature that is (at least in my experience) commonly used between friends just like their app is, and Square continues to build it's user base and trust as a mobile payment system. Win-win.
I've been using square cash for a while and I've been quite pleased with it. Now, assuming I can use square cash to send money to people with Snapcash, it'll be even easier to convince others to adopt this payment method, making it even more useful.
I think their long term objective is to make it in a separate app. Snapchat doesn't have any logs (it's against its principles) and you would want to have some kind of logs if you're sending money. But launch a product through your already successful product and make it something apart when it gets traction.
Plenty of people will feel the same way, but I suspect the proportion is much lower among people under 25. Pretty soon people will probably use software that integrates social and finanicial so often they won't even think of it as anything special.
Don't get me wrong, I don't want my online banking in Snapchat. But sending money to friends is a very different action - it's inherently public, for one.
I have been a long time user of Venmo and have tried to get a number of my friends on it but most of my friends consider entering their routing/account numbers (if they even know what those are...) into an app and waiting a couple days too much work. They even consider Square Cash too much of a hassle but I can see all of those same friends using Snapcash without issue. I consider Venmo to be the best in this space currently (But come on! Allow using debit cards to receive money already!) and I don't mind the 1-3 day delay in cashing out but I will still enter my debit card in snapchat cause at the end of the day I'm going to use the service that allows me to pay and get paid by the highest number of friends.
I never found that to be an issue getting friends to sign up for Venmo. You don't need to enter any info to accept cash. It was getting them to realize this was cash and not some magic points (because they dont know what venmo is). Snapchat should kill it here because people already understand and trust (for the most part) Snapchat and this is just a new feature - not an entirely new service to learn.
50% of snapchat users are under 18 [1]. which this video seems to clearly target (production style is fun, quirky, light hearted, even the actors are young). Yet they require a debit card and the use to be 18+. I guess they are hoping their young users stick with it for a few more years.
In fairness, the other 50% of Snapchat users is quite a large number of people.
I'm assuming their VC-backers are hoping to see traction without waiting for the underage half of the user base to grow up, and are really hoping it doesn't become the fun, friction-free and ephemeral way for that demographic to send their friends funds from their parents' bank account.
I actually thought the video was a bit too old for their primary users. The whole glitz and glam of a over produced Vegas style show probably doesn't connect well with 18 year olds. They also had a large abacus, do 18 year olds even know what an abacus is?
Square loses something like 25 cents per Square Cash transaction [1], and now they want more transactions? I wonder if Snapchat is paying those fees, and if so how they think they're going to make that money back from their users.
Yeah, it's odd. Competitors like Venmo rely on not putting the money directly into the recipients bank account until they cash out. So they can make a little interest money off that directly, and more importantly, any transactions that come off of someone's balance are free since they are just moving money around inside their computers.
The economics of this are fascinating. Square loses money on every Square cash transaction, at least 22 cents to be exact.[1]
The potential justification for that is to promote the Square brand, get cards registered, and maybe hopefully drive usage of other (future) premium products/features that generate actual revenue. So, basically a marketing expense.
Here they're wrapping it in another company's app and brand, Snapchat.
Which still gets cards registered but, presumably, Snapcash users are gonna typically come back through Snapchat to do more transactions, letting Snapchat tax any future premium revenue.
Really weird and.. shall I say it.. bubbly..(shhhhhhhhhh!!!)
Germany – and the whole SEPA (Eurozone + Denmark + Sweden + Norway + Britain + Switzerland) uses the same system.
It’s so fucking convenient to just open the app, enter either the bank account number or just select a contact from a list and be able to send money instantly.
Ye, MobilePay is pretty solid among people in Denmark, and there's even the competitor (competitor is a nice word, considering i've never heard of anyone with it) Swipp.
Danske Bank has offers that in Finland too, but I've never heard of anyone actually using it..
While we're talking about Danske Bank, here's a "funny" story about it: After Danske Bank bought out a Finnish bank called Sampo Pankki, they switched their online banking application to use Java. And it didn't work properly on Linux. I actually switched my bank because of that bs.
As much as I like competition, I hate entering my bank info into a lot of different places. I've been successfully ignoring venmo (in favor of paypal) for a while for the sole reason I don't want my info on more sites than necessary.
Seems like a lot of companies are trying to solve the "I hate entering my bank info into a lot of different places" problem, but it is only making the problem worse when half of my friends use one system and the other half use the other.
