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Facebook P2P Messenger payments in UK & France, as Apple Pay Cash beta launches

09 November 2017

Facebook has launched a person-to-person (P2P) payments service on its Messenger app in the UK and France, stealing a march on Apple who’ve launched a similar Apple Pay Cash service in beta form only in the US, where Facebook P2P payments have been available since 2015.

Both launches will battle Square Cash and PayPal’s established Venmo P2P service in the US and numerous other global financial technology (FinTech) inspired payment services. The bank-owned Paym P2P service, for instance, is incumbent in the UK.

The moves are significant, regardless of those players already in-situ, because tech giants like Apple and Facebook have the scale, customer base and money to seriously challenge banks and others for front- and middle-end services in the payments field around the world. In China, WeChat Pay or Alipay are the major players but certainly in the Western developed world Apple and Facebook could potentially challenge the status quo.

It is also the first foray into financial services (FS) for Facebook in Europe, with British Pound (GBP) and Euro (EUR) P2P services now available. Cash can be transferred with just a message and optional emojis and gif pictures can be added, or transactions initiated by M, Facebook’s artificial intelligence (AI)-powered digital assistant that can verbally launch a prompt to send a payment, if so instructed.

Facebook gained an e-money license in Ireland in December 2016, prompting speculation about its intentions in Europe. It is unclear how Facebook will make much money from its move, but it could add to its data upon which the firm’s advertising-driven revenues depend.

Apple’s P2P service is available on the iPhone via its iMessage app. It can be accessed on the iOS 11.2 beta 2 operating system in the US, where customers see an Apple Pay button in the app. The service is likely to rollout elsewhere in the world.

Payments are made into a new Apple Pay Cash card in the Apple wallet, meaning the money is available instantly. The firm is partnering with prepaid payment card company Green Dot on the virtual card, which could act as a waystation towards the creation of a full bank-like payment service.

Unlike the bank-driven US Zelle service, Venmo and others Apple’s new US beta service will only work across its own devices. This may impair widespread uptake, although Apple does of course have a huge following.

News analysis: real-time
Actual back-end delivery of the payment for both the new services announced this week remains on bank or card-owned ‘rails’ for now, and some of these existing infrastructures, such as Zelle in the US, operate on a real-time payment (RTP) basis. Instant delivery of a payment is increasingly becoming the global norm. But it may not be enough to make providers stand out.

The front- and middle-end moves by Facebook and Apple could leave incumbent, established financial institutions (FIs) as ‘dumb plumbers’ on widespread RTP ‘rails’ without access to the value-added, profitable services on the front-end that customers want. Those who can cater to customers prioritising tracking capabilities, data-rich payment services and other add-ons to speed alone are likely to attract more volume.

The bank-driven Zelle is one example of a bank-driven fight back. But such instant, real-time infrastructures will increasingly be forced open by regulators that are keen to encourage competition. Really it is incumbent on banks to develop their own valuable front-end services for tech-savvy customers that can connect to centralised processing cores.

It is in the front and middle-end where rich revenues potentially lie. These could sustain transaction banks in the future as fees fall away.

Industry reaction: Innovative response needed
According to Sudhesh Giriyan, chief operating officer (COO) of Xpress Money, the remittance arm of UAE Exchange that owns the Travelex brand, it is unsurprising to see Facebook expanding its presence in the P2P payments space. “But it should serve as a warning for traditional banks as yet another big technology company builds its customer loyalty and ‘stickiness’ through added payment infrastructure,” he cautioned.

“While essentially becoming the new middle-man, Facebook is diminishing the role of banks when it comes to their customers’ sending money, or helping to improve their payment experience. With the EU Payment Services Directive 2 on the horizon, banks need to bear in mind that areas where they have traditionally been dominant are likely to be disrupted. To keep up they will either need to partner or innovate themselves.”

Author: Neil Ainger
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