Facebook threw its hat into the mobile payments ring when it announced Tuesday it would begin to roll out the ability for people to send payments to each other via the Messenger app. Facebook certainly isn’t the first social platform to do so, as payment options like Square have been around for some time, and apps such as Snapchat introduced payment options late in 2014. To many people who hang on Mark Zuckerberg’s every word, the mobile cash transfers shouldn’t be a surprise. But the shift is still notable, mostly because of what it could mean for the company in the long term.
Mobile payments are becoming more normalized. At least 27 apps allow you to pay a business or institution with your smartphone, and peer-to-peer payments (what Snapchat and Facebook are doing) seems to be a natural progression. Why not pay your friend for concert tickets through your phone, as Facebook’s own example shows? Plus, a few differences set the Facebook move apart from the others. For one, the company is now using the expertise of former PayPal president David Marcus, who joined the social media company in June 2014. Two, Facebook is only allowing debit card transactions. And what’s more, the company set up the payment plan on its own instead of relying on other platforms. So not only does Facebook have your debit card information, but now it has the opportunity move toward other promotions on its site.
To be clear, Facebook isn’t looking to make money off of its 21st century equivalent of a wire transfer. Payments to Facebook friends are free, and there’s no charge to use the platform or to receive payments. By simply hitting the new $ symbol in the messenger section on iPhones, Androids, or desktops, you can enter the payment amount and send it to whomever you want. Facebook users must have a debit card on file with the company to send payments, and you need to also put card information on your account to receive a payment.
Facebook already has a reported 500 million people using its messaging services, and a total 1.3 billion people worldwide have a Facebook account. According to the company’s fourth-quarter earnings report in 2014, the site had about 890 million active daily users in December, an 18% increase from the year before. Needless to say, Facebook already has a robust built-in audience to sway toward using the new payments service. The move, overseen by Marcus as the vice president of messaging products, likely signals a shift toward more e-commerce traffic on the social media platform.
Once Facebook has users’ debit card information already stored, it becomes that much easier to market other products they can buy with the click of a mouse. The company began testing a “Buy” button on its newsfeed, in which Facebook users can purchase goods featured in ads or posts. Facebook teamed up with payments startup Stripe to power the service, which also required a card on file. Facebook confirmed to Wired that users who link a debit card to their account for Messenger payments can also use that information to buy games on Facebook’s main site. And with the cards stored on the company’s servers, who’s to say it can’t be used for other purchases down the road?
Can it be trusted?
Facebook was deliberate in stating its trustworthiness in hosting so much financial information on its in-house computers. “A dependable and trusted payments processor for game players and advertisers since 2007, Facebook processes more than one million transactions daily on the site and also handles all the payments processed on Messenger,” the company posted in the blog announcement about the new payments. The company doesn’t go into much detail, but it does say that the financial data is separated from other parts of the Facebook platform, and that the company has anti-fraud specialists on staff to monitor for “suspicious purchase activity.”
For the Messenger payments app, which will be rolled out in waves in the coming months across the U.S., users can create a secure PIN number when they first enter their debit information, or choose to use Touch ID when using the iPhone 6. “It’s an easy, secure, truly frictionless, and almost magical experience that happens in-line with existing conversations where all of your friends and family already are … Please bear with us as we make this feature gradually more available nationwide,” Marcus wrote on his Facebook page after the official announcement. What remains to be seen, however, is whether the hordes of Facebook users decide it’s beneficial to pair their photos and page likes with their wallets.
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