Facebook to introduce debit card-based transactions to Messenger app US users

NY Times News Service, SAN FRANCISCO

Thu, Mar 19, 2015 - Page 15

Facebook Inc’s instant messaging service is not just for sending smiley faces and photographs anymore. Now you can use it to send money instantly to your friends.

The social networking company on Tuesday announced that US 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.

Analysts said that if the payment system succeeds, Facebook would extend it to other types of purchases, such as consumers’ buying of products directly from advertisers.

“Facebook could use this as a backdoor to get people’s debit cards to enable the buy button,” SunTrust Robinson Humphrey Internet analyst Robert Peck said.

WeChat, which is essentially the Facebook of China, and other Asia-based communications services like Alipay (支付寶) already allow their hundreds of millions of users to send money via instant message. However, the technology is only beginning to appear in the US, where e-mail payment services like PayPal have long been more popular.

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 Inc’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 startup, offers a similar app that allows payments to individuals by e-mail. And Snapchat Inc, the startup 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 unauthorized transactions, Facebook said, users must enter a PIN or use Apple Inc’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 US Messenger users over the next few months and will be available on mobile apps as well as the Web version.