Snap (SNAP) is reportedly ending Snapcash, its mobile payment service, by August 30 after struggling in the crowded peer-to-peer payment market. This will result in ending the four-year-long partnership with Square (SQ) that actually handled the payment processing. Market analysts fear that this service has been doing rounds in promotion and circulation of adult content.
The platform’s final date has been confirmed by TechCrunch and the users would receive the notification through the app shortly. The exact reason behind the Snapcash closure has not been revealed and this follows the huge moves made by the company towards in-app purchases.
Reports of a few Twitter (TWTR) users accepting payments through Snapcash for adult content offerings have cropped up recently. Experts believe that severe legal and PR problems might arise due to the misuse of Snapcash. This has also been one of the reasons behind the close-down of the payment service. Competition has been rising steadily in the payment market including Google (GOOGL) Pay, Apple (AAPL) Pay Cash, Facebook’s (FB) TransferWise, and PayPal’s (PYPL) Venmo.
Also, Zelle has been giving stiff competition from the financial sector front. Zelle has been owned by the banks Bank of America (BAC), BB&T (BBT), Capital One (COF), JPMorgan Chase (JPM), PNC Bank (PNC), US Bank, SunTrust (STI) and Wells Fargo (WFC).
Snapchat launched Snapcash in November 2014 for letting users transfer money between accounts on the ephemeral photo-sharing platform. The deal, which was made between Snapchat and Square, has made Square access the data of Snapchat’s more than 100 million monthly active users for actual cash movements.
Recently, in mid-June, Snap launched a Snap Kit, a privacy protection feature that lets developers integrate apps into Snapchat. The feature is mostly similar to Facebook Connect, except that it stays uncompromising on data privacy.
During early May, Snap posted disappointing first-quarter results as the company’s redesign of its Snapchat app has not gone down well with users. The average time spent by users still remained 30 minutes per day despite a modest 2% sequential growth in the number of users. In addition, the company has cautioned that the second quarter sales growth would be down considerably over the last quarter.
Market analysts predict that Snap would be providing an updated version of Snapchat by the third quarter. They also expect Snap to post double digits growth in the second half of the year after low-double digits in the first half.
Shares of Snap is trading down 0.44% at $13.21 on the NYSE at 10:49 am ET. The stock had been trading between $10.50 and $21.22 for the past 52 weeks.