Facebook to expand Messenger-based m-payments beyond the USA

When Facebook entered the mobile payments field in 2014, the service was a hotbed of competition between web companies, and between operators and over-the-top providers. Since then, much of the gloss has come off m-payments. They may be a way of life, thanks to NFC and ubiquitous use of smartphones, but monetizing them has proved challenging in developed markets, especially for MNOs.

Undeterred, Facebook is extending its services outside the US and allowing people to exchange money via its Messenger app, starting this week in the UK.

“In the US, most people use payments in Messenger to send less than $50 at a time,” David Marcus, head of Messenger, said in a statement. Facebook does not charge for the capability, but sees it as one of many ways to make its user experience, especially its social network and messaging apps, indispensable to consumers in all their daily activities – driving advertising and other revenues, and keeping them off rival platforms like Google.

Apple has similar plans – its forthcoming Apple Pay Cash will let users send money to friends through the iMessage service. Other options in the US include Square’s Square Cash and PayPal’s Venmo, but in other markets, these services are not available. In Europe, it is more common to use smartphone contactless apps such as Apple Pay and Android Pay, so Facebook will be hoping to spark a change of habit  and a migration to messaging-based offerings.

“Convenience levels and near real-time payment transfers remove historical pain points with alternative P2P payment methods, including checks,” said Phil Sealy, principal analyst at ABI Research. “Although predominately used in social settings, to split bills or pay friends and family, there is significant opportunity for P2P to move beyond the social realms, possibly used as a future alternative platform to pay household bills.”

The bigger target for Facebook, as seen when it acquired WhatsApp, may be emerging economies, where it can build market share more easily at the expense of Google, on the back of its own services, and deals with regional carriers such as Millicom. “Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion,” said a source who spoke to the Financial Times.

However, as Google well knows, a large customer base and the basic elements do not add up to guaranteed success. The search giant had limited impact with its NFC-driven Wallet when that launched, and Google Money never managed to worry PayPal.