Facebook adds payments to Messenger
When David Marcus left PayPal in June 2014 to become the vice president of messaging products at Facebook, this unofficially signaled the social media company’s desire to position its messaging feature as a person-to-person (P2P) payments product.
On March 17, Tuesday Facebook made those intentions a real thing when it announced a new feature in Messenger that will enable users to transfer funds to others in a similar way to what Snapchat and others currently offer their users.
Messenger users must link a Visa or MasterCard debit card to their account to transfer funds. Then users can send funds to others by tapping a dollar sign button in either the Messenger app or desktop version’s chat box.
Snapchat in November 2014 introduced a new feature called Snapcash that rides the same rails as the Square Cash app, which is another of several P2P funds transfer apps available to consumers.
Facebook said Messenger payments will be free as the company rolls out the service to U.S. users in the coming months. Some 500 million consumers use the Messenger app on iOS and Android devices.
“The fact that Facebook will offer person-to-person payments through its messaging app comes as no surprise to industry watchers,” Michelle Evans, senior consumer finance analyst at Euromonitor International, told Mobile Payments Today. “Facebook did not hire former PayPal chief David Marcus last summer because it wanted him to simply expand its messenger user base. That hire was as good an indication as any that Facebook intended to push into payments in a big way.”
However, Facebook faces a glut of similar offerings in the market.
In addition to the aforementioned Snapcash and Square Cash, Venmo is popular with college students and millennials. If and when Facebook expands the service overseas, WeChat is waiting in China, while Line is popular in Japan. Consumers worldwide also have P2P payment options available to them from financial institutions.
“Consolidation in this space is inevitable, but Facebook’s value proposition is an interesting one and may position it to outlast others that have come before it,” Evans said. “Facebook has a wide consumer base and the unique ability as a social network to insert payments into the normal course of the conversation.”
And that’s exactly the spin Facebook put on this new feature when contacted by Mobile Payments Today.
“Messenger has 500 million people using it every month and money is something that people are already talking about on Messenger,” a company spokesman said. “Now, when they have those conversations, they can easily send a payment right from the conversation rather than needing to navigate to a different app.”
Facebook put emphasis on security in its Messenger announcement and that might have been a veiled shot at Venmo, who last week updated its account notification system a few weeks after a Slate article highlighted problems some users reportedly faced with unverified account access.
Facebook said in the announcement it has been a dependable and trusted payments processor for game players and advertisers since 2007.
“We use secure systems that encrypt the connection between you and Facebook as well as your card information when you ask us to store it for you,” Facebook wrote in a company blog post. “We use layers of software and hardware protection that meet the highest industry standards. These payment systems are kept in a secured environment that is separate from other parts of the Facebook network and that receive additional monitoring and control.”
A company spokesman told Mobile Payments Today that Facebook is using proprietary technology for this new feature and that its subsidiary, Facebook Payments Inc., will process Messenger transactions.