Micro-blogging site, Twitter Inc. (TWTR) recently partnered with one of France’s largest banks, Groupe BPCE to allow its customers to transfer money via tweets.
This person-to-person money transfer via tweets on the platform of Twitter will be enabled by S-Money, a division of Groupe BPCE. S-Money, in turn, relies on the credit card industry’s data security standards and transfers money via text messages.
Users can now send their money via tweets irrespective of the banks in which they have their accounts and without having to input any banking detail to complete the transfer. Thus, the security issue will be dealt in a responsible and efficient manner.
This new system is likely to bring about a transition in Twitter’s services. To date, Twitter was only involved in connecting users. However, now with the new system of money transfer, Twitter has entered the arena of processing payments as well. However, Twitter has not yet disclosed whether the transactions will be kept private or revealed to known contacts.
Twitter has been endeavoring for quite some time to enhance its operational sphere in order to seek new revenue sources apart from advertising. The company recently launched its much-awaited “Twitter Buy” to enable customers to search for products of their choice and buy them on its platform.
We believe that the development of additional services on its platform drive its top-line growth, going forward. We further believe that Twitter is following the footsteps of Facebook (FB) concerning the aforesaid service. Recently, Facebook launched “Transfer by Facebook” service to enable users of its mobile banking app to send money to anyone on their friends list.
New products and services are expected to be major growth drivers for Twitter in the long run. As spending on online advertising is expected to increase manifold compared to traditional media, we believe that Twitter has massive growth opportunity owing to its strong mobile products. International expansion and accretive acquisitions are the other significant positives.
Moreover, we believe that Twitter’s initiatives that include the tagging of photos for Apple’s (AAPL) iOS and Google’s (GOOGL) Android devices will increase customer engagement, going forward.
However, the intensifying competition for attracting advertising dollars is expected to hurt Twitter, due to the growing popularity of Facebook’s Instagram among U.S. smartphone users.
Currently, Twitter has a Zacks Rank #3 (Hold).
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