Facebook is entering the payments game now. The social networking company has already experimented with allowing users to send money to each other using Messenger, but now it seems the service is being officially rolled out. Upon first release, Facebook’s payment feature will not compete directly with Apple Pay and other similar technologies, but it may evolve to do just that. In other words, a “buy” button is probably coming to the social network.
Facebook Messenger will allow users to send money to each other
The New York Times reported on Facebook’s announcement regarding its foray into the payments industry. The company will soon allow users of the Messenger app to link their debit cards and send money in the same manner that they send texts or photos. China’s popular social networking site WeChat already allows users to send money to each other, but in the United States this type of technology is just beginning to take off. Other methods of making payments, such as PayPal, which works in conjunction with email accounts, have traditionally been more popular.
According to USA Today, the payments feature will take a few months to be fully rolled out. It will be accessible in Messenger, on iPhones and Android devices, initially only to Facebook users in the U.S.
Wall Street is expecting big things from Facebook
The New York Times discussed how Wall Street is eagerly anticipating the release of Facebook’s new feature. Due to the size and ubiquitous nature of the social network, the payment service could become huge. Today, messaging is an increasingly popular form of electronic communication. The social networking company already has access to millions of people and those users may find it very convenient to rely on the site to make cash remittances. Messenger currently has more than 500 million monthly users.
USA Today noted comments by Facebook product manager Steve Davis, explaining the purpose of the new service.
“The focus is not about building a payments business that is accepted everywhere,” said Davis. “It’s really about making Messenger more useful. We wanted to add payments because we know that people have conversations about money all the time with their friends.”
Analysts on Wall Street, such as Robert Peck with SunTrust Robinson Humphrey, believe peer-to-peer payments may rise to impressive levels, which in turn, will inevitably lead to to a buy button on the site.
“Facebook could use this as a back door to get people’s debit cards to enable the buy button,” said Peck, according to the news source.
What the future may hold for payments on Facebook
By enabling payments in Messenger, Facebook will facilitate financial record keeping – conversations will be saved for future reference. The New York Times reported that in Messenger, a dollar-sign icon will be located next to the thumbs-up button. Once debit cards are linked to the account, if a person clicks on the dollar sign, enters an amount and selects a person, cash will be sent to the designated friend.
Importantly, social networking site is also introducing measures to make sure fraudulent or unauthorized transfers do not occur. The company will require users to rely on Apple’s fingerprint identification system, or enter a unique PIN, to authenticate payments. With mobile payment technology, security is always an essential requirement. Since mobile payments have been positioned as a safer and more convenience way to make purchases, Facebook attention to this aspect of the new service is good indication that it will be successful.
As previously stated, members can only send money to their friends at first, but that will probably change following the full release of the service. While Facebook Messenger will not compete directly with Apple Pay at first, over time, things may prove to be quite different. The news source mentioned that the company already has a payments business that earned approximately $1 billion last year, mostly due to purchases related to games on its platform. In the future, the social networking giant may start allowing users to buy items for sale directly on the site. As a new form of e-commerce, Facebook may become the link between merchants advertising on social media and consumers looking to buy products online. In comments regarding Messenger and newly acquired WhatsApp, Facebook CEO Mark Zuckerberg expressed his high expectations for the payment feature.
“I’m a big fundamental believer that these are going to be very big contributors to our businesses over time, but we just have to do it right,” said Zuckerberg, according to The New York Times.
The evolution of social media sites has been very interesting and their entry into the payments game is no surprise. Facebook already has the platform and the users, so it is only fitting that the company will attempt to tackle new ground in payments as well.Back To Blog