Like my status, and send me money. Facebook is about to get even more involved in people’s lives and wallets. Facebook is planning to jump into the financial services sector. Specifically, Facebook is planning on becoming a player in the world of electronic money and payments.
The Financial Times is reporting that Facebook “is only weeks away from obtaining regulatory approval in Ireland for a service that would allow its users to store money on Facebook and use it to pay and exchange money with others, according to several people involved in the process.”
If Facebook is successful, it could launch a payment platform fully integrated with its users’ Facebook profiles and create a convenient and user-friendly method of transferring money between Facebook friends or contacts.
According to the Financial Times, “the authorisation from Ireland’s central bank to become an ‘e-money’ institution would allow Facebook to issue units of stored monetary value that represent a claim against the company. This e-money would be valid throughout Europe via a process known as ‘passporting’.” So, while this product may be available in Europe very soon, it seems that non-European users will have to wait a bit longer to send money directly to their Facebook friends. Facebook has definitely shown in its interest in handling money for its U.S. users though. Last year, Facebook facilitated $2.1 billion worth of transactions relating to payments for developers (mostly games) who charge users for in-app purchases.
Computer World points out that this is not Facebook’s first attempt to break into electronic payments. Facebook canceled its Facebook Credits virtual currency program after the program failed to get traction with users. Facebook has also been trying to promote its Facebook Gifts program, a service where Facebook friends can sent gifts to each other for birthdays or for particularly awesome cat photo posts.
Given how much Facebook knows about its users already, will Facebook users trust Facebook with their payment information, too? A recent Yankee Group survey found that only “10% of U.S. consumers would choose a mobile wallet from Facebook.” The primary reason for the low interest seems to be security and privacy concerns.
What do you think about Facebook jumping into the electronic payments arena?