They started with their minimum viable product (MVP) and have expanded out from there. Now that they have a strong and continually active userbase, they can begin integrating services such as Snapcash which actually generate revenue. The idea that Snapchat has beat Facebook to the payments game is unbelievable. Integrating payments within social networking is far from a new idea, but SnapChat seems to be the first to implement it in a simple way. You're ordering a pizza with 2 friends and it cost $14.00? No problem, my friend pays and I send him $4.65 for me 1/3 of the pizza by pressing a couple buttons on my phone.
What's the alternative? Break the pizza up into thirds at the cashier and each individually swipe our debit cards? This is an obvious problem that tons of people experience everyday.