Someone needs to come up with a meta solution to sending money that doesn't involve me giving more companies direct access to my bank info.
The guys at Snapchat seem to be completely crazy. But maybe that's exactly what it takes to succeed in the really weird business of replacing cash payments. No matter what, I'm still lying on the floor laughing. Send money easy, it's all so breezy, Snapchat with Snapcash. Chat any cash amount - straight from your bank account! Send money easy, it's fast and greasy! Snapcash Snapcash Snapcash in Snapchat!
Installed it, none of my coworkers can figure out how to actually send cash, or send anything. Right now it looks like a 'take a picture and add a dollar amount' photo app, except you can't export, can't send, can't do anything but take more app-only picture-expenditure receipts.
e: Looks like it's not actually snapcash -- but another so-named app. Looks like someone is getting a ton of unintentional downloads today.
I use a lot of different methods to send money to friends. Venmo is by far the easiest, but I still commonly have to ask people to sign up for Venmo.
Snapchat has tons of users. If this is just a new feature built-in, it's pretty easy to tell someone to link their debit card vs. signing up for Venmo and linking their bank account. Plus, the ability to send friends money w/ a picture attachment is kind of fun I guess.
In the UK one of the banks (Barclays) has setup a mobile app PingIt for this same concept.
Someone sent me money with it, had to sign up to receive it. Due to what I imagine is UK banking laws, a large amount of id/proof of address was required to fully register my account, so that I could also send money.
To verify my address they send a snail mail letter out with a verification code, being a student away at university (moving house every 12 months), I used my parents address. 3 weeks later when I was back home I attempted to verify my address, only to find the code had expired (despite it never mentioning anywhere that it must be done within x days). After rejecting the code, the app appeared to wipe all data regarding my account, now asking me to sign up from the beginning again.
This experience has really ruined my hopes, for a system I was already reluctant to enter.
Unless they have changed something under the hood I would NOT trust this service due to the insecure nature of the Snapchat API.
There are many 3rd-party API clients for Snapchat that can access all parts of the API (send message, send picture, get picture, etc.). I even wrote one for Java. They are easily accessed from a console with a username/password combo.
Considering how many password dumps are out there, it's reasonable to assume that many people have had their Snapchat login credentials compromised. Now I can use that info, log in from a command line, and start "snapping" myself money.
I know that getting someone's username/password is a pretty high barrier, but not high enough for the ability to send money instantly. Maybe there are more security details, but I wouldn't put my info into this just yet.
I suspect that the impetus behind this wasn't Snapchat thinking "Hey, we should add a payments feature!", so much as some Square bizdev guy convincing Snapchat to add payments.
Payments is a highly competitive and commoditised market, which means that margins are under intense pressure (what I like to call a "Race to Zero"). The industry will "consolidate" around a few winners, and those winners will be the companies that successfully execute on the strategy of "Reduce the incremental cost per transaction to as close to zero as possible, and pump up the volume".
Everyone is desperate for volume, so every payments company is desperately trying to strike up as many partnerships like this as they can. Any app or website that has lots of users is a prime target.
[+] [-] jordanthoms|11 years ago|reply
Here in NZ, you've been able to pay directly to someone's bank account number for free for as long as I can remember, and my bank introduced payments to mobile numbers, facebook accounts, and email addresses 3 years ago. (Oh and it's totally safe to broadcast your account number to everyone, most companies have it listed on their website. No way to pull money from it through ACH without their permission).
[+] [-] Negitivefrags|11 years ago|reply
Another thing very interesting in NZ/AU is EFTPOS. EFTPOS is like the credit card system only with no transaction costs. Any shop in NZ/AU will take it.
The original business model for EFTPOS was that the user pays a fixed charge per transaction. I think it was something like 20c originally. However, because each bank was free to charge it's customers whatever it pleased for EFTPOS, price competition very quickly reduced that cost to zero (Which to be fair is what the actual cost of a purely electronic transaction should be).
There is no reason not to pay for even the most trivial purchase with EFTPOS so I haven't carried cash around in my entire life.
The only reason everyone still uses credit cards as well is for online purchases. EFTPOS is in person only. The number on the front of the card has no ability to be used for making a payment.
I think the place where VISA is starting to get more inroads into the NZ market is with NFC. NFC is getting more prevalent, and we are also starting to see things like this turn up as well: https://www.asb.co.nz/paytag/
[+] [-] JonoBB|11 years ago|reply
Also, I was visiting that region in 2006 and was struggling to add some phone credits to my phone that I had just purchased. Some random guy in the queue offered to send me credits from his phone, and I was pretty much blown away with how easy it was.
