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Instagram Adds Payment. Becoming a Marketplace

I noted many weeks ago that Facebook (and Instagram) have become major ecommerce players. Now, Instagram has stepped up the game with a native payment system. The implication is that you do not need to leave Instagram if you want to shop for some items posted by some merchants. I expect sellers to move to these platforms because that is where the customers are.

 Instagram  just stealthily added a native payments feature to its app for some users. It lets you register a debit or credit card as part of a profile, set up a security pin, then start buying things without ever leaving Instagram. Not having to leave for a separate website and enter payment information any time you want to purchase something could make Instagram a much bigger player in commerce.

This will become a challenge to ecommerce companies in Africa that operate marketplaces. You would have to compete with giants like Instagram by first luring the customers to your platform if you expect merchants to put wares in your ecosystem. That was exactly some of the challenges faced by OLX and Efritin.

The competition will escalate further as other big platforms are integrating native payments.

Instagram isn’t the only one who sees this potential. Snapchat started testing its own native payments and checkout feature in February.

In 3-5 years, the best ecommerce marketplaces in Africa will be in a Facebook-owned ecosystem. The reason is simple: the customers are already there.