Tuesday, April 15 16:36:08
Facebook is seeking permission in Ireland for a money transfer service in Europe that would allow it to compete with the likes of Western Union.
The idea is to give users the option of sending money, saving it with the social network or buying items online.
The US tech firm is seeking regulatory approval in its European base in Ireland for "e-money" status, which would see it issue digital credits that can be converted into cash by recipients.
The firm already has permission for some forms of money transfer in the US, which allow payments within apps, including the Candy Crush Saga and Farmville games, from which Facebook takes a 30pc cut. The company facilitated $2.1bn in transactions across Facebook in 2013, primarily to games publishers.
Approval in Ireland would allow Facebook to operate an e-money service throughout Europe using "passporting", which allows digital payments to be used across EU member states without having to gain regulatory approval from each one.
Facebook declined to comment on the development, which first emerged in the Financial Times, but the move highlights the scale of the global money transfer market. "The market for money transfer is very, very large," said Taavet Hinrikus, co-founder of TransferWise - one of three payment services reportedly in partnership discussions with Facebook.
Hinrikus declined to comment on the reported partnership discussions but said:
"For remittance alone the market is worth around $500bn, according to the World Bank, but for money moved between developed nations, as well as between developed and developing individuals and business, the market is valued at an estimated $5tn to $10tn, based on our analysis of global money flow data."
Facebook has made mobile platforms the focus of its expansion strategy in developing markets such as India, which accounts for more than 100 million of the firm's 1.2 billion users. Mobile broadband subscribers far outstrip fixed-line ones in developing nations.
"Could Facebook become some sort of utility in the emerging markets? It's certainly possible," said Brian Blau, a director at the research firm Gartner.
"Facebook has a lot of ambition here and they certainly see the benefits of helping the next 2 billion people make it on to the internet, which they're happy to subsidise for a while, but at some point they have to become paying customers."