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Snapcash allows for peer-to-peer payments that are processed by Square
For a long time it seemed like Snapchat was a company that was racking up mounds of cash, and valuation, without any real sign of how it would actually make money, and no plans for monetization. In the last few months, though, the company is stepping up its revenue efforts in a big way, first introducing advertisements for the first time and now lining another big potential revenue stream.
Snapchat has teamed up with Square to launch Snapcash, which will allow free person-to-person payments in-app, it was revealed in a blog post on Tuesday. The app allows user to send each other cash from their debit card to other users.
The idea, Snapchat says, came from Square Cash, the company’s peer-to-peer payment service.
"We’re huge fans of the folks at Square and have been big admirers of Square Cash since it launched – just type a dollar amount into the subject line of an email and send cash to friends. Genius!," Snapchat wrote. "We loved it so much that we wanted to create something with them that felt Snapchat-y. So we built a Snapcash prototype and shared it with the team at Square. Luckily for us, they were just as excited as we were and wanted to build it together."
I don't have the ability to use Snapcash yet (I never installed the texting feature on the app, and it doesn't come up when I went to enable it) but I have used Square Cash and the new feature seems pretty much identical.
With Square Cash, users have to send a friend an email, or a text, including the amount they want to send Square will then email the user to ask for a the person's debit card, to which they will deposit the cash. With Snapcash, all a user has to do is swipe into Snapchat, and using the text feature, type in a dollar sign with the amount you want to send and hit the green button. The payment will then be sent directly to the recipient, who, again, puts in the debit card number to receive the money.
Snapcash is only available on Visa and MasterCard debit cards at this time, for up to $2,500 per week, a Snapchat spokesperson told me.
Of course, asking people to give out payment information might be asking a little too much, and that is where having Square as a partner really comes in handy, as all debit card information is "securely stored by Square," which will then process the payment.
"We set out to make payments faster and more fun, but we also know that security is essential when you’re dealing with money," Snapchat wrote. "Square has a ton of experience in this area and our teams have been hard at work to make Snapcash a great experience for everyone."
I first got wind that Snapchat was possibly planning a peer-to-peer payments system back in July, when the company filed two trademarks
One was identified as being for, "Computer application software for processing electronic payments to and from others that may be downloaded from a global computer network." The other for, "Electronic transfer of money for others; providing electronic processing of electronic funds transfer, ACH, credit card, debit card, electronic check and electronic, mobile and online payments."
Snapchat has already raised $163 million, most recently a $50 million round in December of last year, which puts its valuation at $2 billion. The company is said to be raising a new round of funding at a $10 billion valuation.
With numbers like that, it's probably a good thing it has figured out how to bring in some cash!
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