Square partners with TikTok to capture the designer economy

FINTECH SNARK TANK OBSERVATIONS

Fintech Square powerhouse announced a new partnership with TikTok that allows merchants on the social media platform to build online stores.

The new service, called Square x TikTok, connects users who view TikTok videos and ads to products available on the Square online store for merchants. The service promises to provide a streamlined shopping experience that retains the look and feel of merchants’ personal brand.

In search of the alpha reports:

“Sellers will be able to grow their business by serving ads using TikTok Ads Manager, sync their existing item catalog with TikTok to include it in organized purchase tabs on their profiles, and include product links in content that directs buyers to Square Online to complete a purchase. “

TikTok has one billion monthly active users, or about a third of the 2.89 billion monthly active users on Facebook, according to Statista. Facebook crossed the billion mark in 2012, demonstrating TikTok’s growth potential.

It’s about creators, not users

The number of TikTok users (or Square CashApp users, for that matter) isn’t what’s important here.

The Square-TikTok partnership concerns merchants – or more precisely, all merchants or small businesses increasingly called “creators”.

An article in the New Yorker Explain :

“Social media platforms are embracing a new buzzword: designer. [The term is] used to describe anyone who produces any form of online content. The idea has proven to be highly marketable: The designer economy has so far received $ 1.3 billion in investment funding in 2021, nearly three times the funding it has received in the past. the whole of 2020. “

According to the article, there is a lot more money in the creator’s economy than the money spent on it:

“Last year, TikTok launched a creators fund to directly pay users for popular content. Snapchat launched a similar program called Spotlight, which offers creators millions of dollars in compensation per month. Last week, Facebook, which owns Instagram, announced that it would pay more than $ 1 billion to users of its platforms by 2022. “

The war of merchants (and creators)

Square’s partnership with TikTok is another step in the company’s battle with PayPal, Stripe, Shopify, and Intuit to capture the merchant market.

Earlier this year, Square partnered with Google to allow Square merchants to add their products to Google surfaces, including search, the Shopping tab, images, maps and YouTube. Consumers will then be able to purchase these items directly from the seller’s online store.

However, the battle for merchants is not limited to their ecommerce or payment business. It is a battle to be the provider of a wide range of services that merchants need to manage and operate their business.

All the major platforms are in an arms race to win this war, and each is working to fill the gaps in its offerings.

PayPal’s acquisition of Honey helped the payments company add marketing and sales capabilities. At the time of acquisition, TechCrunch commented:

“PayPal’s network of 24 million merchant partners will have the ability to deliver targeted and more personalized promotions to consumers as a means of acquiring new business and increasing sales. PayPal credit can also be integrated with Honey to help fund larger purchases.

PayPal highlighted its merchant value chain capabilities in its February 2021 investor presentation with a slide titled “We’re building a comprehensive platform to power the global digital economy.”

The major platforms all have fundraising arms, and Shopify and Square have deposit-taking capabilities.