What are social media payments and are they safe?

Social media payments use social media apps or platforms to send money to another person or business. Snapchat was one of the first to launch social media payments back in 2014 with Snapcash, which allows users to send one another money directly through the app.¹

This article includes tips, suggestions, and general information. We recommend that you always do your own research and consider getting independent tax, financial, and legal advice before making any important decision.

Purchases can also be made directly through platforms like Facebook, Instagram, and TikTok. Known as social commerce, this type of social media payment is projected to reach £6.7 trillion by 2030.²

However, as with any online transaction, users can be at risk of fraud and scams — especially in such a fast-changing digital marketplace. This guide explains the safety of social media payments and provides tips for use.

How do social media payments work?

To send money through social media, a user first needs to link their payment method — usually a card, bank or PayPal account. Once this has been verified, the user can follow the in-app steps to send money to another user or a business. This streamlines the payment process since the user doesn’t need to leave the app to send money to friends or to make a purchase.

How to send money with social media platforms

The exact process for sending money via social media can vary depending on the platform. To start, the user will need to sign up for the platform’s peer-to-peer (P2P) payment service and connect a bank account, card, or PayPal account.

When the user wants to send money to another user, they will initiate this through the social media platform. The money will leave the sender’s connected payment method and end up in the recipient’s bank or PayPal account. This allows for the opportunity to send money online instantly without leaving the app.

To receive money from someone else, an individual can send a message through the app to ask for payment — when splitting a restaurant bill, for example. If the other person accepts, that money will be directly deposited via the attached payment method. Whether paying back a friend or sending money overseas, this method can be quick and straightforward.

It’s important to consider security when sending money with social media. Check the reputation and security features of the social platform before entering personal information. It’s also important to check that the person requesting money is who they say they are as scammers may take advantage of these platforms.

Also, take time to do research into digital wallets vs. payment apps. For example, will a payment go into a digital wallet that needs to be withdrawn to your bank account? To ensure the most seamless process, look for apps that will deposit your funds directly into your linked account — this eliminates the need to make manual transactions.

Types of social media payments

There are a variety of different social media payment options available. These allow users to send money with PayPal, pay back friends, make purchases, and more. Here are some examples:

Peer-to-peer (P2P) payment

This is a method of directly transferring money between users. Many social media platforms use this type of payment because it can keep people within the app. There are several benefits of P2P payments as they’re easy to use and understand, usually have low or no fees, and often use trusted payment providers.

Sites that use a secure partner can make payments anonymous — depending on the users’ social media settings and information. P2P payments made via a social platform means private information, such as full names or bank account details, don’t need to be exchanged. Instead, that's handled by the payment provider.

In-app purchase

This is the process of buying digital goods, services, or subscriptions through an app. Most people will have come across in-app purchases in gaming and health apps, which might grant the user premium access to features or subscriptions to continue using the service.

In-app purchases provide a seamless purchasing experience in that users don't need to leave the app. It also allows quick access to new purchases. And, since the payment is often handled by a trusted partner that most people will recognise, helping increae safety and security. Users may want to look for these trusted names before making a one-click purchase.

Social commerce

Social commerce enables the buying and selling of physical goods directly from a social app or site. People can shop through ads, posts, videos, or a dedicated marketplace. For sellers wanting to collect money for purchases, social commerce could be a good option. This helps avoid the need to set up a website and payment methods.

Many sellers are also embracing live selling on platforms, such as TikTok, which makes it easy to shop directly through the app. Discovering products this way doesn’t interrupt the normal flow of scrolling through the app.

The benefits and drawbacks of social media payments

There are several advantages and disadvantages of social media payments. Here's what users should be aware of.

Benefits of social media payments

The benefits of social media payments include:

• Quick and easy payments. When both the sender and recipient have linked bank accounts, the speed of a transaction can be nearly instant. But it’s worth noting that this benefit can depend on external factors such as bank processing times.
• Convenience. Social networks are a convenient way to send money, as the user is already connected with friends and family.
• International transfers. Some social media platforms allow money to be sent overseas. While this option might not be available with all platforms, it’s a useful feature if needed. And it may help save on international transfer fees.

Drawbacks of social media payments

True of most transaction methods, there are some disadvantages of social media payments:

• Security concerns. Social media sites aren’t immune to data breaches. Users should pay attention to safety and security and look out for social media payment scams.
• Limited user protection. Traditional payment methods offer protection for both buyers and sellers. With social media payments, these same protections might not be in place, meaning there’s the risk of fraud or dispute with limited recourse.
• Privacy issues. Some social media platforms may not be as secure as traditional payment methods, creating the potential for unintended sharing of transaction details.
• Limitations. There could be limitations and fees concerning social media payments. For example, users may not be able to send as much as they could with a traditional payment provider.
• Risk of disruptions. If users become reliant on social media platforms for payments, any disruption could impact access to funds or make necessary transactions difficult.

Safety measures for sending money via social platforms

To ensure safe transactions, keep in mind the basics of social media security — avoid sharing personal information with other users and ensure they are adhering to the necessary safety measures. Other strategies include:

• Choosing a reputable platform. Look for a platform that works with a trusted partner and is transparent about its security features.
• Using secure transaction practices. Make sure to use secure payment methods, avoid sending money over public Wi-Fi, and verify the recipient is who they say they are. For added security, users should use two-factor authentication and regularly update their privacy settings.
• Monitoring transaction activity. For anyone regularly using social media to make payments, it’s important to monitor transaction activity both on the social platform and in the connected payment method. If there are any unauthorised or suspicious transactions, these can be caught quickly and reported.