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Snapchat And Square Team Up To Let You Send Money To Friends

This article is more than 9 years old.

Snapchat today announced the arrival of a new feature for its popular messaging app: the ability to send money to friends. In a partnership with payments firm Square, 'Snapcash' will allow people to enter their debit card payment information securely and message their friends a dollar amount to be directly deposited into the recipient's bank account.

With peer-to-peer payments, Snapchat is joining a crowded field that includes eBay , which owns PayPal and Venmo, and Google , which added a payment feature to Gmail earlier this year, and potentially Facebook, which signaled it may soon follow suit. Snapchat's move into mobile payments is particularly intriguing. When its CEO Evan Spiegel rejected a $3 billion takeover offer from Facebook last year, some speculated the app would never be more than a fun way to send disappearing selfies and lacked significant revenue opportunities. Only this year has the company announced a strategy to bring in advertisers, with the first ad having rolled out in October.

Based on Snapchat's announcement, it is unclear what kind of deal has been struck between the two companies, as it doesn't appear that users will be charged for the service. Snapcash is likely built on top  of Square's own money-sending service called Square Cash that launched about a year ago. Normally Square charges business owners that accept payments through their Square Register platform a 2.75 percent of every card swipe. Square Cash, which is more like a digital wallet than a company cash register, is free to use.

Square and Snapchat are also going to have to overcome questions about the sanctity of users' financial information. Snapchat recently suffered a hack into its user photos, facilitated by a third party app that isn't run by Snapchat, and some users are still wary about handing over private information to the app. But Snapchat in its announcement said that "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."