Facebook ‘Friends’ Mobile Payment Industry
Last week Facebook announced it was going to make it easy to transfer funds between people. While that’s not on the same level as paying bills online or paying for purchase at a retail store, it has tremendous implications.
Right now a very small percentage of the overall buying public uses mobile payments. But many are eager to start doing so, and those that do are very enthusiastic. A study earlier this year by Verifone found that 84 percent of shoppers said they would use a phone to pay for small and medium purchases, but that many U.S. adults are still unaware of these services or how to use them.
The rollout of Apple Pay in October 2014 made huge strides in the public’s acceptance of mobile payments. Since then, more than 220,000 retailers have partnered with Apple to offer contactless mobile payments, enabling iPhones and iPads to wirelessly communicate with checkout machines using near field communication (NFC) technology. Facebook’s latest move using Messenger to transfer money between friends has the potential to move the needle in a similar manner.
For eight years, gamers and advertisers have processed payments on Facebook. With 1.4 billion active monthly users, Facebook offers huge potential growth in the mobile payment space. And it works very simply: Via Facebook’s Messenger app, users open a message with a friend, tap the $ symbol and enter the amount to send, then tap “Pay” in the upper right, and add a debit card. The friend receives it when he or she opens the conversation and taps “add card” to add a debit card and accept the funds.
The system may eventually help increase retail sales. As IFAN Financial President and CEO J. Christopher Mizer noted: “IFAN has long-recognized the growing synergies between social commerce and mobile technologies. We believe that Facebook’s participation in the mobile payments arena will likely accelerate consumer adoption of peer-to-peer money transfers via smartphone and ultimately add value to our platforms.”
For instance, often times shoppers will see an item and remember that it was something a friend mentioned wanting to pickup. Typically, the shopper would call or text the friend with information on the product, and the friend would need to arrange getting to the store or looking it up online to take ownership. With the increasingly social nature of shopping, however, the purchase can be handled in one trip: The shopper not only advises the friend the product has been located, but also can accept payment for buying it on her friend’s behalf. (It could take one to three business days to make the money available to you depending on your bank, just as it does with other deposits.)
Of course, consumers are still very concerned about security of their information, and time will tell if players such as Apple and Facebook can instill more confidence in mobile payment platforms. But despite that hesitance, the public is clearly interested in mobile payments, and with Facebook providing a solution it makes the process seem more accessible to many shoppers— perhaps billions of them.
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