Facebook users will now be able to send money to their friends using its Messenger app, the social network’s first foray into peer-to-peer money transfer.
The Silicon Valley company will compete with payments providers such as PayPal and Square, and potentially large banks, after it announced that users will be able to upload a Visa or MasterCard debit card to their Messenger app to send payments to their Facebook friends for free.
In a product that appears similar to Paypal’s popular Venmo app, US users of Facebook will be able to send money from Apple and Android devices and desktop computers in the coming months.
The company stressed it had enabled security features including a PIN and touch ID on iOS devices, after Venmo was accused of making it easy for fraudsters to steal from a users’ bank account.“We use layers of software and hardware protection that meet the highest industry standards,” Facebook said in a blog post. “These payment systems are kept in a secured environment that is separate from other parts of the Facebook network and that receives additional monitoring and control. A team of anti-fraud specialists monitor for suspicious purchase activity to help keep accounts safe.”
Facebook is the latest technology company to try to enter the financial sector, after Apple launched its payment service Apple Pay last year and Google rolled out Google Wallet.
It hired David Marcus, president of eBay’s PayPal unit, to run its Facebook Messenger division last year, as it searched for a way to generate revenue from the app. Facebook generates the vast majority of its revenue from advertising, which some analysts worried could be intrusive on a more personal one-to-one experience like messaging.Any solution found for Facebook Messenger could also be rolled out across WhatsApp, the SMS-style messaging app that Facebook bought for $22bn last year.
The Financial Times reported last spring that Facebook was readying itself to provide financial services in the form of remittances and electronic money. The company discussed partnerships with at least three London-based start-ups that offer international money transfers, which could prove popular with Facebook and WhatsApp’s large international audience.
Facebook has long had a payments business where it stored card data so that users could pay for extra features in games that run on the platform. It already had a range of money transfer licences in the US and applied last year to become an “e-money” institution in Ireland, where its European headquarters are.
Twitter has also experimented with person-to-person money transfer, with a partnership in France that enabled users to tweet cash to their followers. S-money, a division of Groupe BPCE, the second-largest French banking group by customers, teamed up with Twitter to offer the service last autumn. But the company has not formed similar partnerships in other markets.