Mobile payments play a role in Messenger’s quest to become more like WeChat
Ted Livingston, the co-founder of messaging app Kik, wrote a Medium post in late 2014 about the race to become the “WeChat of the West.”
In the post, Livingston laid out what Kik and others need to do to become more like their counterparts in China (WeChat) and Japan (Line), where messaging apps have become a digital Swiss Army knife for consumers.
Livingston concluded that messaging apps in the West need to morph into a one-stop shop for consumers as a vehicle for payments, food orders, mobile gaming and financial services. He also said providers need to market their apps to the “youth,” which we can assume includes a portion of millennials.
While Kik and Facebook Messenger have both made moves to become more like WeChat and Line in the 16 months since Livingston’s post, the attention is on Facebook this week as it seems poised to add an in-store mobile payment option to Messenger.
The Information reported earlier this week that it examined code in the current iOS version of Messenger that revealed commands such as “pay in person” and “pay directly in Messenger when you pick up the item.”
Facebook is not publicly commenting on The Information’s report, but that the company would eventually add this feature should come as no surprise given its recent efforts to remake Messenger. This was even a topic of discussion during a Twitter Q&A Mobile Payments Today hosted last week.
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Indeed, the conversation about what Facebook could accomplish with Messenger changed in 2014 when the company hired Marcus, who has a long history with mobile payments. The old eBay/PayPal combination acquired his mobile payment company, Zong, in 2011.
Marcus made a difference at Facebook almost immediately; less than a year after his arrival, the company added a person-to-person payments feature to Messenger. Facebook added the capability in March 2015, four months after Snapchat introduced Snapcash, which rides the same rails as the Square Cash P2P app.
But Facebook wasn’t content with just adding P2P payments to Messenger.
A few weeks later, Facebook announced the launch of the Messenger Platform during its annual developer conference. The platform enables software developers to build and integrate apps within Messenger, which is something that was already happening with other messaging apps such as WeChat and Line.
Marcus wrote in a company blog post earlier this year that Messenger is in the midst of becoming much more than a chat app.
“The Messenger team’s mission is to make Messenger the best place to communicate with all the people and businesses in the world,” Marcus wrote in the blog post.
To help illustrate this goal, Facebook Wednesday announced that consumers who fly KLM Royal Dutch Airlines soon will be able to use Messenger to communicate with the airline to check in for a flight, keep track of flight changes, or chat with a customer service representative.
How a Messenger in-store mobile payments option stacks up against NFC-enabled mobile wallets and other providers such as LevelUp and PayPal remains to be seen. Messenger, however, has strength in numbers.
Facebook Messenger now has more than 800 million monthly active users. By comparison, WeChat had almost 700 million active users at the end of 2015, but the majority of these users are in China.
When you compare how Messenger stacks up against NFC mobile wallet users, Facebook wins in a no-contest. Does that mean, however, that it can win the mobile wallet wars?
A recent consumer survey from Javelin Strategy & Research found some 25 percent of U.S. consumers with a smartphone said they are “likely” or “very likely” to use Facebook as a mobile wallet provider if such an option was available.
“How that compares to other providers such as Apple Pay, Android Pay and Samsung Pay … Facebook doesn’t have as much pent up demand, which doesn’t really shock me given that Facebook’s monetization strategy depends on using consumer data to sell them products, so that doesn’t necessarily lend itself to consumer confidence to give them, for instance, payments information,” Daniel Van Dyke, an analyst at Javelin, told Mobile Payments Today in an interview.
“That’s kind of the reason why Facebook was so slow to move into commerce, and they did so in a deliberate way so as to not further challenge their already sort of iffy consumer trust when it comes to payments information,” Van Dyke said.
While Javelin’s survey results are positive for Facebook as a potential mobile wallet provider, this approach is counter to plans made public by the company.
Facebook’s Mark Zuckerberg said earlier this year that the company has no intention to compete with the ‘Pays’ of the world. So, what could be the play here for the king of social media networks?
“I would imagine that payments made through mobile devices in the physical world is just one part of a broader digital wallet strategy that they have,” Van Dyke said. “In looking at proximity mobile payments volume today, which is roughly $3–$5 billion, vs. mobile online retail payments, [the latter is] the much larger market today. Those could be easily facilitated if Facebook could get consumers comfortable with uploading their payment credentials.”
We might learn more about Facebook’s future commerce plans in a couple of weeks when the company hosts its annual developers conference April 12–13 in San Francisco.