It seems that the social network is ready to launch a money transfer service in Europe which would allow Facebook to compete with the likes of Western Union, while providing users the option to store money with Facebook or buy items online.
Facebook is currently seeking regulatory approval in its EU base in Ireland for "e-money" status that would see the company issue digital credits convertible into cash by recipients.
Facebook can make some forms of money transfer in the United States that allow payments within apps, from which the company takes a 30% cut. According to financial reports, Facebook facilitated $2.1bn in transactions in 2013, mostly to games publishers. Approval in Ireland would allow the company to operate an e-money service across Europe using “passporting” – in other words, digital payments can be used across EU member states without approval from each one. Although the company declined to comment on the development, this move highlights the scale of the global money transfer market.
The social network has made mobile platforms the focus of its expansion strategy in developing markets like India – the latter accounts for over 100 million of Facebook’s 1.2 billion users. In addition, mobile broadband subscribers far outrun fixed-line users in developing nations.
In developed nations, the social network competes with established technology platforms like Apple’s iTunes and Amazon, both having millions of customers with credit cards attached to the service. Since payment schemes are the equivalent to credit cards in emerging markets, Facebook can make progress here, particularly in places where banking infrastructure is not as mature as in EU or US. Regulatory approval from Ireland would subject the social network to the same controls as a bank, i.e. the company will be required to segregate funds equivalent to the amount of e-money it issues.
Industry observers confirm that payments and e-money services are currently expanding in financial services and technology market. They also note that Facebook’s rivals are more focused on payment systems than money transfers.
For example, Amazon’s CEO has made payment systems a priority focus, claiming that his company’s payments team should intensify its efforts to be successful in the space.
Thanks to ET.