[+] [-] vishnugupta|11 years ago|reply
Totally second this; I'm from India. It's bit scary to know that in US "account number + routing number" is sort of secret key to the account, this is from my limited knowledge of course, but I don't think I'm far off.
And yes, account to account transfer has been around here for ages; though they were bit late to get it right now we have a whole range of options; pay to debit card, IMPS and what not.
Sometimes I wonder if banking in the so called third-world countries are is evolved than in the US, I could be wrong though.
[+] [-] adventured|11 years ago|reply
Payment innovation would have been drastically faster, were it not for the obscene regulations that are in place at both the Federal and State levels. PayPal ran into this brick wall while traveling at a high rate of speed, very early into its existence.
[+] [-] tmcz26|11 years ago|reply
Credit card fees still exist and are pricier than the US, though. All chip-and-pin so POS fraud is much lower than Card Not Present.
[+] [-] david_shaw|11 years ago|reply
It seems like integrating into a platform that's supposed to be ethereal is a weird fit, but who knows -- maybe it'll catch on.
[+] [-] pencilo|11 years ago|reply
Lucky for Snapchat their users and potential investors don't care about security in the slightest.
[+] [-] free2rhyme214|11 years ago|reply
[+] [-] juanplusjuan|11 years ago|reply
http://techcrunch.com/2014/11/04/dasher-teams-up-with-venmo-...
At least Dasher has a solid team behind it (former director of mobile at Gilt et al). Not sure how I feel about Snapchat given their security record.
[+] [-] Vraxx|11 years ago|reply
[+] [-] a1a|11 years ago|reply
http://www.wired.com/2014/10/the-snappening-is-not-your-faul...
http://www.foxnews.com/tech/2013/12/27/snapchat-ignored-secu...
http://gibsonsec.org/snapchat/index.html
[+] [-] freshfey|11 years ago|reply
[+] [-] jvm|11 years ago|reply
[+] [-] Balgair|11 years ago|reply
I think there is a corollary too, though I cannot attribute it: "Every social media site attempts to expand until it becomes a bank. Those companies which cannot so expand are replaced by ones which can."
[+] [-] otterley|11 years ago|reply
[+] [-] no_future|11 years ago|reply
The actual reason it got popular, which a lot of other people in this thread have mentioned as well, is because it was much faster than MMS because the photos were low quality(and at the time I don't think Apple had introduced iMessage), and the photos didn't stick around on your phone after they'd been sent, so it was perfect for sending silly/mundane things that don't need to be preserved.
[+] [-] crazypyro|11 years ago|reply
edit: I seriously don't understand how you immediately jump to that being the new functionality when sending payments today is as simple as logging into paypal or any numerous other payments sites.... Not to mention the age requirement of 18? This comment is just fear mongering.
[+] [-] jfernandez|11 years ago|reply
Am I alone in this or does everyone here on HN embrace this with arms wide open for actual use (vs experimenting or playing around with new products)?
[+] [-] Vraxx|11 years ago|reply
I've been using square cash for a while and I've been quite pleased with it. Now, assuming I can use square cash to send money to people with Snapcash, it'll be even easier to convince others to adopt this payment method, making it even more useful.
[+] [-] baby|11 years ago|reply
[+] [-] dcre|11 years ago|reply
[+] [-] untog|11 years ago|reply
Don't get me wrong, I don't want my online banking in Snapchat. But sending money to friends is a very different action - it's inherently public, for one.
[+] [-] joshstrange|11 years ago|reply
[+] [-] kevando|11 years ago|reply
[+] [-] dkyc|11 years ago|reply
[+] [-] ndomin|11 years ago|reply
[1] http://www.statista.com/statistics/315398/snapchat-user-age-...
[+] [-] notahacker|11 years ago|reply
I'm assuming their VC-backers are hoping to see traction without waiting for the underage half of the user base to grow up, and are really hoping it doesn't become the fun, friction-free and ephemeral way for that demographic to send their friends funds from their parents' bank account.
[+] [-] derwiki|11 years ago|reply
[+] [-] giarc|11 years ago|reply
[+] [-] jnks|11 years ago|reply
[1] http://qz.com/248572/squares-search-for-a-viable-business-mo...
