Facebook Pay is a payment service introduced by Facebook in 2019 that allows users to send and receive money across Facebook, Messenger, Instagram and WhatsApp. With over 3.5 billion monthly active users across Facebook’s family of apps, Facebook Pay has the potential to become a major player in the digital payments space. However, given Facebook’s history of data privacy issues, some consumers may have concerns about trusting Facebook with their financial information. In this article, we’ll examine the key factors to consider when evaluating whether Facebook Pay is trustworthy.
What is Facebook Pay and how does it work?
Facebook Pay is a digital wallet service that lets users link their debit and credit cards to their Facebook account. Once linked, you can use Facebook Pay to:
- Send and receive money to friends and family on Facebook Messenger
- Make purchases and donations on Facebook
- Pay for products on Instagram Checkout
- Send money through WhatsApp
When you go to checkout on any of Facebook’s platforms, you’ll have the option to select Facebook Pay as your payment method. Facebook Pay uses your linked debit or credit card to complete the purchase or transfer. Facebook does not charge any fees to send or receive money through Facebook Pay.
Facebook Pay is built on top of Facebook’s existing payments infrastructure and leverages technology from companies they’ve acquired like WhatsApp and Instagram. User payment information is stored securely on Facebook’s servers rather than by the merchant. This allows for a streamlined checkout experience since you don’t have to re-enter your payment info each time.
The pros of using Facebook Pay
There are some advantages to using Facebook Pay:
Seamless transactions across Facebook apps
Facebook Pay creates a unified payment experience across Facebook’s family of apps. Once your card is linked, you can seamlessly send money and make purchases without reentering your info.
Works on mobile
Facebook Pay is designed first and foremost as a mobile payments service. With so many users accessing Facebook services on mobile devices, having payment functionality optimized for mobile is key.
Large existing user base
Facebook has billions of existing users across its platforms, which gives Facebook Pay a built-in user base. Adoption of the service could spread rapidly by leveraging Facebook’s massive reach.
Merchant benefits
For merchants selling goods through Facebook, Instagram Checkout or WhatsApp Business, Facebook Pay can help drive sales by providing a frictionless payment experience. Merchants also benefit by not having to directly handle customer payment info.
The potential cons of Facebook Pay
However, there are also some downsides and risks to consider with Facebook Pay:
Data privacy concerns
Facebook has a poor track record on protecting user privacy as evidenced by the Cambridge Analytica scandal and other data misuse incidents. Some consumers may not feel comfortable linking their financial information to a Facebook account given their history of mishandling data.
Centralizing too much data
Critics argue Facebook already collects too much personal data on its users. Facebook Pay further centralizes sensitive information – like credit card numbers – into Facebook’s ecosystem. This creates a lucrative target for potential hacking or misuse.
Abandoned projects
Facebook has killed off numerous products and features over the years after losing interest, including Facebook Credits and Facebook Gifts. Some analysts are skeptical Facebook will maintain long term commitment to payments.
Stifles competition
In the past, Facebook has been accused of anti-competitive behavior by copying features from rivals or using platform dominance to undermine competitors. Adding payments may further increase their monopoly power.
How does Facebook Pay protect user data?
Given the sensitivity of financial information, data security is critical for a payment provider. Facebook claims they take the following steps to protect user data in Facebook Pay:
- User payment credentials are stored securely on Facebook’s servers and not on the merchant’s end.
- Sensitive card data is tokenized for additional security. This means your actual card number is replaced with a unique series of digits to represent your card.
- Facebook Pay is built on top of the same payments infrastructure used across Facebook for donations and purchases. This infrastructure meets industry security standards like PCI compliance.
- Facebook leverages AI and machine learning technology to continuously monitor Facebook Pay for threats and fraudulent activity.
However, many experts argue Facebook’s security protocols are still inadequate. Facebook maintains visibility into user financial transactions and payment history across their family of apps. Given their poor track record of protecting user data, many consumers are reluctant to trust Facebook with payment info.
Facebook Pay vs. Apple Pay and Google Pay
How does Facebook Pay compare against the current leaders in mobile payments Apple Pay and Google Pay?
Apple Pay
Apple Pay was first released in 2014 and is accepted at over 90% of US retailers. Key differences vs. Facebook Pay include:
- Apple Pay uses device encryption, tokenization and biometric authentication like Touch ID and Face ID for security.
- Apple Pay only works on Apple devices while Facebook Pay works across platforms.
- Apple Pay transaction history is not linked to an Apple ID account.
- Apple does not have access to usage analytics or purchase history.
Overall, Apple Pay is viewed as safer than Facebook Pay since Apple doesn’t have visibility into payment data or track user spending habits.
Google Pay
Google Pay launched in 2015 and is accepted at over 2.5 million merchants. Key differences vs. Facebook Pay:
- Google Pay also uses tokenization for transactions.
- Supports NFC contactless payments on Android devices.
- Google can store transaction metadata and usage analytics.
- Google integrates loyalty programs and offers based on transaction data.
Google Pay has more consumer transaction data visibility than Apple Pay, although privacy controls allow users to limit some data sharing. Google Pay has stronger security than Facebook Pay but enables more data usage.
| Provider | Data Visibility | Tracking | Security |
|---|---|---|---|
| Facebook Pay | High | High | Medium |
| Google Pay | Medium | Medium | High |
| Apple Pay | Low | Low | High |
Should you use Facebook Pay?
The decision about whether to adopt Facebook Pay comes down to your comfort level in trusting Facebook with your financial data.
Facebook Pay does offer convenience by integrating payments across Facebook’s ecosystem of apps. For frequent Facebook users, it provides a frictionless way to send money and make purchases without reentering payment credentials.
However, Facebook’s poor track record on privacy raises justified concerns. Facebook Pay concentrates even more sensitive user information into their platform. Unlike Apple Pay or Google Pay, Facebook can analyze purchases, transactions, and spending habits to refine ad targeting or build user profiles.
Ultimately, consumers need to weigh the trade-offs. Power users embedded in Facebook’s ecosystem may find Facebook Pay’s utility outweighs privacy concerns. But users who don’t intrinsically trust Facebook to protect financial data will likely want to avoid Facebook Pay.
As adoption spreads, Facebook will need to provide robust security safeguards and enhanced transparency around how payment data is used. Extending access to regulatory bodies to audit compliance and security protocols could help build public trust. But only time will tell if Facebook can rebuild their reputation as good custodians of user data.
Conclusion
Facebook Pay brings together payments across Facebook’s family of apps under a unified system. While it should provide a frictionless user experience, Facebook’s history of mishandling privacy raises concerns. It remains unclear whether the convenience will outweigh worries about trusting Facebook with financial data for the average consumer. For now, users need to carefully consider their comfort level with how payment information could be accessed or analyzed within Facebook’s ecosystem.