After introducing a peer-to-peer (P2P) payment feature in the US two years ago, Facebook is finally bringing the capability overseas by launching it in the UK.
Users of the company’s messaging app, Facebook Messenger, will be able to send funds to friends and family after adding a debit card.
The company is also reportedly testing out a new payment feature that would allow users to gift money to other users in the form of a digital red envelope, similar to those given out during Chinese New Year, via the company’s main website and app, according to Recode. Both of these features will allow Facebook to capitalize on popular payment trends.
Facebook has a strong user base in the UK, which could help it capture a piece of the growing P2P market. More than 30 million users visit Facebook on their mobile devices every day in the UK. Giving these users an easy way to send funds via a platform they already spend a lot of time on could help Facebook increase adoption of its service — 66% of UK respondents to a Facebook survey stated ease of use as the most important attribute when choosing a method for sending money to someone. This move could also help Facebook potentially capture a larger piece of a massive market — global P2P mobile payments are expected to reach $540 billion by the end of 2017, according to a Juniper Research forecast cited by Mobile World Live.
The firm could also see increased digital payment volume by introducing a service that’s already proved to be successful for several other tech companies. In China, where it’s traditional for individuals to send red envelopes of money to friends and family for the Chinese New Year, digital red envelopes have become quite popular — WeChat, the Chinese P2P and chat app with over 420 million users, saw over 8 billion digital red envelopes sent in 2016 alone. It’s important to note that this sentiment isn’t limited to China — in 2016, PayPal expected a significant portion of the more than 17 million P2P payments made in December to come from gifting.
The addition of these features could ultimately help grow Facebook’s bottom line.Even though these payment options may be hard to monetize by themselves, Facebook could still benefit from having more users adding their payment information to the platform. If users already have their payment information saved, they may be more willing to shop on the company’s commerce solutions, such as Facebook Marketplace, which connects users who are selling and buying goods in a similar vein to Craigslist. Access to this payment data would give Facebook more insight into consumer behavior, which could be used to help attract even more advertising partners — in its Q3 2017 earnings, Facebook generated over $10.1 billion in advertising revenue, up an astounding 49% from last year.
- Forecasts the growth of the P2P market, and what portion of that will come from mobile channels, through 2021.
- Explains the factors driving that growth and details why it will come from increased usage, not increased spend per user.
- Evaluates why mobile P2P isn’t profitable for companies, and details several cases of attempts to monetize.
- Assesses which of these strategies could be most successful, and what companies need to leverage to succeed in the space.
- Provides context from other markets to explain shifting trends.