Facebook enters crowded UK mobile payments market

Thursday 23 November 2017 | 13:11 CET | Background

Facebook recently launched its money transfer via Messenger service in the UK and France. Its AI assistant M will guide users in both countries to the new service when it detects chats about payments. Facebook has a large pool of potential users but not all may be keen to share financial information with the social media giant. At the same time Facebook faces competition from existing players such as Apple/Google/Samsung Pay and the banks and their mobile apps. 

In early November, Facebook announced that Facebook users in France and the UK will soon be able to send money to their contacts via Messenger. The introduction of peer-to-peer payments in euros and British pounds follows the launch in the US market in March 2015. The service will be rolled out in the two countries in the coming weeks and will be available to users who set up a payment account with a debit card to send or receive money. 

Facebook is collaborating with all the major banks and credit card companies to launch Messenger payments, which will require both the sender and recipient of money to register their payment cards. Facebook stated that "since payments in Messenger use debit cards, as with any other debit card payment, if there are unauthorized charges, people have recourse with their bank. Finally, Messenger payments are offered as a regulated payment service, meaning they’re directly subject to consumer protection requirements."

Facebook said Messenger payments are offered as a regulated service, and therefore subject to consumer protection requirements. The company registered as an e-money provider in Europe at the end of 2016, after securing a licence to provide e-money issuing and payment services within the EU from the Central Bank of Ireland.

In the UK, Facebook earlier this year started with its AI assistant ‘M’. This assistant recognizes when an user is talking about payments and will then suggest to use the new Facebook payment service. Messenger users don’t need to download a separate app to proceed with any payments, it takes place in the Messenger app itself.

According to the BBC, Facebook stated that in the US its payment service was widely used to split restaurant bills, pay babysitters and simply send gifts. It says most users send less than USD 50. 

UK mobile payments field getting crowded

The mobile payments field in the UK is becoming more crowded. Alongside the banks’ own apps and the Apple/Google/Samsung Pay services, there is the mobile payment service Paytm and the UK’s first mobile bank Monzo, which recently announced it had managed to attract 500,000 users. Paytm however hasn’t generated much momentum, but several of the banks' apps allow users to transfer money to others by simply using that person’s mobile phone number. 

Facebook only communicates the total number of Messenger users (1.2 billion in April 2017), but Statista estimates the number of Facebook users in the UK at around 37 million, of which the majority is likely to use Messenger. This gives Facebook a large pool of potential users. Considering the ease of use of the system and the growing trend amongst consumers to want to simplify their lives, the new service stands a good chance. Millions already use Messenger and don’t need to open up another app to perform a payment.

On the other hand, some consumers may be reluctant to let Facebook into yet another part of their lives, and such a personal one as payments. They may prefer to use their own bank’s facilities. The payment service via Messenger may be free, but Facebook’s aim of course is to keep users on its platform for longer and longer, so they can be targeted with more advertising. 

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