Social media networks have helped more than a billion people worldwide communicate, share content, and collaborate. Mobile payments have allowed consumers to make purchases by electronically transferring funds from one account to another at points of sale. When will these two trends come together on a large scale?
Social vs. Mobile Sales
Over the past decade, there hasn’t been much overlap between social media and mobile payments. For the most part, social media networks support leisurely pursuits; their recent forays into business have been largely limited to marketing, recruiting, and customer service.
This chasm was evident on Cyber Monday (the e-commerce equivalent of Black Friday) in 2012. On what’s traditionally the biggest online shopping day of the year, less than 1 percent of all transactions [PDF] originated from social media networks like Twitter and Facebook, a decrease of more than 26 percent from 2011. Meanwhile, mobile sales reached nearly 13 percent, an increase of more than 96 percent over 2011.
Many businesses that use social media see the dearth of e-commerce generated by these sites as a monumental growth opportunity. Now that Facebook has gone public, analysts believe that mobile payments represent an attractive (even necessary) market for the company, which must now pay more attention to profits and worry about its share prices.
This opportunity is not without its challenges, the most daunting of which may be a lack of standardization. Mobile payments platforms are all over the map when it comes to technology, connectivity, and compatibility. Add to that a social media arena that’s diverse in its own right, and you have dozens of possible permutations that can be used to process transactions and generate revenue.
To their credit, most big players in the mobile payment and social media arenas recognize these obstacles to success and are taking steps to overcome them. Many gathered at the Social Mobile Payments conference in Miami in November to discuss the nuts and bolts of combining the two industries to their mutual benefit. Speakers and seminars covered topics ranging from strategies and new markets to business models and successful technology deployments.
A fruitful marriage between the mobile payment and social media industries won’t happen overnight. But as demand grows, the market will weed out the weak contenders and the strongest processes and systems will be duplicated. Before you know it, the two trends could merge to become the cornerstone of how consumers purchase goods and services.