The Future of Cash: How Social Media is Changing Mobile Payments


mobile-payment-940x492
Social Media Week

From Venmo to the Open Ledger Project, eCash and digital currency are changing all aspects of our contemporary financial system.

11 days until 20,000+ global leaders come together for SMW June 6-10. Learn more here.

When Venmo officially went mainstream in 2013, its meteoric rise to fame happened in part because of strong social buy-in and good old-fashioned peer pressure. The more friends who joined the app, the more likely you were to begin using the app, too.

As more friends used Venmo to split payments on everything from brunch to concert tickets, the pressure was on for you to be on the app so you could easily contribute your fair share. And since the app links with Facebook friends and email contacts, sharing money became instant and easy. Goodbye checks and ATMs, hello instant cash.

By 2014, Business Insider estimated that the app handled as many total dollar value transactions (approximately $314 million) as Starbucks’ wildly successful payment app. And in this January alone, Venmo processed more than $1 billion in mobile payments, while also announcing new third-party partnerships for in-app purchases.

While Venmo dominates the 20-something demographic, if you’re older and not worried about splitting utility bills or movie tickets with your roommate, you may not be familiar with the app. But understanding its meteoric rise to fame is essential to understanding the future of eCash and why contactless payment apps like Google Wallet and Apple Pay have still not caught on (yet).

With global mobile payment volume expected to hit $721.4 billion in 2017 (up from $163.1 billion in 2012), according to Due.com, it’s safe to say eCash is here to stay. Now, major corporations are making big moves with an “Open Ledger Project” that could revolutionize marketplace transactions.

Here’s what you need to know about mobile payments and the future of eCash in 2016.

Why Venmo Exploded: How Social Media Use Drives Mobile Payment Apps

Venmo, which Slate called the “quintessential app for the urban professional twenty-something” took the best features of PayPal and Facebook and turned them into a mobile payment app. Why the praise? Venmo did everything right that PayPal didn’t do (even though the app is owned by PayPal and Braintree).

Venmo’s magic formula simplified transactions while connecting into Facebook’s social interface. Simply link up a debit card, find friends and you’re ready to go. No hunting down change for cash payments. Utility bill do? Venmo your share to the roommate whose name is on the utility bill. Picked up the happy hour tab for friends? Venmo-charge them for their two beers.

But without a lot of friends on Venmo, the app is pretty useless. Venmo gambled that users who embraced the app’s ease would become “app evangelicals” and bring more friends on to the app. Venmo succeeds because it is viral by design. Once a few people in a social circle adopt it, it’s just a matter of time before the entire circle is on board. 

Venmo wisely offers social features like a payment stream reminiscent of Facebook’s newsfeed. (You can also set payments to private in order to exclude those $200 Beyoncé Formation World Tour tickets from being seen by all your friends in the stream). Most importantly, you can also send a billing request for money owed. This feature lets users still bill friends and avoid the awkward you-owe-me-money conversation.

What’s Next for eCash? Understanding Blockchain and the Open Ledger Project

Venmo may have skyrocketed in popularity, but alternative currency Bitcoin has yet to truly take off. While Bitcoin is unlikely to ever be a replacement for the dollar – and it’s been declared “dead” countless times – the ideas behind Bitcoin live on.

The concept of a blockchain (a digital ledger of all digital currency distributions) and distributed ledger applications could redefine how computers interact with one another and major financial companies are taking notice.

In December 2015, IBM, Intel, JP Morgan, the Linux Foundation, and several big banks announced the “Open Ledger Project”. The idea behind this project is to use blockchain technology to allow businesses to build a distribution ledger for virtually any product or service they can imagine, reports Due.com.

For example, users would be able to exchange automotive titles in just seconds. Since the ledger is connected and distributed, forgery would be a virtual impossibility. Blockchain has hit critical mass, and some industry analysts say it could even become the back-office foundation of our global financial system.

Bottom Line

From Venmo to the Open Ledger Project, eCash and digital currency are changing all aspects of our contemporary financial system. Small businesses should take note: don’t overlook opportunities for innovation in the digital currency space or mobile payment marketplace. Pretty soon, cash may be as antiquated as CDs and flip phones.



Brian Hughes

Owner, Integrity Marketing & Consulting

BrianHughes116

Brian Hughes is a digital marketing expert who enjoys writing about helping small businesses be successful with their Internet and social media marketing objectives. He helps to get brands recognized and their sites ranked highly through his agency Integrity marketing & Consulting.



Want to write for Social Media Week?

We're looking for individuals around the globe to contribute articles on marketing, media, technology, and more.







Comments