Facebook Wants To Tap Into Financial Services
The world's largest social networking website is jumping into the financial services sector.
Facebook (NASDAQ: FB) is only weeks away from getting the regulatory approval it needs in Ireland for a service that would allow users to store money on the social network site, as well as use it to pay and exchange money with others, the Financial Times reports.
The Palo Alto-based company has reportedly been talking to money transfer startups in London, including TransferWise, Moni Technologies and Azimo. According to someone familiar with the situation, Facebook offered to pay Amizo $10 million to recruit one of its co-founders for business development. A Facebook spokesperson told the FT that the company did not comment on “rumor and speculation.”
Facebook has 1.3 billion users around the world, and many people use the site to stay connected with friends and family living in different countries. The company could use that massive connectivity to achieve its goal of tapping into the migrant remittance market.
“Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion,” a person familiar with the company's strategy told the FT.
This isn't Facebook's first attempt to join the payment business.
In 2011, the company launched a pilot program called Facebook Deals that offered online coupons and discounts from local businesses. But after four months, it quietly shut down the program.
Facebook also tried a virtual currency that allowed users to purchase items for games and other apps on the platform. This attempt only lasted a year, as Facebook didn't encourage sharing about the credits or make a case for people to care about them.
Global mobile transaction value is expected to average 35 percent annual growth between 2012 and 2017, according to research firm Gartner. By 2017, market worth is anticipated to be at $721 billion with more than 450 million users.
Other big companies are interested in mobile payments, too.
Google (NASDAQ: GOOG) launched its mobile payment system,Google Wallet, in 2011. But the Android app has been slow to gain traction. Last week, Google's payments chief Arial Bardin told conference attendees that the company is in the mobile payments market for the long-haul.
“We have been doing this for a while,” Bardin said at the payments trade show. “And we'll continue to keep doing this for a long while.”
Apple (NASDAQ: AAPL) is also looking into expanding its mobile payments services. People can already use credit cards on file with the iTunes account to purchase music, movies and apps. But the company's iTunes and App Store chief, Eddy Cue, has met with industry executives about handling payments for physical goods and services, according to the Wall Street Journal.
CEO Tim Cook said in a conference call earlier this year that mobile payments was one of the thoughts behind the Touch ID feature on the iPhone 5S.
“It's one of the things we've been intrigued with,” Cook said.
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