[+] [-] smackfu|11 years ago|reply
[+] [-] jpalacios|11 years ago|reply
[+] [-] abalone|11 years ago|reply
The potential justification for that is to promote the Square brand, get cards registered, and maybe hopefully drive usage of other (future) premium products/features that generate actual revenue. So, basically a marketing expense.
Here they're wrapping it in another company's app and brand, Snapchat.
Which still gets cards registered but, presumably, Snapcash users are gonna typically come back through Snapchat to do more transactions, letting Snapchat tax any future premium revenue.
Really weird and.. shall I say it.. bubbly..(shhhhhhhhhh!!!)
[1] Visa debit interchange is $0.21 + 0.05% http://usa.visa.com/download/merchants/visa-usa-interchange-...
[+] [-] MrJagil|11 years ago|reply
Snapcash seems to be the first app that approaches what we've had for a while now: http://danskebank.dk/en-dk/personal/ways-to-bank/pages/mobil...
[1]Except for Japan and all their NFC stuff... [2]http://en.wikipedia.org/wiki/NemID has been WILDLY debated though.
[+] [-] kuschku|11 years ago|reply
It’s so fucking convenient to just open the app, enter either the bank account number or just select a contact from a list and be able to send money instantly.
[+] [-] Systemic33|11 years ago|reply
[+] [-] nawitus|11 years ago|reply
While we're talking about Danske Bank, here's a "funny" story about it: After Danske Bank bought out a Finnish bank called Sampo Pankki, they switched their online banking application to use Java. And it didn't work properly on Linux. I actually switched my bank because of that bs.
[+] [-] angryasian|11 years ago|reply
[+] [-] edkennedy|11 years ago|reply
[+] [-] skizm|11 years ago|reply
Seems like a lot of companies are trying to solve the "I hate entering my bank info into a lot of different places" problem, but it is only making the problem worse when half of my friends use one system and the other half use the other.
Someone needs to come up with a meta solution to sending money that doesn't involve me giving more companies direct access to my bank info.
(cue crypto-currency advocates)
[+] [-] cylinder|11 years ago|reply
[+] [-] dkyc|11 years ago|reply
[+] [-] mmanfrin|11 years ago|reply
e: Looks like it's not actually snapcash -- but another so-named app. Looks like someone is getting a ton of unintentional downloads today.
[+] [-] arnorhs|11 years ago|reply
You click it and put in your payment info before you can use the feature.
I'm on the Android app though, I heard from coworkers that the iOS one doesn't have it yet.
[+] [-] kin|11 years ago|reply
Snapchat has tons of users. If this is just a new feature built-in, it's pretty easy to tell someone to link their debit card vs. signing up for Venmo and linking their bank account. Plus, the ability to send friends money w/ a picture attachment is kind of fun I guess.
[+] [-] minimaxir|11 years ago|reply
That's a pretty fair fight.
[+] [-] Robadob|11 years ago|reply
Someone sent me money with it, had to sign up to receive it. Due to what I imagine is UK banking laws, a large amount of id/proof of address was required to fully register my account, so that I could also send money.
To verify my address they send a snail mail letter out with a verification code, being a student away at university (moving house every 12 months), I used my parents address. 3 weeks later when I was back home I attempted to verify my address, only to find the code had expired (despite it never mentioning anywhere that it must be done within x days). After rejecting the code, the app appeared to wipe all data regarding my account, now asking me to sign up from the beginning again.
This experience has really ruined my hopes, for a system I was already reluctant to enter.
[+] [-] habosa|11 years ago|reply
There are many 3rd-party API clients for Snapchat that can access all parts of the API (send message, send picture, get picture, etc.). I even wrote one for Java. They are easily accessed from a console with a username/password combo.
Considering how many password dumps are out there, it's reasonable to assume that many people have had their Snapchat login credentials compromised. Now I can use that info, log in from a command line, and start "snapping" myself money.
I know that getting someone's username/password is a pretty high barrier, but not high enough for the ability to send money instantly. Maybe there are more security details, but I wouldn't put my info into this just yet.
[+] [-] jackgavigan|11 years ago|reply
Payments is a highly competitive and commoditised market, which means that margins are under intense pressure (what I like to call a "Race to Zero"). The industry will "consolidate" around a few winners, and those winners will be the companies that successfully execute on the strategy of "Reduce the incremental cost per transaction to as close to zero as possible, and pump up the volume".
Everyone is desperate for volume, so every payments company is desperately trying to strike up as many partnerships like this as they can. Any app or website that has lots of users is a prime target.