14 DAY TRIAL // Facebook is reportedly looking to create a new service within its platform that would allow users to store money on their accounts.
According to the Financial Times, Facebook is just a few weeks away from receiving regulatory approval in Ireland for a service that enables users to store money on Facebook and use it to pay others with e-money.
Facebook will thus be allowed to issue units of stored monetary value representing a claim against the company. The e-money can be used in Europe for “passporting.”
The deal with Ireland will have Facebook required to hold capital of €350,000 ($484,000), as well as segregate funds equivalent to the amount of money it has issued.
The publication cites sources saying that Facebook had talks with at least three London startups offering international money transfer services – TransferWise, Moni Technologies and Azimo.
This new adventure that Facebook wants to set out on will help the company become a relevant player in emerging markets. “Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion,” said a person familiar with the matter in a rather unusual comparison.
Facebook is certainly constantly growing. It has recently announced that it has reached 100 million users in India, the largest market for the social network outside the United States.
On the other hand, Facebook is a really big social network. Most people already have a lot of concerns regarding the security of their data, especially following the NSA scandal. It’s unclear whether someone will actually trust Facebook to handle their money.
Even so, this is a huge move for Facebook, especially since the company makes most of its money from advertising, just like most Internet companies, including Google and Yahoo.
While this may be a new step in Europe, Facebook has already received authorization for some forms of money transfer in the United States. This makes it possible for the network to process payments for developers who charge people for purchasing boosts inside their apps.
According to a SEC filing, Facebook has actually helped transfer some $2.1 billion (€1.5 billion) in transactions, most of which came from games.
As always, Facebook has refused to comment on “rumor and speculation.”
Other similar companies across the world, and particularly in China, have already engaged in such activities, racing to turn their sites into mobile payment platforms that could provide users with more tools in the same place.