Social networking giant Facebook on Tuesday entered into the mobile payments fray with a new service connected to its Messenger app. With the new payments feature, you can do more than send messages and emoticons to your friends -- you can send cold hard (digital) cash.
Facebook is positioning the feature as a “more convenient and secure way” to send and receive money between friends. The free service will start rolling out in the U.S. in the months ahead. With 500 million monthly users, Facebook potentially has a strong head start in the mobile payments space.
“A dependable and trusted payments processor for game players and advertisers since 2007, Facebook processes more than one million transactions daily on the site and also handles all the payments processed on Messenger,” the company said in a statement. “Incorporating security best practices into our payments business has always been a top priority.”
Facebook Promises Secure Payments
Here’s how it works: To send money, just start a message with a friend. Tap the $ icon and enter the amount you want to send. Then tap “Pay” in the top right and add your debit card to send money. Once you’ve added your Visa or Mastercard debit card, you can create a PIN to offer more security the next time you send money.
To receive money, open the Messenger conversation from your friend and tap the “Add Card” in the message. Then add your debit card to accept money for the first time. The money is transferred right away, but Facebook noted it could take one to three business days to see the funds hit your account, which is standard.
“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. We use layers of software and hardware protection that meet the highest industry standards,” Facebook said. “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 team of anti-fraud specialists monitor for suspicious purchase activity to help keep accounts safe.”
Moving Into E-Commerce?
Although this doesn’t directly compete with Apple Pay and Samsung Pay, it does tap into a potentially lucrative mobile payments trend. The U.S. mobile payments market is set to boom by 2019, according to market research firm Forrester Research Inc. Forrester is predicting it will hit $142 billion by then. Facebook is competing more against the likes of Venmo, which PayPal owns. And e-commerce startup Square offers similar functionality in its app -- it allows payments to people via e-mail.
We caught up with Greg Sterling, vice president of Strategy and Insight at the Local Search Association, to get his thoughts on Facebook’s move. He told us peer-to-peer payments is a logical market for Facebook to enter.
“This project was launched under the leadership of David Marcus, who used to run PayPal. I suspect it will be popular and successful, especially outside the U.S.,” said Sterling. “Facebook has been processing payments in one form or another since 2007. However, this may be the beginning of a broader move into online and e-commerce payments and perhaps, one day, into mobile payments in the real world.”