Facebook wants to be the Internet and you don’t need to be a social media expert to state that. While it is working on drones to make internet available in emerging countries, use artificial intelligence for next generation of entertainment, it is also planning to facilitate financial services in the form of electronic money and remittances.
Reports state that Facebook is weeks away from getting regulatory approval in Ireland for a service that lets users store money on Facebook and use it to pay others — what’s known as “e-money”. This would mean Facebook will be able to issue units of stored monetary value that represent a claim against the company, and the e-money can be used throughout Europe in a process known as “passporting”.
At the same time it is said that Facebook is also talking with at least three London startups offering international money transfer services online and via mobile: TransferWise, Moni Technologies and Azimo. It is also rumoured that Facebook offered to pay Azimo $10 million to recruit a co-founder as a director of business development.
However, Azimo’s CEO and co-founder, Michael Kent spoke to TC and has declined such rumors. “Surprised to see it in the FT today, we talk to everyone and are lucky enough to get a bunch of interesting offers and approaches coming up although we prefer to keep those to ourselves.”
TransferWise’s co-founder and executive chairman Taavet Hinrikus, meanwhile, would not comment on the news except to say that it “validates the space.” Facebook has also declined to comment on the report initially published by FT.
While one can debate on the validity of the report, it would be surprising if Facebook stops itself from entering this space with WhatsApp already in its kitty. Facebook knows its next billion users are in the emerging countries. While it is working with Internet.org to make internet available in these countries, money transfer is a big problem in the emerging nations, which mobile startups and operators are already trying to solve.
Facebook might think of replicating a similar business model with WhatsApp that WeChat did during the Chinese New Year with red envelope. Earlier this year WeChat launched a feature letting users based in China gift money to friends and family.
The feature went viral in China, and later the parent company Tencent disclosed to Chinese media that during the first two days of Spring festival, over five million users participated in the scheme, exchanging over 20 million envelopes. At its apex, over 121,000 envelopes were sent within a five-minute stretch, during with 585,000 attempts were made by users to snatch one up.
Possibilities could be endless for Facebook in this space at a time when it has more than 100 million users in India. Amidst all these rumors, the European P2P money transfer service TransferWise, which is said to be in talks with Facebook, has hit a major milestone today: Its platform has processed £1 billion of customers’ money, an eight-fold increase — £125m to £1bn — since May last year.
Is TransferWise going to be Facebook’s next acquisition?