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Facebook's payment ambitions have made banks cautious for years, despite many false starts. But now it seems that Facebook is revolving around the development of remittance activities, starting with a cryptocurrency project in India.
Through a blockchain development unit created this year – led by former PayPal president David Marcus – Facebook has been working for months creating a way for users of its WhatsApp messaging app in India to make small value transfers using a stablecoin, which is a type of cryptocurrency anchored to the US dollar, according to Bloomberg.
This is not the first Facebook raid in virtual currency. The social network launched its currency, called Facebook Credits, in 2010 with the aim of creating a common currency for in-app purchases on its platform. The idea was to eliminate the need to convert currencies to global users, but developers preferred to set their prices by region, so Facebook gradually phased out its virtual currency in 2013.
The Facebook relationship with traditional cryptocurrencies has been more combative. In early 2018, Facebook started to block ads for cryptocurrencies, but it eased this ban in June. The social network was still wary of advertisements for risky financial products such as initial coin offerings, so it kept some restrictions.
Exploiting the P2P cryptocurrency in an emerging market could boost Facebook at a time when it needs to find new growth, as the younger segments in developed markets have not joined the 2.25 billion consumers currently they use Facebook all over the world.
In developed markets, the revelations of Facebook in recent months of a serious data breach and questionable data sharing practices are raising further questions about its role and its growth trajectory.
"People have happily shared all of their personal data with Facebook for years, but it's a $ 1 trillion advertising platform and learning what Facebook has done with their data is making some users uncomfortable," said Adam Levin. co-founder of Credit.com. Previously Levin was a director of the New Jersey Consumer Division.
Some high-profile technology industry observers have recently disconnected from Facebook and millions of consumers are migrating to Instagram, Levin noted. The fact that Facebook possesses Instagram emphasizes the lack of alternatives to the leading social network.
Facebook's reputation has suffered from negative headlines, according to eMarketer, but the company's payment transactions have avoided the glare. In the United States, Facebook continues to support P2P payments via Facebook Messenger, and with the payment cards of many users connected to their Facebook account to make purchases and donations, no cases of card data exposure have been reported.
Observers say that Facebook has worked to recalibrate its strategy in the wake of recent revelations.
"When Facebook overcomes the current public relations challenges, it is in an enviable position to extend to users new offers related to commercial services that payments will facilitate," said Richard Crone, a Crone Consulting LLC executive.
Studies show that after the first waves of shock following a data breach, most consumers return to business as usual. The effect on Facebook from its recent data and its privacy gaffes will not be different, predicts Crone.
"Companies have no better way than Facebook to connect with customers for word of mouth campaigns, and users who already rely heavily on Facebook as a repository of their personal, travel and business history do not intend to move away from this convenience so easily, "said Crone.
Facebook would be wise to reassure consumers about the reliability of the platform and find ways to encourage users to continue visiting the platform to drive trade, he said.
The overwhelming majority of Fortune 500 US companies have a public presence on the country's largest social media platforms, and that number is still growing, according to eMarketer.
It would take a formidable new competitor to derail Facebook, said Shane Green, CEO of Digi.me, a company based in North Korea that develops user-centric data solutions. Consumers use Digi.me to aggregate their data from over 15,000 sources and access it with financial, health and lifestyle apps.
Emerging Internet search companies like Duck Duck Go and Brave could succeed by capitalizing on consumer demand for better privacy and data protection, Green said.
"Duck Duck Go has grown like crazy without tracking people like Google, and I'll see them introduce other interesting features soon to help use data privately provided by people to personalize search results," said Green, noting that these companies do not they have no hope of challenging Google.
Facebook has lost 1 million users in Europe this year thanks to the new privacy rules. In North America, daily active users remained stable at 185 million, the company said in October.
"Facebook does not have a clear emerging challenger, but I can not imagine that Facebook continues to dominate as it has done for much longer, as it has lost its appeal to younger people," said Green.
What could hurl on Facebook – along with the disinterest of the younger audience – is the rise of new, more localized social media networks.
One example is Nextdoor, an app focused on the rapidly expanding 2011 neighborhood with Sarah Friar, the former CFO of Square who was named CEO of NextDoor in October 2018.
Although NextDoor does not disclose its total users, it claims to reach more than 200,000 neighborhoods and recently expanded in Europe. The app is now available in the United States, United Kingdom, Germany, France, Spain, Italy and the Netherlands.
NextDoor allows neighbors to connect to socialize or information and many companies use the app to promote products and services.
"For any social media app to work, it has to offer consumers something to keep them involved, and if shopping and commerce are part of it, payments will have to play a role," said Crone.
