I read the Facebook announcement of payments through Messenger with interest, and just a touch of “about time”!
After all, there is nothing more social than sending money to family and friends. And although much attention is paid in the press to the friend-to-friend use cases, I suspect that the family-to-family opportunities are much greater. Not just kids’ allowances, but the whole wide world of both occasional and ongoing support payments among relatives. And how nice that it could easily solve that vexing problem of thank-you notes after sending off the birthday check.
Looking ahead for Facebook, the particular opportunities with cross-border workers’ remittances are enormous. This goes beyond what they are currently offering, but it doesn’t take much imagination to figure out they are heading there. After all, cross-border is lucrative: anyone looking at Visa, MasterCard, or PayPal financial statements can spot this without difficulty.
The synergies are staggering. Who is more interested in pictures of loved ones than the remote worker who is supporting her family? Who more interested in “status updates”?
Brand is another great advantage for Facebook. At Glenbrook, we spend a lot of time talking – and teaching – about the importance of brand (whether “big B” (e.g. AmEx) or “small b” (e.g. “check”) as an enabler of payments. This is because the sending and receiving parties need a common word (brand) to tell each other how they are going to pay. Lack of a common brand is a huge barrier to entry for payments startups. Facebook has this covered: “I’ll send it to you by Facebook” will be readily understood by their hundreds of millions of users.
Some will point out that receivers often don’t have bank accounts – very true. But GSMA points out that there are over 255 live mobile money services targeted at the unbanked in the developing world. I’m sure Facebook is smart enough to figure out how to deposit money into mobile money accounts. There will be a lot of heavy lifting to do to monitor and control fraud – but as Marcus learned in his years at PayPal, that is entirely possible to do, with enough people, systems, and money – which I’m guessing are available at Facebook!
The world of P2P payments has just changed in a very major way.
This post was written by Glenbrook’s Carol Coye Benson.
