Commentary

Facebook Bows Peer-to-Peer Payments

Anyone who has tried to split a tab with Millennials and received their looks of pitying condescension and exasperation when shown a credit card -- or even worse, old-fashioned paper money -- knows that mobile payments are the wave of the future. “You’re not on Venmo?” Eye roll. Sigh. “Dude.”

Now, like a surprisingly agile 800-pound gorilla, Facebook is moving to dominate yet another important sector in the emerging digital economy with the introduction of its peer-to-peer payments service. Now Facebook users can send money to friends via Facebook Messenger, putting the social titan into competition with peer-to-peer payment services like Square, Venmo, and Snapcash, introduced last year by Snapchat and powered by Square.

The Facebook system is pretty simple: users just have to create a new message to a Facebook friend, tap the “$” icon, and enter an amount. Then they tap “pay” and (for the first transaction) enter their Visa or Mastercard debit card number to complete the transaction. To receive a payment, the user opens a conversation with the friend, taps “Add Card,” and adds their debit card number to accept money. It may take two to three days for the money to show up, depending on the bank. Users can add a pin number for additional security if desired.

The service will become available over the next few months for Android, iOS, and desktop users. Facebook is offering the service free, with no transaction fees, and currently says it doesn’t plan to monetize it. It also emphasized that the service only allows payments between individual Facebook users, not payments to businesses.

The industry has been expecting Facebook to roll out a payments service ever since it hired former PayPal president David Marcus as vice president of messaging products last year.

Of course, even though users can’t make payments to businesses with the new service, that doesn’t mean that Facebook itself can’t try to sell them stuff once they have handed over their debit card information -- giving marketers another potential opening for e-commerce and direct-response online advertising on the site.

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