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Instagram Gets in the Payments Game for a Better User Experience

By Sarah Grotta
May 4, 2018
in Analysts Coverage
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TechCrunch reported on their discovery that Instagram is piloting a native payments capability in its app.  It is pretty quiet right now, but it appears to be available to a select number of its users:

Instagram just stealthily added a native payments feature to its app for some users. It lets you register a debit or credit card as part of a profile, set up a security pin, then start buying things without ever leaving Instagram. Not having to leave for a separate website and enter payment information any time you want to purchase something could make Instagram a much bigger player in commerce. 

This move makes a lot of sense.  Instagram provides greater convenience to its customers, improves its user experience, and gives retailers more of a reason to advertise on their platform:

With its polished pictures and plethora of brands, shopping through Instagram could prove popular and give businesses a big new reason to advertise on the app. If they can get higher conversion rates because people don’t quit in the middle of checkout as the fill in their payment info, brands might prefer to push people to buy via Instagram. 

Later this month, Mercator Advisory Group will be publishing a report on Asian payment apps like AliPay, Paytm and WeChat Pay.  This move by Instagram looks to come straight out of their playbook:  get consumers hooked on an app for reasons having nothing to do with payments, banking or finance, and then begin to add these features to a loyal customer base.  Instagram doesn’t have to be too concerned about the costs of offering this service since it makes its revenue from other sources:

It’s possible that the payments option will work with Instagram’s “Shoppable Tags,” which first started testing in 2016 to let you see which products were in a post and tap through to buy them on the brand’s site. Since then, Instagram has partnered with storefront platforms BigCommerce and Shopify to get their clients hooked up, and expanded the feature to more countries in March. For now, though, none of Instagram’s previous shopping feature partners like Warby Parker or Kate Spade let you checkout within Instagram, and still send you to their site.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

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Tags: Customer InteractionsInstagramMobile PaymentsPayments

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