Facebook is adding a digital payment method to its platform, a move which will facilitate retail transactions, and ultimately encourage customers to stay within its ecosystem.
Facebook Pay, which was announced last week, will link to most credit cards and debit cards, much like Amazon Pay and Venmo. Users will have the option of donating to online fundraisers, in-game purchases, purchasing event tickets, and completing person-to-person payments on Facebook Messenger and purchase from “Select Pages and Businesses” on the Facebook Marketplace. The capability will be added to Instagram and WhatsApp, though Facebook did not comment the timing of these launches.
The move will help Facebook learn more about its users, which could help the company in its efforts to target marketing and advertising efforts, said David True, partner at Paygility Advisors. “Facebook makes money from information, so [it] can keep people doing more and more things without leaving the Facebook universe,” he explained.
According to True, payments are an important data play. The platform knows when a user clicked on a link or spent a specific amount of time looking at an item on the market, intelligence that will offer insights on which posts will more likely lead to transactions, he noted. Indeed, the success of Alipay and WeChat Pay in their home markets offer compelling use cases for the co-mingling of social media platforms and payments.
Facebook Pay marks the third recent financial services move on the part of the social media giant, beyond digital currency Libra and a charitable donations tool. Despite the potential for wide adoption, security concerns may deter some users from paying with Facebook Pay, Gartner senior analyst Charles Golvin said in a recent interview.
“Consumers are concerned about Facebook’s [treatment] of their private data,” he said, noting that consumers’ openness to turning over their private financial data to the social media giant is still a “big question mark.”
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