Facebook (NASDAQ:FB) has added a payments feature to its Messenger app, although its purpose is somewhat different from Apple Pay and others designed for use at the point-of-sale.
In keeping with its mission to facilitate communications between "friends," the Facebook payment system is peer-to-peer and free, enabling the half billion Facebook users to send money to each other through Messenger after linking a Visa or MasterCard debit card to their account by tapping a dollar sign in the chat box. Credit cards cannot be used.
"Really explicitly this is not for commercial transactions," Steve Davis, Facebook product manager, told USA Today. "This is again for casual payments between friends."
Younger consumers are looking for a convenient way to handle P2P payments, according to the Walker Sands "2015 Future of Retail Study." Half of 18- to 25-year-olds said they are likely to exchange money with a friend or colleague using a mobile app, while 19 percent of consumers ages 46 to 60 said they were likely to do this.
The development was long rumored, and even hinted at by CEO Mark Zuckerberg, who said mid-2014 that implementation would be years in the future. This was shortly after David Marcus, Facebook's Messenger VP, joined the company from PayPal. Facebook is known for moving fast, after all.
The service will be rolled out in the U.S. in the coming months for Android, iOS and desktop, Facebook reported on its news blog. The company went on to emphasize the security of its payment system, which encrypts the connection between users and Facebook, as well as card information when users ask for it to be stored. The system was built in-house and implements "layers of software and hardware protection."
Facebook has been handling payments for advertisers and gamers since 2007, processing in excess of a million transactions daily. These payment systems are kept separate from the rest of Facebook and are monitored by anti-fraud specialists.
As part of its messaging service, and not a standalone app, Facebook will become a formidable competitor to PayPal's Venmo, Google Wallet and Square Cash, reported TechCrunch.
"We're not building a payments business here," Davis told TechCrunch. The company's goal is to offer free P2P payments to make Messenger "more useful, expressive and delightful." Facebook will continue to depend on advertising for revenue, so it doesn't have to monetize payments, he said. Facebook wants to keep people on its platform looking at News Feed ads, and is using Messenger to help accomplish this.
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