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Facebook's instant messaging service isn't just for sending smiley faces and photos anymore. Now you can use it to send money instantly to your friends.
Facebook, the social networking company, announced on Tuesday that American users of its Messenger app would be able to link their debit cards to the service and use it to message money to one another just as easily as they send a snapshot or text.
Given Facebook's huge size and reach, the introduction of its payments feature - which has been highly anticipated by Wall Street - is likely to cause tremors in the nascent market for instantly sending money to individuals, known as peer-to-peer payments.
And analysts said that if the payment system succeeded, Facebook would extend it to other types of purchases, such as consumers' buying of products directly from advertisers.
"Facebook could use this as a back door to get people's debit cards to enable the buy button," said Robert Peck, an internet analyst with SunTrust Robinson Humphrey.
WeChat, which is essentially the Facebook of China, and other Asia-based communications services like Alipay already allow their hundreds of millions of users to send money via instant message. But the technology is only beginning to appear in the United States, where email payment services like PayPal have long been more popular.
As messaging has begun to eclipse email as the preferred form of electronic communication, especially among younger users, Facebook has sought to dominate that market much as it dominates social networking.
The company's Messenger app is one of the largest platforms in the world, with more than 500 million monthly users. And last year, Facebook spent nearly $22 billion to buy WhatsApp, a separate messaging platform that now counts more than 700 million active users globally.
In the US, a host of peer-to-peer money transfer services have emerged and are trying to capture the wallets of messaging enthusiasts.
Venmo, a mobile payments app owned by eBay's PayPal unit, is perhaps the most direct competitor to Facebook's new offering. Popular with young users, it is not just a payment system, but a social network that allows users to post public or private messages about what the money is for.
Square, the e-commerce start-up, offers a similar app that allows payments to individuals by email. And Snapchat, the start-up known for its disappearing messages, also allows users to send cash to one another through a partnership with Square.
With its service, Facebook wanted to simplify the process as much as possible, according to Steve Davis, the product manager in charge of the project. "We know that conversations about money are happening all the time," he said in an interview. "But most conversations begin in one place and end in another place."
Facebook wanted to keep the payment and the conversation in one message thread that would also serve as a record. So right next to the thumbs-up button on the Messenger screen will be a dollar-sign icon to send money.
If a debit card number is already saved in the app, you can send money to the other person in the conversation by clicking the dollar sign and entering an amount. The whole conversation will be saved for later reference.
To reduce the risk of unauthorised transactions, Facebook said, users must enter a PIN or use Apple's fingerprint identification system before they can send the money.
By using debit cards to handle the transfer, the money can move fairly quickly between the two bank accounts while allowing Facebook to offer the service free to users. Unlike PayPal or Venmo, "you don't have to remember to withdraw the funds later," Davis said.
As with most new Facebook features, the Messenger payments button will be gradually introduced to Messenger users in the United States over the next few months, and will be available on mobile apps as well as the web version.
Initially the service will be limited to sending money between people who are Facebook friends, so it will not immediately compete with Apple Pay and other mobile payment services meant to allow people to make purchases easily with their phones. The commercial market, Davis said, poses a different set of challenges.
Still, some merchants, particularly overseas, have been informally using Messenger to make transactions, Facebook said. The company has a payments business that brought in nearly $1 billion last year, mostly for items purchased within games hosted on its platform. It has also been experimenting with an e-commerce system that allows merchants to list items for sale and collect money for purchases directly on the social network.
Wall Street has been hotly anticipating the addition of payments to Messenger since June, when Facebook hired the president of PayPal, David Marcus, to lead its messaging efforts.
Mark Zuckerberg, Facebook's chief executive, told analysts in January that he expected Messenger and WhatsApp to be big moneymakers eventually.
"I'm a big fundamental believer that these are going to be very big contributors to our businesses over time, but we just have to do it right," he said.
©2015 The New York Times News Service
