Last month, Instagram announced its entry into financial services with plans for a “checkout” feature on the app.
However, it’s not the first social media platform to foray into Fintech. Others like Facebook and Snapchat already offer money transfer options.
With this development, social media platforms morph into one stop ecommerce shops. But the move signals a shift in the compliance landscape of these social media giants.
What does it mean?
Experts note that social media companies with fintech offerings should reflect on a few foundational questions around payments. Does the company want to move money? Or, just purchase a payment service? To be a money transmitter, one requires a license. In house compliance teams need to be aware of the many nuances of fintech compliance.
In addition, access to more customer data through in-app purchases means that compliance teams need to be diligent about the application of GDPR laws. The in-app checkout leaves less data for merchants, who will now be reliant on the social media company for some amount of sales data.
Will the fast moving world of social media slow down to keep pace with the stringent requirements of financial compliance? How do you navigate the differences in culture to bring this transition into fruition? These are some of the many questions that confront us, as we stand on the brink of this change.
Lastly, it is through peer learning, sharing, and collective imagination that we can shape the systems of the future. Technologies such as AI will help set the foundation we need, as we embark on this journey of learning.
The final word
As the line between social media and fintech is set to blur, social media companies need to undergo a compliance makeover. To spearhead and successfully execute this transition social media will require the oversight of financial experts. Through mutual learning and collaboration, we can refine and simplify the complex landscape of financial compliance, while accommodating the culture and ethos of social media.