Facebook Rumored to Enter Online Payment Business

Company planning to rival PayPal, Google Wallet with money transfer services
April 15, 2014 5:38 am Last Updated: April 15, 2014 5:31 am

Carl Icahn knows where the money is. He was pushing eBay to spin off its subsidiary PayPal, because it’s growing fast. Now Facebook is hopping onto the electronic payments bandwagon.

According to a report by the Financial Times, Facebook is close to securing an “e-money” license in Ireland that would allow Facebook to provide similar services to PayPal and Google Wallet.

Both allow users to link credit cards and store money online. And while Google Wallet is mostly used to pay for Google services, PayPal is accepted at millions of websites apart from eBay. PayPal also allows users to send money to each other.

“The customer has purchased a non-cash means of payment, which can be used in much the same way as cash or other forms of card payment but without the requirement of third party authorization,” says the Central Bank of Ireland website.

PayPal, which has its largest European representation in Dublin, also holds the “e-money” license, which enables the company to do electronic transactions all over Europe.

Facebook Potential

Facebook, also big in Dublin, told the FT it would not comment on “rumor and speculation.” However, it makes sense for it to participate in the massive global money transfer business, especially in emerging markets, where Facebook is growing rapidly.

Facebook has around a billion users, so the potential is huge. PayPal has 143 million accounts and transacted $180 billion in 2013, up 24 percent from 2012. Revenue: $6.6 billion, up 20 percent from 2012.

This why, according to the FT report, Facebook already discussed potential partnerships with money transfer companies in London: TransferWise, Moni Technologies and Azimo. It even offered Azimo $10 million to hire one of the co-founders and put him in charge of business development, the FT cites people familiar with the negotiations.

“Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion,” a person familiar with the company’s strategy told the FT.