Twitter's decision to hire a head of commerce signals that the company plans to play a significant role alongside the many companies that have sought to transform the social media site into a platform for payments.
The creation of this position is no surprise to companies such as Chirpify and Dwolla, which allow consumers to initiate payments to one another by sending messages through their Twitter accounts. Twitter hired Nathan Hubbard, former president of Ticketmaster, to fill the new role.
"When we started as a Twitter payments platform we knew Twitter was going to eventually get into payments," says Chris Teso, founder and CEO of Chirpify.
Chirpify has expanded on its initial focus on payments to also support the conversion of advertising of all kinds, including in stadiums or on the radio, by using hashtags the short words or phrases, preceded by a # sign, that make Twitter messages searchable.
Hubbard's role "is not any type of threat," Teso says. "Twitter is validating that social has its place in the commerce world; it's pretty exciting."
Plus, Twitter is looking to partner with payment services providers and merchants, instead of competing with the existing players, Hubbard told Bloomberg News. But he also said Twitter might take a percentage of all transactions initiated through the site.
Hubbard will begin at his new position on Aug. 29, says Genevieve Wong, a spokeswoman for Twitter.
The choice of Hubbard may allude to the company's plans. While at Ticketmaster, Hubbard oversaw the revamp of the company's online technology unit.
"It's a bit different than bringing on someone from the retail brand side which surprised me," Teso says. The pick could hint at "what types of commerce they're trying to drive maybe tickets or impulse purchases or smaller-ticket items."
But building a full-featured commerce system will take time, Teso says. There are many questions that need to be answered before Twitter rolls out a new platform, he says: Who services the brand? Where does the inventory reside? Where is credit card information stored?
But Twitter likely won't go towards a siloed shopping mall experience, Teso says. Facebook looked into doing this at one time, but found more consumers and merchants were interested in integrated campaigns instead of a marketplace running on top of a social media platform, he says.
Facebook has made many changes to its payments strategy over the years. Its most recent revision removes the ability to purchase physical gifts, allowing the social network to place more emphasis on digital and plastic gift cards.
"Social commerce is not about the payment social commerce is about helping brands and merchants to directly monetize social network engagement, that is, to bundle the social engagement with a commerce transaction in a single event," says Arkady Fridman, senior analyst at the Aite Group.
"By taking the commerce strategy in-house, Twitter can enable a cleaner integration for brands and merchants with the platform, similar to what eBay did with PayPal," Fridman says.
Many companies have attempted to turn Twitter into a payments mechanism. Some, such as Flattr and Ribbon, have come into direct conflict with Twitter over whether they violate Twitter's terms. Others, such as TwitPay and Twippr, barely took off.
By contrast, Dwolla's customers use the hashtag #dwolla to initiate person-to-person payments.
"We can talk about revenue opportunities until the cows come home, but I don't think Twitter cares," says Jordan Lampe, communications head at Dwolla. "They're in the business of altering the way we consumer and interact with the world, and Twitter realizes that payments may be the purest form of measuring that."
While social commerce is just one small part of Dwolla's overall online payments strategy, Lampe says, the company is looking forward to seeing how Twitter has interpreted consumer behavior on the social stream.
"One thing that Twitter is amazing at is revolutionizing communication in 140 characters or less," Lampe says. "I don't expect their take on e-commerce innovation to be any different."