Last week, Facebook introduced peer-to-peer payments in Messenger, with the product goal of enabling other services on Facebook. Facebook’s Deb Liu, head of platform stated: “We see Payments as an enabling tool. Our core business is not payments, but it’s an enablement to making [other parts of our business] like games work. We’re not in the business of driving as many transactions as possible, it’s enabling as many opportunities as possible.”
Right now Facebook peer-to-peer payments are only available to US users with a debit card. Another of Ms Liu’s product scenarios, in addition to gaming, is planning an outing, or a dinner together. “[Messenger] is the place where people are already planning things… It used to be you’d have these conversation face to face and I’d just hand you $20 in cash. [With Messenger] you’re already in the conversation.” Including payments in Messenger is just “in the natural flow of conversation.”
Paying for a joint dinner, or a joint gift, or paying someone back, are all common, causal potential uses of peer-to-peer payments but I have a feeling that payments will be more significant on a global scale. Take, if you will, WhatsApp’s adoption and usage statistics outside of the US, especially their incredible penetration numbers in Latin America, Africa and the Middle East. Over 60% of mobile internet users use WhatsApp making it, by far, the most popular mobile messaging app worldwide. It got there because it solved a problem for international users: it allowed them to avoid often steep costs for texting, both locally and abroad, set by their local mobile phone provider.
Now, look at international money transfers, especially between friends and family. Banks and money transfer businesses charge as much as 5-8% in fees when transferring money. This can be a huge burden but there are no easy ways to avoid such fees today. Anecdotally, when my friends and relatives who live abroad want to send me a gift, their preferred method is to buy me an Amazon gift card. They don’t feel like they are paying an extra fee for what is essentially a money transfer, Amazon is happy to do business with them (they accept credit cards from almost every nation) and I am happy to spend my gift card there. In its own roundabout way, it’s the easiest way for family members to send me gifts.
It will be interesting to see if Facebook can make peer-to-peer payments that much easier internationally, as frictionless as possible, and if it even wants to. The success of WhatsApp in making texting free for international users proves there is a huge hunger abroad for mobile-based services, especially those that can reduce widespread fees. Facebook could also consider integrating payments with WhatsApp, certainly more popular than Messenger abroad. On the other hand, Facebook may just be considering the social scenarios that will perhaps be more common use cases in the US. It will be interesting to see how the product grows.