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So-called shoppable ads could get a big boost if a tap-and-buy test announced Tuesday by Facebook Inc.’s Instagram social network succeeds, a test in which PayPal Holdings Inc. is the payment processor.
Other social networks and Internet sites have rolled out or begun testing shoppable ads, including Pinterest, Snap Inc.’s Snapchat, and Alphabet Inc.’s Google, according to The Wall Street Journal. But with more than 1 billion monthly users, including 500 million daily users, Instagram could help prove whether instant buying through social-network ads is a viable e-commerce—and payments—channel.
Dubbed Checkout on Instagram, the service will enable members to make a purchase from an ad without leaving the Instagram mobile app. When the user taps to view a product from a brand’s shopping post, she’ll see a “Checkout on Instagram” button on the product page, according to a post on Instagram’s news site. Another tap will bring up various options such as size or color. Once those are selected the user proceeds to payment without leaving Instagram.
Members only need to enter their name, email, billing information and shipping address the first time they check out. User data are saved for future purchases, and members can track order shipments from within the app. Instagram initially is working with 23 merchants, from Adidas to Spanish fashion retailer Zara, but says more are coming.
“From Instagram’s perspective, it’s a powerful new value-added tool to market to retailers,” says e-commerce researcher Thad Peterson, a senior analyst at Boston-based Aite Group LLC. “Putting a buy button at the moment of discovery is a game changer.”
Peterson adds that “the key to this is the embedded payment function that can move the customer from interest to purchase with almost no friction. It’s also not intrusive for those who aren’t interested in purchasing.”
Meanwhile, PayPal stands to benefit as the Instagram shoppers generate transactions. PayPal is not only a payment option for Checkout on Instagram, it’s also providing the processing platform through its PayPal for Partners service, which routes transactions to the appropriate network depending on the payment card brand the buyer uses.
“Over the past few years, we’ve announced more than 40 partnerships with leaders across the tech and financial industries to enable new experiences for customers and connect businesses and people across new platforms,” Bill Ready, chief operating officer at San Jose, Calif.-based PayPal, said in a blog post. “Today, we’re excited to share that we’re partnering with Instagram to help with buyer and seller transactions for their new checkout experience for shopping.”
Instagram primarily is a photo-based social network that Menlo Park, Calif.-based Facebook bought in 2012 for $1 billion.
