Facebook Inc. Could Turn Messenger Into a Point of Sale Platform
Facebook could soon turn Messenger into a retail point of sale (POS) service, according to code within the app spotted by The Information . The new feature would allow customers to pay "directly in Messenger" upon buying an item at retail stores, with Facebook authorizing each credit card transaction.
Image source: Pixabay.
During a conference call in January, Facebook CEO Mark Zuckerberg suggested that Apple Pay could be integrated into Messenger alongside other payment services. But if those mobile payment players decide against partnering with Facebook, the company might launch Messenger as a competing platform instead.
What mobile payments mean for FacebookNearly two years ago, Facebook forced all its mobile users to download Messenger as a separate app. It subsequently expanded Messenger as a platform by adding stickers, apps, games, and peer-to-peer payments. That strategy is similar to the "monolithic" approach of Asian messaging apps like LINE and WeChat, which both launched a wide variety of apps and services to enhance their messaging services. By doing so, Messenger becomes a new way for Facebook to monetize its core users beyond the News Feed.
P2P payments on Facebook Messenger. Image Source: Facebook.
Transactions don't equal revenuesThe problem with the mobile payments market is that service providers only retain a tiny cut of the transaction. Apple, which is widely believed to have secured the most generous deal, receives 0.15% of each U.S. credit card transaction on Apple Pay. But even with that cut, Piper Jaffray estimates that the service will only generate $310 million in revenues this year -- a drop in the pond for Apple. Meanwhile, Alphabet's Google doesn't retain a percentage of credit card transactions with Android Pay, since card companies subsequently blockedthird-party payment processors from charging card providers fees.
Apple's ability to charge card providers lets it process payments without directly charging merchants -- which is how most mobile payment companies generate revenue. Square currently charges merchants 2.75% per card swipe or paid invoice, or 3.5% plus $0.15 per manually entered transaction. Rival PayPal charges 2.9%, plus$0.30 for retail and peer-to-peer payments. Google Wallet, which is a separate service from Android Pay, charges a flat 2.9% fee for debit and credit card transactions. Whether or not Apple has a price advantage depends on the card being used, since Apple Pay merchants still pay a 1% to 3% interchange fee for each credit card transaction.
The article Facebook Inc. Could Turn Messenger Into a Point of Sale Platform originally appeared on Fool.com.
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