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Stripe’s role in social media payments

Twitter may soon be implementing a new Coins feature, allowing users to reward content they like, powered by Stripe. It’s another example of the payment processor’s push into social commerce, and we explore the reasons why.

Earlier this month, security researcher Jane Manchun Wong alleged that Twitter was currently working on the purchasing screen for its new Coins feature, powered by Stripe, which will allow users to send awards to other users that can be cashed out as fiat currency. Stripe is expected to process payments for the Coins, which can be purchased with fiat currency and withdrawn by the rewarded user once their value passes a $50 threshold. 

With the new feature (which Wong says has been in the works for a while), Twitter is following in the footsteps of TikTok, Instagram and Twitch, all of which have token-based systems for creator rewards. For the payments sector, the story demonstrates how social media platforms are continuing to provide revenue opportunities for processors, particularly Stripe.

How will Twitter’s Coin system work? 

Though it hasn’t been officially confirmed yet, the new feature is expected to see users buying Coins with fiat currency before spending them on ‘awards’ sent to their chosen user. Named awards include ‘Bravo’, ‘Super Like’ and ‘Gem’, with higher value awards correlated with higher Coin values, and therefore more money for the creator.

Twitter Coins seem to be more akin to an in-app currency, rather than a system for direct P2P payments. They have been compared to Reddit Coins, a virtual currency that can be gifted to other posters and exchanged for awards. Similarly, TikTok and Snapchat have their own in-app tokens that users can buy and redeem for gifts to send creators, which they can then cash out after they hit a certain amount.

The Coins system follows on from Twitter’s Super Follows, also powered by Stripe, through which users pay for a monthly subscription service that allows them watch bonus content.

Twitter also has a Tip Jar feature, which allows users to tip creators via a third-party payment service such as Ko-fi, PayPal or Cash App. 

How are payments processed on social media platforms?
Payment processors and capabilities across example SM platforms

Stripe’s pedigree in social media payments

Twitter’s Coins would be the latest example of Stripe enabling payments through social media platforms. In the past, the company has helped facilitate payments for ‘buy’ buttons on Facebook and Pinterest, which allow users to buy products advertised on these networks directly from sellers. Stripe also supported payments for Twitter’s short-lived Ticketed Spaces feature, which allowed users to host paid live audio rooms before it was dropped last October. 

Stripe was one of several payments companies to back Facebook’s Libra Association, which aimed to create a new distributed crypto token, before backing out in 2019, along with Visa and Mastercard. Last year, the processor began enabling platforms (including Twitter) and marketplaces to instantly pay funds to sellers, freelancers and content creators in cryptocurrencies, and it has even established a dedicated crypto team. However, it’s not yet known whether crypto would be enabled for Twitter Coins payouts. 

The latest Twitter development is more in line with Stripe’s continued focus on the creator economy, an area that several industry estimates value at more than $100bn. Its other clients include subscription newsletter service Substack, online publishing platform Medium and audio social network Clubhouse, all creator-driven platforms that are incorporating payments into their services.

Other payment processors – such as PayPal, Amazon Payments and Payoneer – are also supporting payments made to creators via social media platforms, with PayPal being a popular option for payouts and sending. Square (now known as Block) supported direct P2P payments on Snapchat until 2018, when the service was cancelled.

Like many companies, social media platforms can have multiple payment processors, with not all of them being named (which is why only named processors are included on the graphic above). 

The potential of social commerce for payment processors

According to Statista, Reddit coins (which can be acquired via a paid subscription or as a one-time purchase) generated a little over $11m in 2021 – a number that pales in comparison to Reddit’s much higher advertising revenues. For processors, it’s likely that in-app currencies that reward creators will continue to be dwarfed by the much bigger opportunity for social commerce – using social media platforms to sell products and services. 

China already has a booming social commerce scene, and platforms like TikTok and Instagram are investing in winning similar ecommerce gains in the West (the former launched in-platform shopping in the US near the end of last year). For payment processors that make money from transactions, supporting in-app ecommerce payments will likely remain the major draw.

Social media platforms may also look to expand their own in-house payment processing capabilities in the future. Forbes reports that J.P. Morgan is working with TikTok parent company Bytedance to develop in-app payments technology for products like TikTok Coins, which can be bought and used to send gifts to creators. However, the move has raised eyebrows in the US, with Senator Marco Rubio saying that the partnership risked exposing Americans’ sensitive data to the Chinese Communist Party. 

As new platforms continue to emerge and existing platforms fight for creators’ and users’ attention, it’s important for payments companies to stay abreast of ongoing social media trends. For Stripe, which is already embedded in Twitter, Coins could be just one of many payment opportunities pursued by the Musk-helmed platform this year. 

 

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