Facebook Messenger Pay: Is there a hidden e-commerce agenda?

Facebook’s impending entry into the peer-to-peer payment space may only be the very beginnings of a fully fledged e-commerce strategy, writes TravelMole’s Ray Montgomery.

Smartphone apps that allow peer-to-peer money transfers are not a new phenomenon but the very fact that Facebook messenger is muscling in is significant for several reasons. Firstly, there is already a captive market of a reputed 500 million active monthly users of the Facebook mobile messaging app, so users who want to send or receive payments simply have to enter their card details and they are good to go.

Also, unlike most mobile payment apps, there are no transaction fees to pay. You make think Facebook is missing a trick here by not immediately monetizing the service but there could be rich pickings in the long term. With a huge databank of stored payment information (for any peer-to-peer money transfers, both parties are required to register payment details) there are potentially many opportunities for e-commerce down the line, particularly in the travel space. For that to happen the payment feature needs global traction. It will be rolled out only for US users initially with no details announced yet if and when it will be available worldwide.      

Facebook has revealed some of the security features such as “layers of software and hardware protection that meet the highest industry standards” and it has deployed a team of anti-fraud specialists keeping tabs on any suspicious activity. There is also an option to add a PIN as an extra safeguard and iOS users can enable Touch ID.

Once a debit card has been linked to a Facebook ID, users simply click on a dollar-sign icon on the screen to send money. The transaction and the two-way conversation will be saved giving Facebook valuable insights into the where, who and how much of money transfers and the conversations behind them.

“We know that conversations about money are happening all the time but most conversations begin in one place and end in another place,” said Facebook’s Steve Davis, the product manager in charge of the project. This is a big deal for marketing and in-app commercial opportunities in the future and once the service is scaled up globally, it is likely to appeal straight away to the expat remittance market in cross border payments.

Although over the top commercial activity can quickly alienate social media users, there are undoubtedly opportunities to monetize the platform and very precisely target ‘social shoppers.’

Robert Peck, an analyst with SunTrust Robinson Humphrey, said “Facebook could use this as a back door to get people’s debit cards to enable the buy button.”