The social network is negotiating with Ireland’s central bank to become a licenced financial services operator
Facebook, the second most popular website in the world, is getting ready to offer a wide range of electronic money services. The social network is speaking to financial regulators in Ireland, the location of its European headquarters.
If approved, it will be able to store money on behalf of its 1.23 billion users, make payments to other businesses and issue its own electronic currency, reports Financial Times.
Facebook is already authorised for some forms of money transfer in the United States – mainly processing in-app purchases for games, which account for about 10 percent of its revenues.
The bank of Facebook
Facebook is seeking authorisation from Ireland’s central bank in order to provide financial services on computers and mobile devices. The project is reportedly led by Sean Ryan, Facebook’s VP of platform partnerships, and is expected to get a green light in a few weeks.
Sources familiar with the situation told the FT that the social network has approached at least three London-based FinTech start-ups – TransferWise, Moni Technologies and Azimo – to look at technology that could enable international money transfer and payment services.
International transfers are especially important for customers in the developing world, who often receive help from across the border – and such customers are a very tempting target for Facebook.
The report, which hasn’t been confirmed by the company, could signal a shift in the social network’s business model, moving it from advertising to services. But what looks like a sudden change is actually a part of a natural progression – Facebook’s largest competitors, including Google and Chinese social network Tencent, are already offering payment and e-commerce solutions.
“Going after the money transfer market could help Facebook gain access to payment information on a huge number of users while also extending the network’s presence in emerging markets,” commented Patrick Salyer, CEO of social data company Gigya. “Although Facebook will need to find a unique model that differentiates from money transfer providers like PayPal or Western Union, payments could be a trojan horse for the social network’s quest to own consumer identity.”
The success of this new strategy will depend on whether Facebook can maintain the trust of its users, and it’s not doing great so far. Earlier this year, two account holders filed a class-action lawsuit in the US, accusing the social network of mining their private messages to boost its marketing efforts.
Are you an expert on Facebook? Take our quiz!