Sending money is now as simple as texting a dollar sign. Photo: Flickr via Maurizio Pesce.

Money transfer, not mobile payments.

That's the key difference with Snapchat's instant cash transfer app Snapcash and Apple's (NASDAQ:AAPL) recently launched Apple Pay service. One remains connected to social media the other to e-commerce. It means the money transfer service should quickly become popular with the legions of millennials who currently use Snapchat to share self-destructing (and sometimes self-destructive) selfies.

Snapcash isn't competing against Apple Pay, Google's (NASDAQ:GOOG) long-standing Wallet, or even PayPal's Venmo service. At least not yet. Think of it as Western Union (NYSE:WU) or MoneyGram International (NASDAQ:MGI) for social networking.

But by making it as easy to send money as it is to text a friend, Snapchat can build a loyal user base that serves as foundation to build its own e-commerce platform on. 

Simply type in a dollar amount to a friend, and hit send. Your money is whisked away from your registered bank account into the account of your friend. And once users are comfortable doing that, adding features allowing them to pay merchants doesn't seem too difficult or far-fetched.

Snapcash is powered by mobile payments start-up Square, which assumes the responsibility of storing the linked bank account information. That might alleviate concerns users have about security after hackers got access to embarrassing Snapchat photos through a third-party app. Snapchat says no third-party apps are required for the money transfer service.

Because young college students and teens primarily use the service, it has the potential to create long-lasting relationships. That could be valuable to marketers and merchants in the future.

And to Snapchat, too. The messaging app is beginning to monetize its resources, and last month began inserting advertisements into its updates section. It said the 20-second trailer for the movie Ouija was the first time it's tried to make money in that fashion. Like the texts, photos, and videos users send, the ads will disappear quickly, too.

It just allowed Samsung to brand its Our Stories feature from the American Music Awards. 

Snapchat continues to look smart for refusing the $3 billion Facebook (NASDAQ:FB) wanted to throw its way. After another round of funding that valued it around $10 billion, the messaging app could be well on its way to rivaling the valuations of other social media sites.

The mobile wallet marketplace is still in its early days. Apple Pay got everyone excited again, however, and it immediately became the industry frontrunner. The market researchers at Forrester say mobile payments will nearly triple over the next five years. They'll grow from $52 billion this year to and estimate $142 billion in 2019.

Snapcash could similarly cause everyone to rethink money transfers.

With over 100 million users Snapcash's installed base of potential users is quite large. They also tend to be intensely connected to mobile communications and loyal to the app to a fault. Because Snapcash only requires you have a bank account, not where that account is housed, it may appeal to them even more.

It's possible they might not view sending cash over an app they're used to taking selfies with as a serious (or trustworthy) pursuit. It's also important to remember Snapchat will need to comply with anti-money laundering rules.

Both Western Union and MoneyGram have face higher costs for stricter compliance regulations. Western Union said it expects those expenses to amount to 3.5% of total revenues this year. It reported $5.6 billion in revenues over the past 12 months, which would equate to $192 million in compliance costs. Snapchat is only just starting to generate revenues.

They're also facing competitive pressures. Earlier this year Wal-Mart (NYSE:WMT) entered the money transfer market with a low-cost service that undercut its main rivals.

But increasing the usefulness of the Snapchat app to do more than just text or take pictures will increase its utility to users. It suggests they may be more willing than not to adopt its platform.

From there it's only a matter of time before it expands to further monetize its assets and transforms the app into a complete e-commerce platform. And a $10 billion valuation into one worth significantly more.