On March 17th, Facebook announced that in America, it’s instant-messaging app will soon allow users to perform digital monetary transactions. Users will be able to link their debit cards to their Facebook account, tap on a dollar sign in the app, type in the amount, and press send. Very simple.
Facebook is not the first to enter the market of free person-to person (P2P) payments. The move follows Snapchat, Apple, Samsung, and Google, all of whom announced new payment systems over the past few months. Facebook’s service differs in that it does not make instant payments: the money only arrives after a few hours, or days, depending on how quickly the user’s bank acts.
This move is widely seen as proof that technology firms are beginning to creep into the banking industry.
But how efficient are these systems, and do the businesses involved make a profit? Venmo, Square, and Snapchat do not charge users a fee for sending funds, and cover all the behind-the scenes transaction fees themselves, meaning they lose money on every single transfer. Apple is allegedly the only exception to this rule, and managed to convince banks to share a cut of each Apple Pay transaction.
Do you all think that this a good move by Facebook? I’m someone who uses Venmo quite frequently, but I can’t imagine ever using Snapchat or Facebook to transfer money. Facebook’s payment product manager noted “We’re not building a payments business here. The goal is simply to make Messenger more useful, expressive and delightful”.