Will All Messenger Apps Become Payment Apps by Default? by@Olga Kazmina

Will All Messenger Apps Become Payment Apps by Default?

ZELF researcher Olga Kazmina says money in messengers is the future of personal finance. Money in messaging apps could be a replacement for credit cards, debit, credit cards or even crypto. We will look into what makes money in messaging superior in some use cases and when they fail, what the current payment solutions for messengers are with their advantages, shortcomings and plans for development. In the 2020s it’s time to live cross-border banking makes it possible to transact to anyone in the world.
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Olga Kazmina

Researcher at ZELF

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In the last 30 years, Internet and smartphones have led to an explosion in messaging volumes by driving the cost of messages down to zero, and the speed to infinity. Messaging apps are the quintessence of this transformation: free, instant, borderless communication at the tip of your finger any time of the day.

WhatsApp, Facebook Messenger, Viber, WeChat, LINE and more have become the ubiquitous apps, each in their own region. Apart from texting, sharing media, public chats and chatbots, these platforms are becoming a payment method with varying success. In this article we’ll explore the concept of money in messengers as another payment method besides cash, debit, credit cards, digital wallets or even crypto. 

We will look into what makes money in messengers superior in some use cases and when they fail, what the current payment solutions for messengers are with their advantages, shortcomings and plans for development. Let’s go!

What’s great about money in messengers

Banks and startups started experimenting with money in messengers after Facebook announced its chatbot platform in 2016. Since then, many banks have created support chatbots on Facebook Messenger and other platforms, but failed to provide a separate user-friendly product with full-fledged banking features. But I believe it to be the future of personal finance and here is why:

1) No fees for transfers 

The main woe of banking is transaction fees. Be it cross border or local payments, a huge amount is always eaten by your bank or payment system. Messenger banking solutions reverse the order of things and give power to the users of messengers platforms just as they allowed us to exchange free messages instead of SMS. If not eliminated entirely, the fees should be minimised. 

2) Send money as quickly and easily as sending a photo or a message 

Traditional banking is clunky. At its best, you have to press a lot of buttons in the apps: login, select, confirm, confirm, confirm. It doesn’t have to be so long and you don’t have to download one more app to your phone that will track your location, transactions, contacts and so on, compromising the safety of your money.

If you want to receive money, just forward your personal link to the chat above or below. Any friend from your contact list can receive and send you money with without leaving the conversation. Ideally money in messengers should be cross-platform and not be limited with the exchange between the users of one messaging app.

3) Instant notifications 

Money needs to be under control. In messengers any operation will come to you as a message that you won’t miss. Convenient. Your account is always under your sight and you will be aware of every transaction. 

4) Text and voice instead of buttons 

Voice is the future of our interaction with technology. I believe so because according to research you can save up to 4 minutes of your time on every transaction using voice. Besides, voice UX is much more native for humans, and for fans of voice messages it’s a pleasure on its own.

Many fintech companies like Cleo or Plum have already implemented financial assistants with Natural Language Processing technology to simplify our interaction with money. This comes even naturally with the conversational nature of the messaging apps.

5) Cards are optional.

China has skipped the phase of credit cards and stepped right into the cashless future of WeChat payments (more on their case below). In Western world cards have been the fastest growing means of payment but card payments still lack the same degree of interoperability and harmonisation as can be achieved with banking in messengers.

Along with adoption of contactless payments, money in messengers could present a small addition for reducing plastic footprint in 2020s. 

6) All your friends are already there

You don’t need to ask your friends to download an app, or worse still, get another bank card. All you need is to send them a link with payment information or choose the person and put the amount of money to send. Ideally we should be able to choose whether we want to pay with card-2-card transfer or a simple p2p transfer or other payments method when we open a new transaction within the messaging app.

7) Truly international

In the 2020s it’s time to live cross-borders. Messenger banking makes it possible to transact to anyone in the world fast and for free. Your partners, clients or peers are already sit on same platforms thus you can just add transactions to your daily communications.

The competition in messenger banking landscape

As a market researcher currently working for Zelf I have a vested interest in exploring the digital payments landscape emerging in messaging applications. Players big and small are entering the area with different approaches.

While giants like Signal and Telegram had an attempt to create their own digital cash systems, Facebook is testing p2p payments in in Instagram, Messenger, WhatsApp ecosystem.

Facebook. In 2020, we will see Facebook roll out Facebook Pay and Whatsapp Pay in select countries and locations following their debut in US two years before. While it is cool to see a social giant enter the personal finance space, whatever the technology inside it is clear that payments will be limited to Facebook platforms only, while a multi-platform messenger payment solution is still not in sight. 

Sure, you can trust big tech companies with your data in terms of financial safety (although databases still get hacked from time to time). But you might be concerned given the Facebook privacy scandals to share all your transactional data – favourite places, purchases, clients, etc. – with all the numerous 3rd parties they sell data to? 

Besides, although money is transferred right away in case with Facebook Pay you still have to wait several days for a receipt . 

So, as always with tech corporations, there is stability, trust and scale on the one hand and privacy issues along with platform limitations on the other.

WeChat. While Facebook’s payment solutions are integrated into its apps as bonus features, for Chinese tech giant Tencent payments are actually a key part of WeChat messenger. 

If you go to China today, you will just not be able to pay for anything without WeChat or AliPay. Chinese have skipped the debit/credit card phase and jumped from cash-only to cashless, mobile payment only society in just 5 years.

A striking difference from sluggish Western financial and banking infrastructure. If you do not have a Chinese phone number and bank account, you’re officially not allowed to use it. Thus, foreigners are limited to cash. 

Unlike Facebook Pay where users link their current bank accounts and use their debit cards to top up the account, in WeChat you can hold money directly in the app. 

Another difference is Asian love for QR codes – they have taken the continent by storm and have become the main payment method. Unnoticed in the West, they gained popularity among Chinese smartphone users because they are cheap to create, easily spread and only require a phone with a camera. 

QR codes may be charmingly simple to use, but are also simple to hack – criminals can easily replace legitimate codes with fake ones, stealing money from your account.

Telegram. Right now, amid Telegram Open Network regulatory controversy, Telegram does not have any money transfers built in and does not process payments from users. Instead, it relies on third-party providers and developers to create payment solutions allowing users to make and accept payments via Telegram Bots. 

While not focusing on p2p payments, Telegram aims to connect bot developers in over 190 countries with various payment processors, but Telegram users can not trust 3rd parties as the developers.

Cross-platfrom solutions. As a result of big companies promoting their own platforms, at the moment there are no cross-platform and cross-border solutions for messenger money. In this sense the cryptocurrency is a promising concept but yet to be trustful and widely accepted to be a universal means of payment.

Even Facebook cryptocurrency Libra hasn't taken off despite powerful lobbyists in Zuckerberg's team. For cross-platform messenger banking yet many obstacles remain on the path familiar to other big fintechs: the rules set up by monetary authorities, countries policies and by players of international financial system.

These limitations need to be taken into account to open accounts and issue debit cards right in the messengers.

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