Embedded user-to-user payments: the hidden billion dollar market

Let’s begin by addressing the elephant in the room: Why does it have to be so difficult still in 2021 to receive $1 from 1,000 people during a live stream? Here’s the answer: It doesn’t have to be. In this present day, the world is still not as optimised as we’d like it to be for it to cater successfully to the growing need of a flexible, hassle-free, and straight-forward financial ecosystem. As a creator in the “Creator Economy” – let’s look at real-case scenarios that involve small-value transfers between users and how in-transparent and complicated the entire process is; given the absence of adequate financial infrastructure.

As context, the inability to easily move $1 between any two people led apps to build entire ecosystems based on in-app points and credits. While this avoids regulatory complexities and expensive tech – it restricts growth as well as transformative new business models. Imagine you’re a content creator on Bigo Live – one of the many social streaming apps similar to MeMe Live, Loop, Facecast and many others. You have built a fan base that regularly joins your live sessions and these fans purchase ‘Diamonds’ on Bigo via in-app purchases (with 30% going to Google/Apple). These virtual diamonds can then be used to purchase various gifts, from lollipops to flowers or cars. For every virtual gift one receives, the corresponding amount of ‘Beans’ are credited to your Bigo Account (e.g. gifts sent that are worth 10 Diamonds are credited to your in-app account as 10 Beans). Once one has accumulated 6,700 Beans – they are eligible to convert them into real money; at a conversion rate of 210 Beans to 1 USD. While this is great in enabling people to earn from their talents, it is also extremely inefficient in terms of the time till you get paid and in terms of the money left on the table along the journey.


These streaming apps achieve long-term retention by providing a set of tools that make user-to-user engagement highly rewarding. Broadcasters establish special relationships with their fans, and apps make money from virtual gifting and converting it back to cash. However, a lot of “value” evaporates along the journey because of complicated “in-app purchase-transfer-buy-back of virtual items”, when in fact apps simply want to move a small amount of money between two users and monetise in between. Let’s do some quick math:

– Let’s assume I spend $100 in the app
– Apple and Google take 30% of that
– I now have around 4,000 Diamonds in my account
– I decided to give gifts and all my 4,000 Diamonds converted into 4,000 Beans
– The broadcaster converts Beans into cash (210 beans : 1 USD) and gets 19 USD
– The broadcaster then withdraws the 19 USD into a bank account and proceeds to pay another $3 + 2% in foreign exchange fees

This begs the question: why are people so price-sensitive when sending money to friends and family via remittance companies? And why do they not seem to “care” how much of their money actually is given to their broadcaster friend? The answer has something to do with the amount being sent. For example, we are less sensitive to a 20% commission when tipping someone $1 vs. a 20% commission when sending someone $1,000. And there is also the convenience factor: I can send a tip in the form of a virtual gift in the middle of a live stream. I don’t have to open another app and navigate through a payments flow or wait for an OTP. It is simple, instant, and the receiver can immediately show gratitude.

The next question is how much upside for these in-app economies would there be if this entire process could be handled through seamlessly embedded in-app wallets with real money. Broadcasters could be paid in real-time versus the 3 to 30 day payout cycle currently needed given these “regulatory” workarounds. In addition, real-money transfers would avoid the 30% app store commission – resulting in significant more value being captured by apps and their communities.

Bigo Live is one of the world’s fastest growing, live-streaming, and social communities with around 400 million users in over 150 countries. It’s one of the many apps in the emerging content creator and streaming economy with massive upside as they slowly become part of people’s financial lives. The key to harness this potential is for apps to master the complexities around cross-border embedded finance and user-to-user payment first.

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