Can Facebook Sell Its Mobile Payment Service?

After toying with a whole host of innovative concepts and technologies, Facebook wants a piece of the mobile payment pie, which is currently a rapidly growing area. The company is in talks with some of the UK-based  companies such as TransferWise, Moni Technologies and Azimo that offer online and mobile international money transfer services, says a Financial Times report. Experts believe Facebook is looking to achieve what Vodafone is doing with m-pesa and Google with Google Wallet.

The report also mentions that the company is close to obtaining approval from the Central Bank of Ireland to start a service that It would allow users to store money on the social network and use it to pay and transfer cash to others. This could prove lucrative especially to emerging markets, as it will allow members to send remittances via their Facebook accounts, where migrants sending billions of dollars home to developing countries every year where a large section of the population do not have bank accounts. Moreover, the social network major also has a large user base in some of these markets.

The biggest challenge – Trust

But the key question is can Facebook take on established players such as money transfer companies such as Western Union, PayPal or mobile phone-based payment service Vodafone M-Pesa, and of course traditional banks and not to forget its biggest rival Google.

The competition would surely be a tough one. And that’s not the end. While Facebook’s own mobile money service could help the company make billions, the social network’s biggest challenge to overcome is consumer trust, believe analysts, owing to the large number of security and fraud cases.

According to an Ovum report conducted last year, only 1% of respondents said they trust social networks to deliver mobile payments. In contrast, 43% of respondents trusted banks and 13% trusted credit card companies.

Experts believe while many more technology providers like Facebook will move into payment services to drive revenues and expand reach, for Facebook to survive in this business, they will have to overcome the user trust issue and convince businesses that transactions through its platform can become highly secured and lucrative.