This post first appeared on Brand Republic’s The Wall blog (no longer available).
Suddenly, Facebook’s decision to strip the messaging functionality out of its main mobile app and encourage people to use its dedicated Messenger service is beginning to make a lot more sense.
At the time, we thought it was designed to protect the Facebook brand within a rapidly evolving social networking landscape; as conversations shift away from the major networks towards mobile chat apps, the danger for Facebook was that it could become increasingly sidelined, especially with WhatsApp destined to remain a standalone product.
But while it was a smart move in that respect, it’s well-known that social networkers don’t like change – least of all when it’s being forced on them. The level of discontent being vented on forums – and on Facebook itself – was clear testament to this; while some users didn’t mind the migration, lots of them were pretty furious with the social networking giant. Of course, Facebook has never shied away from making changes when it wants to – even when users were likely to react badly – but this one seemed bigger than most. Why was it so very insistent on pushing the Messenger service, especially when people had been happily messaging each other inside its main app for years?
Now we know there was another pretty major factor at play: Facebook doesn’t just see Messenger as a communication platform, it wants it have a much bigger, and more overtly commercial, function – with a bit of digital sleuthing by a Stanford University student having uncovered a piece of code showing its planned role as a peer-to-peer money transfer service.
The system mimics the mechanics used by WeChat in allowing users to send money to each other via PIN-secured transfers based on debit card payments; it’s fairly easy to see in this the influence of PayPal’s former president David Marcus, who joined Facebook in June. And although other person-to-person payment apps have been out there for a while now, Facebook’s huge reach would give it a distinct advantage in terms of pushing this behaviour into the mainstream.
It’s also clear that this piece of code is not a test. Facebook has applied for ‘e-money’ status in Europe, which would allow it to implement seamless money transfers across the EU and, potentially, launch its own brand of digital credits. The possible profits it could bring the network are vast: estimates of the global digital money transfer market are in the trillions. Elsewhere, the World Bank estimates that working migrants alone transfer $500 billion back home each year.
Even more crucially, GlobalWebIndex’s research across 32 global markets reveals that more than half of Messenger’s current users have bought something via their mobile within the last month (significantly ahead of the equivalent figure among the general online population). Although not explicitly designed for purchasing products at the moment, it’s not hard to imagine how Messenger’s new role could be expanded further to facilitate this, giving Facebook a significant footprint in a space set to enjoy massive growth in the months and years ahead (only last week, for example, Asda, Sainsbury’s, Spar, Shop Direct and House of Fraser announced a new partnership with mobile app Zapp which – from next year – will allow shoppers to purchase items in-store using their mobiles). Following its largely unsuccessful “gifts” service, quietly withdrawn earlier this year, we know that Facebook has been testing a “Buy” button in the US and will be keen not to lose ground to its rival Twitter, which has already unveiled its plans for an equivalent feature.
Seen in this context, the evolution of Facebook Messenger is actually a fairly critical part of the social network’s future success. Although Facebook shares are now trading at twice their IPO price, Mark Zuckerberg and his executives know that Facebook needs to become more than just a network supported by advertising revenues alone. Just look at the hype surrounding new-kid-on-the-block Ello to see how weary some users are becoming of its seemingly relentless focus on advertising.
Facebook’s move into the money transfer and online shopping markets is thus another step in its transition from a social network to a service provider. And it’s one that could prove highly lucrative.