Friday, July 25, 2014

Facebook Messenger is getting a mobile payments system… eventually


Facebook Messenger is getting a mobile payments system… eventually


Earlier this month, PYMNTS.com reported that Facebook is testing a “Buy” button that allows certain customers to purchase items placed in the news feed or on ads on the site with a click or two. But don’t expect Facebook to compete against the likes of Kmart.com or Walmart.com anytime soon.


When the company first announced it had hired David Marcus, the former president of PayPal, the industry took it as a strong hint that Facebook was looking to monetize its messaging app. After all, Marcus joined PayPal after parent-company eBay acquired his mobile-payments startup Zong in 2011, first leading PayPal’s mobile efforts before taking the lead as president.


During a July 23 second-quarter earnings call with analysts, Cheryl Sandberg, Facebook’s chief operating officer, acknowledged the “small test” being done in the U.S. only, but cautioned against looking too deeply into it. “It streamlines the process for buying from our clients,” she said. “No one’s buying from us. We’re just streamlining the process of buying from our clients.”


In an earnings call on Thursday, Mark Zuckerberg focused heavily on messaging. Messaging is a natural area for Zuckerberg to place his attention, not just because of WhatsApp but also because competitors in Asia are proving there’s a big market and a lot of money in it. One thing that he didn’t want to discuss much on the conference call was when exactly the messaging products would start generating revenue.


That’s OK. Facebook reported impressive quarterly earnings, with revenue surging 61 percent. The stock rose in extended trading past its all-time closing high. So shareholders are inclined to believe whatever Zuckerberg has to say right now. With messaging, the CEO was adamant that Facebook would not “take the cheap and easy approach and just try to put ads in.” Zuckerberg said: “We’re going to take the time to do this in the way that we think that’s going to be right over multiple years.”


Zuckerberg did suggest that payments, an area Marcus is well-versed in, will probably be a part of the equation. This would be something of a new model for Facebook, which made 92 percent of its revenue last quarter, or $2.68 billion, from ads. But payments is the standard business model for messaging apps around the world, including the one Facebook just bought, and it’s looking to be a mega business. Read more about the story here.


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