The world’s most popular social media network has ambitions to dig deeper into our pockets. According to a report in Financial Times, Facebook isn’t content with being just a platform to host cat photos and status updates anymore.
The financial daily maintains that Facebook is readying itself to provide financial services in the form of remittances and electronic money, and is just weeks away from receiving regulatory approvals from authorities in Ireland.
When (or if) it receives the approvals, it can immediately launch a service allowing users to store money on their Facebook accounts and trade it with others on the social media network, in effect using it as an e-wallet that can be used to remit funds.
Initially, the service will be available for money trade within Europe via a process known as ‘passporting,’ and the site is reportedly in discussions with UK-based start-ups that offer international money transfer services online and via smartphones.
Facebook currently boasts of 1.3 billion active monthly users and 680 million mobile users, and analysts maintain that this huge user base – combined, it is more than the population of any country in the word – means that the company is well positioned to make a significant impact in the payments area.
Lafferty Group, a major provider of knowledge services for the financial industry worldwide, was quick to “welcome reports” that Facebook is seeking an e-money license in Ireland that would enable its users to hold and exchange money on the social networking site.
“As well as having implications for the rapidly expanding global electronic payments market, the anticipated announcement will provide a boost to Ireland,” the company said in a media comment on the rumours even as Facebook itself has so far not commented on the reports, with a spokesperson maintaining that the social media giant doesn’t comment on “rumour and speculation.”
Nevertheless, Lafferty Group CEO Robert Grealis put the move in context. He said: “We think that Facebook has enormous potential in the e-payments business – both in developed and emerging markets – and wish it well. E-money in its various forms is now enjoying explosive growth around the world. Recent research undertaken by Lafferty Group’s Westport-based research centre has found that several Latin American countries are particularly well-positioned in the field of mobile money, not least because of their willingness to allow telcos and others to accept and store deposits, which allows them to issue e-money, thereby compete directly with banks.”
Incidentally, Facebook isn’t the only technology firm that wants to dominate the new battlefield that is e-wallet. eBay’s PayPal, Google’s Wallet app and Chinese tech giants Alibaba and Tencent are already trying to establish themselves as viable online currency exchanges.
Moreover, this will be Facebook’s third attempt at dominating the eWallet space. The company launched the virtual currency Facebook Credits in 2011 as a way for users to pay for games on the social network, but discontinued the service after messing up with the conversion of its Credits into fluctuating international currencies.
Then early last year, the social media network unveiled reloadable Facebook Cards, similar to debit cards in usage and available in a variety of physical and digital stores. Facebook also later in the year toed up with PayPal to allow users to use their Facebook login, linked with their credit card info, to make online purchases.
The company is now in talks with TransferWise, Moni Technologies and Azimo, among others, to facilitate payments and remittances as and when it is given the green light by Irish authorities. From a licensing perspective there are wider implications. Laffery’s Grealis explained that “Several other major internet players with substantial operations in Dublin are also known to be considering similar moves. This presents Ireland with a great opportunity to compete with London in the field of e-money licensing.@ eCommerce in general and remittance in particular and is a lucrative business. Global remittances, including those to high-income countries, are estimated at $581 billion (Dh2.13 trillion) this year, from $542 billion (Dh1.99 trillion) in 2013, rising to $681 billion (Dh2.5 trillion) in 2016.
Even a fraction of that in commission will mean big money, and India being the largest recipient of remittances in the world (non-resident Indians sent home $71 billion or Dh260.8 billion in 2013) bodes well for Facebook, whose user-base in India surpassed 100m just this month, confirming it as the social network’s largest national market after the US and underlining the country’s importance for growth.
In fact, analysts suggest that its Indian user-base will surpass Facebook’s 180-million user-base in a few months, within this year itself. This is especially because of the rapidly growing Indian middle-class that is fast adopting mobile Internet.
With Facebook’s recent acquisition of WhatsApp, its Indian user-base it sent to multiply further, and that will result in not just more messages, but more money being exchanged by its users. Now that’s one status update that Facebook wants to flaunt as soon as it can.