Friday, March 27, 2015

The Facebook P2P Mobile Payment is more than just a payment method

Online Payment has been a dream of Facebook for eight years. It was also clear that when the company hired former PayPal executive David Marcus last year that it was planning to turn that dream into business.
Not surprisingly, Facebook has announced launching of peer-to-peer (P2P) mobile payments into its Messenger application. Honestly, it works basically like GMail payments or Square Cash that only supports debit card transactions, and for now only in US.
According to the announcement, “The first time you send or receive money in Messenger, you’ll need to add a Visa or MasterCard debit card issued by a US bank to your account. Once you add a debit card, you can create a PIN to provide additional security the next time you send money. On iOS devices you can also enable Touch ID. As always, you can add another layer of authentication to your account at any time.” Theoretically, the money is immediately transferred. However Facebook indicates that it can take up to three days to receive the funds depending on the underlying bank’s policies.

Given the popularity of Facebook around the world, it is reasonable for us to say that this mobile payment method will ultimately roll out globally and it could become quite successful (for different reasons in different countries). Beyond that, a more interesting question is what might come after the P2P mobile payment.
Obviously, such a powerful payments capability could enhance e-commerce on Facebook or provide consumer spending data to Facebook ad targeting. In just last week, Facebook announced the acquisition of TheFind, publicly discussed as a way to improve Facebook Ad targeting and relevance. However, TheFind is a shopping site that could provide Facebook with an immediate e-commerce marketplace capability. It still remains to be seen whether e-commerce is the next target that Facebook is moving towards. Mobile payments would obviously be supportive of e-commerce. It’s also not inconceivable that Facebook would get into in-app payments or offline mobile payments in physical stores at some future point. Marcus has experience with all these things.
All these payment scenarios also raise the prospect of “closed loop” transactions and the ROI reporting and optimization benefits they imply.

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