What is going on with Facebook Pay?

Facebook Pay is a payment service developed by Facebook that allows users to make payments and money transfers across Facebook, Messenger, Instagram, and WhatsApp. It was first launched in November 2019 and has since expanded to more countries and platforms. Facebook Pay aims to provide a convenient, secure and consistent payment experience for Facebook users.

Some key things to know about Facebook Pay:

It lets you make payments without leaving the app you’re using, whether that’s Facebook, Messenger, Instagram or WhatsApp.

It uses existing payment methods you’ve already added to your Facebook account, like credit/debit cards, PayPal, etc.
It has built-in fraud protections and account security features.
Transactions are processed in a secure system separate from Facebook’s servers.

It’s free to send and receive money through Facebook Pay. You only pay any applicable fees charged by the payment provider.

Facebook Pay is still relatively new, but Facebook has been steadily expanding its availability and usage over platforms. This raises questions around what Facebook’s goals and plans are with payments, and what impacts this could have for users.

What are Facebook’s goals with payments?

Facebook likely has a few key goals and motivations behind their push into payments:

Drive engagement: Enabling payments creates more reasons for people to actively use Facebook’s family of apps. Payments can enable things like person-to-person transactions, in-app purchases, donations, event tickets, and more.
Monetization: Facebook may take a cut of some payment transactions, opening up a new revenue stream beyond just advertising.
Commerce: Payments help turn Facebook’s platforms into commerce venues, both for small businesses and larger brands. This aligns with Facebook’s increasing focus on shopping and ecommerce.

Data: Transaction data gives Facebook further insights into how people spend money. This data could be used for ad targeting or other business initiatives.
Competition: Services like Alipay, WeChat Pay and Apple Pay have shown the value of payments integrated into a platform. Facebook wants a piece of this market.

Bringing payments into its ecosystem allows Facebook to increase user engagement, drive new revenue sources, get into ecommerce and gain data on transactions and spending habits. It supports the company’s strategy to be more than just a social platform.

How does Facebook Pay work?

When you first use Facebook Pay, you need to add a payment method, such as a credit/debit card, PayPal account or bank account. Here are the steps to set up and use Facebook Pay:

Open the Facebook, Messenger, Instagram or WhatsApp app. Go to Settings > Facebook Pay and tap “Get Started.”
Choose the payment method you want to use. Enter your card details or log into your PayPal account.

Facebook Pay will be enabled, letting you start sending or requesting payments. Facebook Pay also may show up as a payment option when you shop or donate within the app.
To send money, open a chat and tap the payment icon. Enter the amount you want to send and an optional note. Confirm your payment details and send.
To request money, open a chat and tap the request icon. Enter the request amount and details. The other person will get a notification to pay your request.

You’ll see payment receipts and transaction history right in the app where you sent or received money.

Facebook Pay uses your existing payment credentials so you don’t have to re-enter details each time. The payment information is encrypted and stored securely on Facebook’s servers.

When you pay someone, you can choose which payment method to use for that transaction. Facebook Pay essentially acts as a manager for your payment credentials across Facebook’s apps.

What can you use Facebook Pay for?

Here are some of the uses and transactions currently supported by Facebook Pay:

Peer-to-peer payments: Send money to friends and family through Messenger or WhatsApp.
Group collections: Collect funds from a group for a gift, donation, event expenses, etc.

Donations: Support nonprofit causes and organizations directly within Facebook apps.
In-app purchases: Buy digital goods, services or features within apps and games.
Event tickets: Purchase tickets for events and attractions using Facebook Pay.

Commerce: Check out with Facebook Pay on ecommerce sites and shops on Facebook.
Loyalty programs: Earn and redeem points and rewards when paying with Facebook Pay.

The availability of uses varies across Facebook’s different platforms, but the general idea is to make payments frictionless across its ecosystem.

As Facebook Pay expands, more types of transactions are supported. Facebook is focused on enabling small business sales and ecommerce, so more shopping and retail uses are likely coming.

Which Facebook apps support Facebook Pay?

Facebook Pay first launched on Facebook and Messenger in the US in November 2019. Since then, support has expanded to more countries and apps:

Facebook: Send money to friends, donate to causes, pay for Group purchases, buy event tickets, etc.

Messenger: Peer-to-peer payments, in-app purchases, donations, business transactions.
Instagram: Make in-app purchases, donate to fundraisers, pay for ads and sponsored content.
WhatsApp: Send and receive money through WhatsApp in supported countries.

Facebook Pay is not yet universally available across all Facebook platforms and regions. The service first launched in the US, and has since expanded to more countries like India, Mexico, Thailand, and many parts of Europe. However, Pay is not yet available globally.

Facebook has also discussed integrating Pay with its cross-platform Marketplace for buying and selling goods. So support for Pay on Marketplace may be coming in the future.

Is Facebook Pay secure?

Facebook Pay utilizes several security measures and practices to help keep payments safe, including:

Payment credentials are encrypted and stored on secure Facebook servers, separate from profile and activity data.
Payments require authentication via PIN, fingerprint, face ID or other verification measures.
Facebook’s systems run real-time fraud monitoring on transactions and accounts.

