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Report: Facebook Wants to Become an E-Money Institution

By - Source: The Financial Times | B 10 comments

Facebook may become a PayPal rival.

Sources told the Financial Times that Facebook is requesting authorization from Ireland's central bank to become an e-money institution. Facebook is only "weeks away," sources have said, from allowing its members to store money on Facebook and use those funds to make payments and exchange money with other members.

According to the report, Facebook has also talked about potential partnerships with at least three London start-ups. These businesses offer international money transfer services online and through smartphones, including TransferWise, Moni Technologies and Azimo. Sources report that Facebook actually paid Azimo $10 million to recruit one of its cofounders as a director of business development.

One source told The Financial Times that "Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion." However, the paper points out that Facebook users may not trust the company enough to handle their money, afraid that it's just one more piece of information Facebook can use to boost advertising.

The move to become an e-money institution is a strategic shift for the company, which makes most of its revenue from ads. The news also isn't surprising given that other Internet groups, including Tencent and Alibaba, are racing to turn themselves into mobile payment platforms. Sources claim that Facebook's money transfer project is led by Sean Ryan, the company's vice-president of platform partnerships.

Here in the United States, Facebook is already authorized to process payments for developers who charge for in-app purchases such as Candy Crush Saga. Facebook charges up to 30 percent for each payment, which account for around 10 percent of its revenue. The company facilitated $2.1 billion worth of transactions, most of which stemmed from games, during 2013, according to documents filed with the SEC.

Should Facebook become a PayPal competitor? Given the amount of time users spend on the social network, it makes sense for Facebook to take the PayPal route. Then again, can Facebook be trusted with your money?

Add your comment Display 12 Comments.
  • 7 Hide
    gm0n3y , April 16, 2014 11:28 AM
    Wow, a payment system that I'll likely dislike even more than Paypal.
  • 7 Hide
    wiinippongamer , April 16, 2014 11:46 AM
    I hope they fail miserably
  • 6 Hide
    antilycus , April 16, 2014 12:23 PM
    lets see a company that was founded on being free, then took it's user's info and sold it for hundreds of millions of dollars. Has publicly said they believe nothing should be private and now they want to hold our money? no thanks. I'll stick with BCs
  • 5 Hide
    firefoxx04 , April 16, 2014 12:58 PM
    Paypal already abuses me enough, why wont facebook?
  • 3 Hide
    Kieran Warren , April 16, 2014 1:13 PM
    Nope.
  • 0 Hide
    gwwerner , April 16, 2014 1:48 PM
    I definitely wouldn't use facebook as a bank account. Being able to use facebook to pay back friends and family when I owe them small amounts would be useful, though. As it is, I only keep cash around to pay people back for tickets they have bought, or if I am contributing to a gift for someone. If I could use facebook to transfer the money, I wouldn't have to keep cash around at all. If have used paypal for this a few times, but many people don't have a paypal account, or if they do, they have never used it to send money to someone they know.
  • 3 Hide
    everlast66 , April 16, 2014 1:56 PM
    All of a sudden PayPal dosen't seem so bad, after all.
  • 2 Hide
    Rhinofart , April 16, 2014 2:35 PM
    I'd rather have my balls pounded flat with a wooden hammer than have Farcebook deal with my money.
  • 0 Hide
    boytitan2 , April 16, 2014 4:14 PM
    Lol facebook dealing with my money that is funny.
  • 0 Hide
    cats_Paw , April 17, 2014 1:38 AM
    Facebook: First we took your data, now we will take your money :D .
    I do have to say their bussiness plan is brilliant.
    From the 1.5 billion users they have, even if 1% of them actually use this feature, its like hitting gold.

    And expect friends you havent heard from for years start to pop up, asking if you got 10 bucks for a pizza or something....
    Im quite sure some famous people might get some income thx to this as well...

    Dont know how this will go, but im sure as hell gonna be having some fun watching it all from a distance.
  • 0 Hide
    voreo , April 17, 2014 12:53 PM
    Could be good. If business say Pay With Facebook soon after it happens.
    I hate paypal.
  • 0 Hide
    squish8294 , April 17, 2014 7:07 PM
    Bring me the popcorn; I wanna sit back and watch the inevitable shitstorm that this will cause if it happens.
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