Millennials have learned to quickly adapt to the way mobile technology fundamentally changes the way simple tasks are performed; wireless cashless payments serve as a good case and point. Recently Facebook targeted the millennial generation with their own payment feature that works through their Messenger app. The app will allow Facebook friends to transfer money easily between bank accounts. According to Facebook, this service will become available to U.S. users within the next few months, and will expand internationally some time later.
Currently, PayPal and Snapchat both let users send money to friends and family using smartphones that are linked to bank accounts. Facebook's new feature will work with debit cards and will be available on desktop computers as well as both Apple and Android mobile devices. Most notably, Facebook is not charging users a transaction fee to pass money back and forth. This means that the Facebook isn’t using Messenger payments for revenue, at least for now.
Unlike Snapchat, which partnered with Square to handle the actual money transfers, Facebook built its entire system in-house. The world’s largest social network was quick to emphasize its substantial security features and reassured users that it already handles over a million payment transactions each day for advertisers, gamers, and users sending gifts through the platform. Payment systems are stored separately from other areas of the network and receive extra monitoring and control.
How It Works
To engage in the peer to peer payment feature, Messenger users will tap the new "$" icon, which will be found next to the camera icon. Users can then enter the amount they would like to send and tap "pay" in the top right corner, where they will enter their debit card number and create a pin code. This pin code will be entered next time the user would like to send money, rather than re-entering the card number. Touch ID is also available to be used instead of a pin code on Apple devices that allow it.
(Photo Source: http://newsroom.fb.com/)
What the Future Holds
Facebook continues to innovate and add new features to attract users beyond basic communication, which helps keep them relevant and ahead of the curve. Due to Facebook's size, this should disrupt the peer to peer payment market, at least short term as users try out the new service. It’s also important to note that through this “free” new feature, Facebook is collecting more payment data, and may be able to use it to better target users if they ever decide to sell products or services on their site, or incorporate a buy button.
“While Facebook’s entry into mobile payments is not providing them with a revenue stream currently, it will help their users to grow more familiar with utilizing the platform for that purpose,” said WebiMax CEO Ken Wisnefski. “While Facebook payments mechanically only help users to pay a friend for dinner, concert tix, etc., Facebook’s already huge user base could make them a dominant player in the mobile payment space down the line, if they decide to expand the functionality beyond peer to peer payments.”