Facebook and Payments to Eventually Overlap, Says Mark Zuckerberg

Recently, it was announced that David Marcus, the man behind PayPal’s online-payments service, would be joining Facebook as its head of messaging.

At Facebook’s Q2 earnings call, CEO Mark Zuckerberg commented on the company’s plans to monetize via payments. There will be some overlap between Messenger and payments, and it will be part of what will help drive overall success, he said.

  • The Messenger app processes 12 Bn messages a day and boasts 200 Mn monthly active users.

  • Since Facebook does not host advertisements on Messenger, integrating a digital cash system would add an effective revenue stream for the app.

  • Mobile commerce is growing rapidly and is expected to total $304 Bn in 2014, according to eMarketer.

  • Facebook generated $2.91 Bn in revenue in Q2. Of that, nearly $1.66 Bn, or 62% of the company’s overall advertising revenue, was acquired via mobile advertising.

  • Revenue from payments and fees for the quarter was $234 Mn.

Facebook has already made forays into the payments market. A couple of months back Facebook applied for an e money license in Ireland, which would enable it to offer peer-to-peer money transfers in Europe. With Facebook pages having a huge fan following, banks see it as amazing significant channel through which to engage with customers.

Zuckerberg stressed, however, that Facebook would be building up the entire ecosystem carefully and that the company would take the time to do it right over the course of several years. We could put ads in … or payments and make some money in the short term, but we’re not going to do that, he said. To the extent that your models or anything reflect that we might be doing that, I strongly encourage you to adjust that, because we’re not going to. We’re going to take the time to do this in the way that is going to be right over multiple years.

Several scenarios seem possible for Facebook:

  • Facebook becomes an international bank – an e-money bank with or without collaboration with banks around the world, providing a singular platform for the world’s different currencies and making it easy for users to save, invest, transfer money or do commerce.

  • Facebook becomes the biggest e-commerce player on the planet, with Facebook pages acting as virtual retail outlets. Payment methods are integrated to complete commerce transactions. Consumers can use Facebook’s WhatsApp and Messaging apps to get in touch with sellers to find out more about products and discuss terms of payment. Also, it can work the other way around for sellers, making Facebook like a big platform for negotiating and making deals.

  • Facebook becomes the biggest remittance giant in the world, providing high-volume, secure cross-border payments day after day – like a digital version of Western Union.