Facebook to extend WhatsApp for payments

Facebook is planning to extend its social messaging platforms WhatsApp and Facebook Messenger to become a leading channel of digital payments services, its Northern Europe finance chief has said.

Laura McCraken, Facebook’s head of financial services and payments partnerships for Northern Europe told the audience during a panel at London’s PayExpo that the social media giant is already seeing WhatsApp - which has 1.5 billion users worldwide - used for buying and sharing payment credentials, and explained that Facebook has already started rolling out digital wallet services in emerging markets such as the Philippines.

“We have actually started doing some partnerships with both Messenger and WhatsApp in emerging markets to create wallets so that people can actually receive money, have it sent to your wallet and then you can use it, you can spend it, move it save it as you wish.”

She explained that the social media giant had plans to expand the roll out of digital payments across its channels, but cautioned that the company would not seek to take on the role of a payments provider or lender and would need the co-operation of banks and financial institutions for the service to gain a foothold in mobile payments.

“We are going to start expanding that,” she said. “I think that’s the perfect way to use [Messenger] but we’re not becoming the payment facilitator. We are not going to become a bank, we’re viewing ourselves as a channel. We bring the people, the channel, the platform, the engagement and what we need is our partners in the financial services sector to provide the mobile financial services for our customers.”

McCraken identified broad opportunities for Facebook’s social messaging channels across the payments space, but emphasised that the company would not be seeking to emulate the mobile-based model of China’s WeChat Pay; used by an estimated 600 million users every month.

The WeChat Pay service allow users to transfer funds amongst their contacts and facilitates in-store purchases through a QR code scanned on mobile phones.

“Let me just say first up that we are not following the WeChat pay strategy, it’s very different, McCraken said. “With WhatsApp we have one billion users around the world, we cover almost every marketplace except China, so we have lots of engaged customers who are spending time on WhatsApp every single day.”

However, the Facebook payments chief said she did not expect European markets to embrace social payments technology at the same pace as Asian countries, with markedly lower finance-related activity amongst users here.

“I think it’s not going to be prevalent very quickly in Europe, so I see very different behaviour in Europe versus emerging markets, you can see in Thailand, Indonesia, Vietnam, Malaysia, a lot of the places in Africa, where people are using mobile wallets, QR codes.”

McCraken’s fellow panellists agreed that digital payments via social messenger would gradually become mainstream, as Millennials and younger demographics migrated their finances to the social media channels where they spend most time online.

Joshua Bower-Saul, chief executive of payment security FinTech Cybertonica, said: “Payment has always followed communication - what you’re going to see is many more applications that are full buffet, so anybody, if you connected on a messaging platform you would have basically PayPal in your hands for less than PayPal will charge you.

“That’s what’s happening in micro-segments of the market now, those things are going to slowly rise to the top, that’s where communication is going, that’s where payment is going.”

However, whilst he acknowledged the potential of social channels to extend payment services, Bower-Saul warned that the data collected by apps such as WeChat Pay and AliPay in China served as an example of a “danger point” for consumer privacy.

“Both AliPay and WeChat pay share all their information with the Chinese government,” he claimed.

“It is true that when you have identity, government data, and payment data you practically know 99 per cent about that person, and having that stored in one place, I’m not even sure that’s good for the Chinese economy, because that can be perverted, used in the wrong way.”

He concluded: “There’s great value for the consumer in bringing that data together, but there’s also abuse that can take place, so it’s got to be balanced.”

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