Suspicious transactions will trigger notifications for review and confirmation before processing.
All payments are processed by authorized payment service providers like Stripe and PayPal.
Transactions leverage the security layers built into credit cards, banks and other financial institutions.

Additionally, Facebook Pay provides specific protections around:

Unauthorized transactions: You can dispute unauthorized charges and get refunds.
Lost/stolen devices: You can remotely disable Facebook Pay if your device is lost or stolen.

Chargebacks: If you don’t receive what you paid for, you can request money back via your card provider.

Facebook claims Facebook Pay adheres to strict compliance and regulatory requirements. Of course, no system is completely infallible when it comes to fraud, hacking or security breaches. But Facebook Pay does seem to implement robust measures to help safeguard payments.

Does Facebook see or store your transaction data?

An important question around Facebook Pay is how much transaction data Facebook can view or access. According to Facebook’s privacy policy:

Transaction information is stored separately from your social data on Facebook.
Facebook doesn’t see or collect details about what specific items you purchase or who you send money to.
Facebook only receives basic transaction data like date, time, amount, currency, payment method, and confirmation the transaction completed.

This data may be used for operations, fraud prevention and aggregate reporting – but not for ads.

Facebook claims it gives users control over payment information and limits employee access to payment data.

However, Facebook likely can view some aggregate transaction patterns, such as a user spending $500/month via Facebook Pay. This gives them insight into spending behaviors in general, even if not item specifics.

Overall though, Facebook states they don’t view or use your Facebook Pay activity for ad targeting or recommendations. The data is segregated from your social profile and activity on Facebook.

How does Facebook Pay make money?

Facebook doesn’t directly charge consumers for Facebook Pay. But the company does potentially earn revenue through:

Merchant fees: Facebook may charge merchants a percentage of transactions for sales through checkout on Facebook platforms.

Transaction fees: Some payment methods like credit cards charge processing fees per transaction, from which Facebook takes a cut.
User data: Insights from transaction data at an aggregate level are highly valuable for Facebook’s analytics and could enable better ad targeting.
Increased engagement: More transactions and payments should increase time spent on Facebook apps, allowing Facebook to show more ads.

According to Facebook, merchants are charged the same rates or lower than what other payment providers charge. This means Facebook Pay is either revenue neutral or additive for Facebook from merchant transactions.

However, the big-picture value for Facebook is the data and engagement opportunities payments facilitate. Payments are both a monetization lever and a strategic capability for Facebook’s ecosystem.

How does Facebook Pay compare to competitors?

The major competitors to Facebook Pay include dedicated payment services like PayPal, Venmo and Square Cash, as well as integrated payment platforms from technology companies:

Provider	Key Features
Facebook Pay	Integrated with Facebook apps Use existing payment methods Free to send/receive between individuals
PayPal	Established brand recognition Robust ecommerce features merchant fees on transactions
Venmo	Popular for peer-to-peer payments Social feed connected to payments Free between individuals
Apple Pay	Easy mobile wallet payments Integrated with Apple devices Strong security features
Google Pay	Android ecosystem integration Rewards programs Supports crypto payments

Facebook Pay aims to differentiate based on tight integration with Facebook’s apps and user accounts. This gives it a pre-established user base to deploy payments to right away.

However, dedicated payment services have strengths around financial tools, features, security and trust. And tech platforms like Apple have an advantage on device-level integration.

So Facebook still faces an uphill battle against both payment specialists and other tech companies expanding into the payments space. But the company is betting its massive reach provides the scale needed to push into payments in a big way.

What does this mean for the future of payments?

Facebook’s payment efforts highlight a few key trends that are likely to shape the future of payments:

Platform-centric: Payments are increasingly being built into major digital platforms customers already use, rather than requiring new services and apps.
Mobile-focused: Mobile devices are becoming the dominant payment channel, especially for everyday transactions.

Ecosystem interoperability: Customers expect seamless payments across a provider’s full ecosystem of apps, sites and services.
Data insights: Payment data provides valuable intelligence into consumer spending patterns and behaviors.
Fast and flexible: Customers want payments that are instant, have flexible uses, and work across contexts.

Facebook adding payments fits squarely into these trends – using its mature platform to make payments mobile-centric, integrated and data-driven.

Other implications could include:

More technology platforms look to add payment capabilities.

Incumbent payment providers enhance their value-added services.
Fintech and ecommerce increasingly converge.
Blurring lines between social, commercial and financial activity online.

Facebook Pay signals how payments are becoming embedded into our digital experiences. Transactions are now simply part of how customers interact with brands and platforms.

Conclusion

Facebook Pay aims to make payments frictionless across Facebook’s family of apps. It provides a convenient way for Facebook’s billions of users to transact digitally for things like sending money, in-app purchases, event tickets, donations and more.

Facebook’s goals appear to be driving engagement, enabling commerce and monetization, and gaining financial data – rather than solely establishing a payments network.

The service leverages users’ existing payment methods for streamlined checkout. It faces competition from established payment providers and technology platforms with payment capabilities. But its massive reach gives Facebook Pay a solid starting point to gain adoption.

Broader implications from Facebook getting into payments include digital wallets becoming more platform-centric and embedded into our daily digital experiences. Facebook Pay exemplifies these trends of fintech convergence and “platformization” of payments. Its future direction and success will have impacts across the payments landscape.