Social Payment Service Example

Social Payment Service Use Case

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Background

E-Commerce has been the key driver of the web for the past 10 years, with on-line payment totaling more than $200 Billion last year in the U.S. alone (source www.comscore.com). Social Networking sites like Facebook and MySpace are becoming the new drivers for usage on the Internet. These two forces will meet as purchasing goods and services on the Internet will become more social over the coming years.

While Social Networks like Facebook are beginning to roll out early payment services to their communities, there is a need to more broadly enable social payment. Using the Ringside Networks Social Application Platform, we are developing a Social Payment Service that can run on any website and integrate with the large Social networks like Facebook and MySpace.

What is Social Payment?

Social Payment is essentially taking today�s payment models and adding a social context. There are a number of use cases:

Buying a subscription for yourself and a group of your friends. For example, the Wall Street Journal On-line could provide an offer to a subscriber to add 5 friends to her subscription for an additional $100. The friends are selected and notified via their social network connection (such as Facebook or LinkedIn). This adds to the WSJ direct subscription revenue, but also increases traffic on the site. The additional context the WSJ could glean from a social network of subscribers could help target ads and additional service offerings. (see Social Payment - a simulated WSJ example for a fuller explanation)
Reserving tickets and hotel rooms for a group of friends traveling to New York to see a Broadway show.
Buying a plan of 20 songs a month on iTunes that is shared by the whole family.
Providing a wireless phone plan for small businesses that encourages group payment of the business use of the cell phones of employees, while also adding the capability to pay for the private add-ons of family members.
Providing a discount for certain merchants as part of a Google Checkout or PayPal pre-pay promotion.

Ringside Social Payment Service

The Ringside Networks Social Payment Service provides the base platform that any website or payment service could use to implement the use cases mentioned above.

To further illustrate, let's examine the following example. Let's assume ESPN is interested in building a social payment service that allows groups of friends to access "Premium" content that is only available to subscribers:

In this example, ESPN could offer a Social Payment Service that allowed a group of friends to share the payment of the Premium Content subscription. This offers the benefits of increasing revenue as well as increasing traffic to the site for advertising. Additionally, the advertising could be targeted based on group trends. For example, if one person in a group bought a Philadelphia Eagles jersey, an offer could be made via display ads to the group.

Another benefit would be the ability to offer content directly within other social networks since the Ringside platform provides compatibility with the Facebook API and the Open Social API - the two dominant social platform standards. Moreover, since we provide a pluggable payment service interface, any payment provider such as Google, Paypal, or Authorize.net could be used.

Brian Robinson of Ringside Networks demonstrates this use case in a video at http://wiki.ringsidenetworks.org/display/ringside/Payment+Services.

Payment Provider Implications

Over the next several years payment providers will be looking to help their clients increase revenue. There is of course a direct correlation between transaction volume and revenue for the payment providers themselves. For example, last quarter EBay reported that PayPal transactions totaled $14.42 Billion, a 34% increase over the prior year, and their net revenue was $582 Million, a 32% increase over the prior year.

Social Payment allows customers to increase revenue and open up new channels of distribution. It also helps build in the ability to participate in new markets as they emerge within the large social networks.

Conclusion

Social Payment Services is a tangible example of how the Social Web will evolve over time. Early adopters of the Social Web will gain competitive advantages - whether they are an e-commerce site, an existing payment service, or even the large social networks themselves. Ringside Networks' open source approach allows early adopters the flexibility to integrate these services into their own infrastructure quickly and meaningfully.

Ringside Networks is focused on providing solutions to Social Web scenarios like the one described in this paper, and we have designed the Ringside Social Application Server to:

Connect your website members to the Social Web
Connect members to friends on your website, Facebook, or any OpenSocial site
Connect social applications to your website, Facebook, or any OpenSocial site
Connect your social applications to your content, data, and systems

References

This paper based on blog entitled "Social Payment, a Simulated WSJ Example"
http://bobbickel.blogspot.com/2008/04/social-payment-simulated-wsj-example.html
Comscore E-Commerce Review
http://www.comscore.com/downloads/Retail_Economy_Series_comScore Webinar.pdf
Social Payment Service Video Using ESPN as an Example
http://wiki.ringsidenetworks.org/display/ringside/Payment+Services
Social Payment Service Design Documents
http://wiki.ringsidenetworks.org/display/ringside/Payment+Service

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