The social media giant is reportedly seeking to enter the mobile payments space with its own cryptocurrency.
Facebook payments may be around in the not too distant future. The social networking company is jumping on the cryptocurrency bandwagon and is reportedly developing its own digital currency called Facebook Coin. The company’s supposed goal, reports CNBC, is to allow users of its cryptocurrency to transfer money through WhatsApp.
Facebook’s move would mimic China’s popular WeChat Pay.
The Facebook Coin, which would be attached to the US dollar, and would allow users to transfer money through Facebook’s acquired popular messaging application WhatsApp, would be a move that analysts say is targeted at replicating the success of WeChat in China.
WeChat, which is the most popular messaging app in China, has become much more than a messaging app over the years. With over a billion users and owned by Tencent, Asia’s largest technology firm, WeChat is thought of as a “super-app.” The reason is it offers users everything from that ability to make mobile payments (WeChat Pay) to booking flights, playing games and more, all without having to leave the mobile app.
Analysts are not confident that Facebook payments will enjoy the same success as WeChat Pay. Part of this reason is that WeChat not only offers payments. It also has other financial services, including wealth management and micro loans.
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“The potential monetization for Facebook Coin may not be as diverse as WeChat Pay,” Choi Chun, senior analyst at China-based market research firm iResearch, told CNBC.
“A large chunk of WeChat Pay revenues are generated from commission dollars from online shopping within WeChat and wealth management services, which I don’t think Facebook would be able to tap into as the online shopping sector and wealth management sector are already mature in the U.S,” Chun added.
Facebook payments will reportedly target India’s market first.
WhatsApp is very popular in India, a market that is increasingly incorporating and relying on mobile payments within its society. However, Facebook may run into stiff payments competition, even in India and other markets where WhatsApp is popular. In India’s case, Facebook will have to go up against Ant-Financial-backed Paytm, which is one of the country’s most dominant players.
Another challenge Facebook payments might face is convincing users to trust Facebook with their money. This isn’t easy for most companies but could be extra difficult for the social media company after the privacy scandals that occurred last year.