Recent numbers indicate that Facebook is losing its popularity amongst the younger generations. Despite recent concerns over privacy and a drop in teen users, the customer base of Facebook continues to increase – bolstered by growth in older users and expansion into new markets.
However, the adoption of new and convenient ways to deal with money happens faster amongst younger audiences who have less experience, and therefore not yet formed habits, when it comes to payment.
Instagram is likely to reach one billion users by the end of the year. Its mission statement is: “To strengthen relationships through shared experiences”. For many, it’s taking over as the predominant platform used to interact with friends as well as a growing number of advertisers.
It’s only logical then that its parent company, would aIso seek to trial built-in payments on this platform. TechCrunch reported last week after a reader tip off that Instagram had added a native payments feature to its app for some users. An Instagram spokesperson confirmed that a limited number of partners – like restaurants or salons – were helping them to trial the new functionality.
Instagram’s advertising revenue is growing along with its users. It’s the perfect platform for selling. Users scroll through images, see something they like and no longer have to actively navigate away from the platform to buy it. All this without getting into the platform’s referral marketing power.
This isn’t the first of the many steps of payments fragmentation that we’re only starting to really recognise as a result of open banking regulation, PSD2. The second payments service directive lets anyone with an audience and a license access accounts and enable payments for its users.
This highlights an important point that all banks need to fully get to grips with – attention is currency. Instagram is merely one example of a frequently used platform that has massive attention from its users. The frequency of use outperforms all banking apps by thousands per month. Users are already engaged in a channel, on a device that they love and use daily.
Adding payments and commerce to it makes perfect sense and further strengthens the bond between the service and its users.
Look at AliPay. On first glance, AliPay does not look like a payment service. It has chat, social media features, a marketplace, taxi services and more. But it’s a billion dollar a month payment service. The payment by itself is not the key. Rather, the services around it, the stickiness and convenience are what makes it so successful. Payments are just a commercial enabler.
Compare the above to banking services. Payments are the core and often the only feature. Banks must turn around and look at the problems that consumers are experiencing and solve them – with payments becoming the enabler not the core feature. If they don’t manage to achieve this, Instagram, for one, will make payments a commodity inside the services people already love and use daily.
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