Premise 1 – Payments are messages. Me to you, you to me – the content of which is the exchange of value.
Premise 2 – For consumers and merchant to adopt new payment technologies and move from legacy technologies (physical credit cards, cash, etc) they have to be global, frictionless and assured/secure consistently.
Facebook has 1B users globally. They have two messaging platforms that have global scale and significant numbers (Messenger at ~200M and What’s Ap at ~500M). Facebook, under the leadership of David Marcus, has declared an intention to enter payment messaging market. The large card players watch but largely dismiss the social networks as potential competitors. The traditional view is ultimately a transaction will still cross their rails, so either way they benefit.
But – bear with me across some leaps. What if Facebook changed the game, as they have in so many other ways?
None of this attributable to any industry sources – just speculation on one possible path.
- Facebook leverages Messenger and What’s Ap to launch “FriendPay”. On this platform – one friend pays another via enhanced messaging. If we are friends (whether individual or merchant) – a payment can be sent. If we both are on Facebook, then we just need to be Friend or Followers.
- Facebook acquires Discover card providing their own payment rails and reduce dependency on the other payment networks and their fee structures. To join FriendPay, users would agree to credit terms and conditions similar to acquiring a Discover card – but branded under the FriendPay (Have you ever had the strong urge to run out and get a Discover card?).
- How much does Facebook charge? $0 – not to the individuals or merchants, which turns the traditional industry model on its head. Why? Facebook already has your social graph, this rounds out their insight into not only what you do, but what you pay for. The large card players are still trying to get this model right – it’s right there in Facebook. All they have to figure out is strong payment messaging. This increases their targeting capability many fold.
No “wallets”, low friction, free – all the parts are there. My money would be on Facebook.