Snapchat is now letting you send cash through its app with a new feature called, fittingly enough, Snapcash. Your first instinct might be to take your debit card and run far, far away from an app that has been the target of high-profile hacks--that's understandable. But Snapchat's new Venmo-like feature is powered by a name people actually trust: Square.
Square handles the back-end details of Snapcash, including debit card number storage. No financial information will be kept on Snapchat's servers, which have fallen prey to attacks in the past.
You don't have to install another mobile payments app to send money through Snapchat, which will appeal to the app's demographic: teens. The promotional video features two kids picking out a gift for their mom--the son is going to pay, and the daughter is using Snapcash to send over money. She types in a dollar amount and hits send. It's incredibly basic, but effective. The key is using the $ sign to trigger the transaction. Some fine print: You have to be 18 or older to use the feature, and it's only compatible with Visa and MasterCard debit cards at launch.
Why this matters: Snapchat isn't trying to compete with established mobile payment apps like Venmo and Square Cash. Working with Square to make Snapcash possible is evidence that Snapchat isn't pivoting toward payments, and the deal is positive exposure for Square as mobile payments remain a buzzy topic (thanks to Apple Pay). There was concern that Apple Pay would detract from Square's popular Reader, which lets small businesses process credit and debit card transactions without a lot of fuss. Square CEO Jack Dorsey said Square would work with Apple Pay, and Snapcash is evidence that the company might be diversifying into other types of partnerships as a way to stay relevant.
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