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Payfriendz seeks to innovate P2P payments with messaging, social features

July 28, 2014

payfriendzNewcomer Payfriendz wants to innovate mobile peer-to-peer payments with a unique messaging feature, but whether social is enough to compete against the likes of PayPal is questionable.

Intertwining financial transactions with social interactions, Payfriendz also aims to eliminate the battle of transferring funds from one person to another, which further ambitions to make the entire process a fun one. Users can receive funds via a virtual Mastercard, incorporated in the app, expanding the use of the app to any online commerce site that accepts Mastercard.

“Payfriendz integrates effortlessly in peoples’ lifestyles nowadays, which is interacting on social networks and sharing messages via smartphones all the time,” said Volker Breuer, co-founder and CEO at Payfriendz, London. “PayPal on the other hand is a payment provider, mostly associated with eBay and online, so Paypal feels much more like banking.

“Where as Payfriendz is truly social, mobile and has a messaging style. The whole Payfriendz brand pays into that single user proposition. Something an arguably innovative but still banky style player like Paypal can hardly achieve.”

New offerings
Payfriendz executives claim its competitors require a substantial amount of information from the user that it is often viewed as a turn off. Payfriendz shortens the registering process and allows the user to experiment with the app more quickly, according to Mr. Breuer.

“You can go through the tedious registration process with services like Pingit, PayPal or basically any banking service,” Mr. Breuer said. “They will ask you for a lot of stuff before providing you with a better or worse service. In that sense Payfriendz is truly revolutionary.

“We turn this practice pretty much upside down, let you register within a minute and experience the app as quickly as possible. We’re the first who truly marry OTT messaging, like WhatsApp, with peer-to-peer payments.”

The app allows users to import their Facebook friends and phone contacts for easy connection, and executives claim this operation eliminates the acquiring of bank details from a friend.

Payfriendz is free and only charges a one percent fee for cross currency transactions, claiming to be a lower charge than other competing apps.

A balance on Payfriendz can either be transferred back to the recipient’s bank account or can be spent via a virtual MasterCard, allowing for online shopping wherever MasterCard is accepted, such as Amazon or Net-a-Porter.

Following PayPal’s attainment of Venmo almost two years ago, the two remain competitors. Venmo can only be used in the U.S,. but Payfriendz is available in European app stores and allows cross currency transfers in pounds, euros and dollars.

A broad glance at the app

While PayPal is not a literal target of Payfriendz, its efforts are geared toward an innovative system that incorporates the daily routines of smartphone users, which is frequent use of social.

“Our objective is not to overpower PayPal,” said Howard Allen, development director at Payfriendz, London. “Our objective is to provide consumers with something relevant today and for the future. The Payfriendz functionality is designed to integrate into the way in which people live today.

“Payment product providers often focus too much on themselves and solely on the processing aspect of payments. There is a bigger picture. For example, looking at how cards have developed, we can see credit and loyalty points have been as important, perhaps more important, than basic convenience and functionality.

“PayPal is not our focus. Meeting the current and future needs of consumer are our focus.”

Can social reign?
Perhaps the implementation of social into a payment system could lend for an innovative way of advertising via social sharing and word-of-mouth marketing.

“If the roots of your mobile payments app are truly social, and not just a layer added later because it seems en vogue, this gives you as a provider of that service many new opportunities for monetization, such as word-of-mouth marketing and risk management, which will be crucial for success,” Mr. Breuer said. “For early adopters, it yields massive benefits in terms of convenience, such as how easy it is to share payments, and trust, because if your friends use it, then you could use it, too.”

However, a questioned analyst is skeptical and believes it would take much more effort to cause a consumer to switch from an existing payment vehicle that they are already familiar with.

“Messaging is clearly not a sustainable differentiation,” said Tim Sloane, vice president of payments innovation at Mercator Advisory Group, Boston. “There are many messaging platforms that PayPal could use to enable a similar feature, although it is more likely that PayPal would simply partner with an existing messaging platform that already has an installed base.

“If I were to build a business plan today, it would be to have my payments solution integrated into all of the existing messaging solutions so that my payment option is available as they type,” he said.

“I should point out that I expect there are very few people that don’t remember the debt when a credit comes in.  While it is nice to be able to include a note, I doubt the ability to link a note to a payment will be sufficient to make me adopt both a new messaging platform and a new payment vehicle.”

Mr. Sloane is not affiliated with Payfriendz but agreed to comment as an industry expert.

Payfriendz is hoping that by considering consumers and their way of thinking, this will pay off like it has for other app developers.

“We believe it is the first mobile app associated with payments that has been built firstly with how the customer wants to behave in mind,” said Mr. Allen. “It isn’t built to promote mobile banking or to help mobile operators to get into financial services.

“It is a consumer-oriented, easy-to-use service with a secure financial transaction.”

Final Take
Caitlyn Bohannon, editorial assistant for Mobile Commerce Daily, New York

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