Need to pay a friend back for lunch yesterday, but don’t have cash on you? Facebook could soon be your go-to wallet. Facebook is “weeks away” from obtaining regulatory approval in Ireland for a service that would allow users to exchange money with each other electronically, according to the Financial Times.
The new service would allow Facebook to become an “e-money” institution, thereby permitting it to issue units of money users store on the site. The money would be valid throughout Europe in a process the Times calls “passporting,” which could help friends easily split things like dinner bills and trip expenses without having to use paper cash.
Facebook has also discussed potential partnerships with “at least” three London startups that offer electronic international money transfers, including TransferWise, Moni Technologies and Azimo, the Times reports.
If such a service were approved in Europe and eventually expanded into the States, it’d be interesting to see whether it gained heavy traction – a challenge that similar user-friendly money transfer services are facing in the U.S. Venmo, a mobile app that connects to users’ bank accounts to allow them to send and receive money with contacts, has gained popularity among millennials but is far from becoming a universally recognized way to transfer funds. And though Google Wallet and Cash from Square allow users to send and receive money through email, many people are unwilling to connect these services to their bank information. This indicates that a money transfer service from Facebook in the U.S. could go one of two ways: either Facebook’s existing prevalence among U.S. users could help it gain traction faster than competitors, or users’ skepticism towards Facebook’s personal data mining practices could discourage people from sharing financial information with the service at all. My guess would be that some users trust Facebook enough to allow a potential money transfer service to gain steam in the States.
Such an electronic remittances service would not be Facebook’s first foray into financial services. The site has been processing purchases for app developers for some time, a service that generates about 10% of Facebook’s revenues. Facebook also has a longstanding partnership with American Express in which Amex cardholders can receive statement information and account alerts directly within their Facebook notifications.
Would you transfer money to friends through Facebook?