There has been an absolute avalanche of information about the recent Facebook press release confirming that in the coming months Facebook Messenger will enable users, in the US, to send / receive money. In this post I don’t intend to reiterate what’s already been said, but rather to share 10 things about Facebook and with it the potential of Facebook Payments that I found pretty interesting.
1. Facebook is the most popular social network in the world
From Facebook Company Info, based on December 2014 statistics:
- 890 million daily active on average
- 745 million mobile daily active users
- 1.39 billion (!!) monthly users
- 1.19 billion mobile monthly users
- 82% of the daily users are outside of the US and Canada
2. Facebook Payments, via Facebook Messenger, will be pretty simple
I don’t want to repeat what has already been said, so check out the Facebook Payments press release (and TechCrunch) which outlines how to send money and receive money using Messenger. The main thrust of the Facebook Payments message is that payments through Messenger will be Easy, Secure and Free
3. Facebook Payments will be Free
Facebook have enabled this by enabling payments using Visa and MasterCard debit cards only, and by developing the Facebook Payments functionality in-house rather than utilising an external provider / solution. TechCrunch shared that Facebook Payments will “undercut PayPal’s 2.9% + $0.30 fee per transaction from debit cards”.
4. Facebook Payments were inevitable
According to the BBC, Facebook have responded to their users who were unhappy about having to download separate apps to chat with friends, send videos and make free calls. The BBC report highlights how in 2014 the need to download separate apps resulted in user scores for the Messenger app, via iOS App Store, fell by 1.5 stars. As a result Facebook has developed and enabled various apps (such as Messenger) within Facebook itself.
You could also argue that payments via Facebook are nothing new. After all, on a daily basis Facebook processes over a million transactions for game plays and advertising.
5. Facebook Apps needed their user base to reach a critical mass
So in June 2014 Facebook poached David Marcus from PayPal to help monetise mobile messaging. According to TechCrunch Facebook has shared that they only wished to monetise apps once they hit 100 million users. The WSJ reports that Facebook Messenger now has more than 500 million users and WhatsApp messenger has more than 700 million users.
6. Facebook Payments ensure ‘Stickiness ‘
Rather than transferring you to another payments websites or payments app, such as Paypal’s Venmo, Facebook Messenger is enabling Facebook Payments directly within Messenger so you remain ‘locked’ within Facebook and don’t leave the website / app at all
7. Facebook Retention is key
Mashable shares that Facebook aims to keep users on the social network for longer, and quote eMarketer who estimated that in 2014 adults in the US spent on average 21 minutes per day on Facebook – which amounts to 6% of their overall time spent online. The overall theory being that the longer one is on your website, the less time they are spending on a current or future competitors website.
8. Facebook Payments are a no-brainer
Mashable go on to quote Forrester Research that indicates that mobile payments will triple in volume from $52 billion in 2014 (is that right? wow!!!!!!!!!) to $142 billion in 2019. Those statistics combined with the fact that Facebook has 745 million mobile (via mbile phone/tablet) daily active users makes Facebook Payments a no-brainer!
9. Facebook Payments security…
In the Mashable article, You can now pay your friends through Facebook Messenger, they interview Steve Davis (not the snooker player) the Facebook payments program manager and he shares how Facebook Payments are PCI compliant – which in short means they use the same security standards that are applied when you make a credit card payment. In addition to this the Inquirer reports that the payment systems are further isolated in a separate and secure environment from the rest of Facebook and have additional monitoring and control checks. For those using an iPhone, they can authenticate Facebook Payments using the TouchID fingerprint security.
10. Who Are the Other Players in this Space?
There are a couple of current key competitors, Venmo (from PayPal), Snapcash (Snapchat) and Square Cash in this space. There are other examples such as weChat in China and Twitter payments via Pingit in the UK – but the Facebook potential due to its numers and reach in this space is quite unique. What’s interesting is that some of these providers enable instant payments – Facebook does not. Facebook payments will route through your bank account and as a result take longer.
The uses of Facebook Payments are pretty obvious; kids at college asking for money transfers from family, borrowing a bit of money from friends / family or sharing the bill at restaurants. So for now in the US, and I’m sure very soon elsewhere, saying that you’ve forgotten your wallet will no longer be a valid excuse 😉
I would love to hear any interesting facts or information about Facebook Payments that you may know – kindly share them below…