Social media network Facebook, which is likely to receive mobile payment license from the Central Bank of Ireland, faces huge challenges in the mobile money market.
FT reports that Facebook will start a mobile payment service that would allow users to store money on Facebook and use it to pay and exchange with others.
Financial Times reported on Sunday that Facebook is preparing to join the mobile-payments race with remittances and electronic-money services on the social network.
Last week, Juniper Research said that the value of global payments via mobile devices will reach around $507 billion this year, a rise of nearly 40 percent year-on-year.
Windsor Holden of Juniper Research last week said that the prevalent business models for NFC have been unattractive to banks and left them dependent on multiple network operators, each of which may have its own approach to mobile wallet management. HCE (Host Card Emulation) solutions have the potential to revitalize a market which has struggled to gain traction.
In a number of emerging markets such as Kenya and Uganda, the imposition of service taxes threatens the buoyancy of domestic mobile money transfer. Facebook user base in emerging markets is growing fast with some 200 million in Asia alone at Q4 2013.
Eden Zoller, m-payments experts at Ovum, said: “Ovum predicted Facebook would launch a renewed push into mobile payments this year and its focus on mobile money transfers makes sense. These applications are gaining good traction with consumers, particularly in emerging markets where Facebook has ambitions to be the prime platform from which people access, and interact with Internet services.”
Challenges to Facebook
The social media network faces challenges.
When it comes to mobile payments and financial services, Facebook will have its work cut out and the biggest challenge will be consumer trust. It also remains to be seen how well Facebook will execute m-payments given its poor track record with m-commerce applications.
The Facebook Credits virtual currency got nowhere and was wound down last year, while the main m-commerce offering in place today, Facebook Gifts, has so far received a muted response from consumers.
Ovum’s 2013 Consumer Insights found that only 1 percent of respondents trusted social networks like Facebook to deliver m-payments, in sharp contrast to the much higher levels of trust placed in banks (43 percent) credit card companies (13 percent) and mobile operators in the context of emerging markets (11 percent in China).
The company has also had partnership talks with at least three London start-ups — TransferWise, Moni Technologies and Azimo — that offer online and mobile international money transfer services, FT reported.
Telecom groups, retailers and banks are all trying to secure a pie of global mobile payments, which is predicted to grow rapidly in the next few years.
Vodafone brought its mobile money transfer service M-Pesa to Romania last month, following its success in Africa, and is likely to expand the service in eastern and central Europe.
Facebook rival Google’s head of payments recently reiterated commitment to the struggling Google Wallet and mobile payments service. The company had allowed users to send money last year as an email attachment.
Apple chief executive Tim Cook said in January the company’s interest in mobile payments was a reason for creating the Touch ID fingerprint sensor in its iPhone 5S smartphone.
Global mobile transactions are expected to grow at an average 35 percent per year between 2012 and 2017, according to a report by research firm Gartner. The June 2013 report forecast a $721 billion market with more than 450 million users by 2017.
Tablet to support m payments
Average transaction sizes over tablets are already exceeding those via desktop PCs in many markets. While spend via smartphones was increasing sharply, their primary function in retail was as search and discovery devices with the final purchase being made on the tablet, said Juniper Research.
Pyramid Research says tablet sales in Latin America are expected to reach 37.7 million units by 2018, which will equal nearly 9 percent of the total global tablet market.
During 2013, 14.2 million tablets were sold in Latin America, accounting for 6 percent of global tablet sales. By 2018, Pyramid Research expects the number to reach 37.7 million units sold; nearly 9.3 percent of the market.
The scale of digital transactions is receiving a boost through the adoption of mobile ticketing applications, with metro and transit authorities in Europe and North America that have already deployed services, experiencing high levels of adoption.
The opportunity for contactless mobile payments has been bolstered by contactless infrastructure deployments, with the majority of POS (Point of Sale) terminals now shipping with contactless.