“It seems like Facebook wants our lives to revolve around its platform.” — Brynne Ramella
Facebook has evolved far beyond a simple communication platform to keep tabs on your friends, peers, enemies and family members. Users can sell and buy anything on the Facebook Marketplace, can communicate with coworkers via Workplace by Facebook, play around in Facebook’s new VR application, and even hail an Uber or Lyft via Facebook Messenger.
Oh, and one more thing: users can now send and receive money in Facebook Messenger.
Is Facebook going to become the place that people go?
It sure looks like Zuckerberg and company are planning on it.
What I’m interested in, though, is why Facebook rolled out Payments in Messenger. Snapchat rolled out its peer-to-peer payment system, called Snapcash, in November of 2014. In my opinion, Snapcash is one of the most unsafe and unnecessary ways to send and receive money. In a world where PayPal and Venmo exists, why depend on a platform that prides itself on temporariness?
How does Facebook’s peer-to-peer digital payment system differ from Snapchat’s?
Is Facebook going to become the place that people go? It sure looks like Zuckerburg & Co. are planning on it.
Both Facebook and Snapchat partnered up with payments firms before rolling out their digital payments system. Snapchat entered into its first ever partnership with Square, a credit card processing company, to usher in a new (arguably optimistic) era of Snapchat.
Both Payments in Messenger and Snapcash merely require the linkage of the user’s debit card to the platform. While this seems risky, on the bright side, at least both platforms track the history of paid and received payments.
However, Snapchat’s security system is horribly shoddy. In 2014, nearly 4.6 million Snapchat users’ accounts were hacked, resulting in the leak of those 4.6 million users’ phone numbers and usernames. Snapchat’s record has not been squeaky clean since. That may be why Snapchat promised not to keep personal financial data on their own servers. This doesn’t mean that they’re refraining from collecting that data, it just means that that data will exist on Square’s more secure servers.
On the other hand, Facebook is a bit more committed to security than Snapchat. For example, instead of turning to experienced payment companies like PayPal to power the Payments in Messenger feature, Facebook decided to build the product from scratch. Why incur the risk of saving data on a separate server when Facebook can lean on its giant pool of developers and incredibly smart people to build a cheaper product on-premises?
Holding Your Attention
An interesting element of Payments in Messenger that Facebook continues to explain is that the feature is free.
Lex Sokolin, writer of the Autonomous NEXT fintech weekly digest, posited a fascinating theory that explains why Facebook doesn’t want to build a payments business via Payments in Messenger: “High-tech is interested … in the attention economy … If a user wants to split a bill with friends and does so within the chat stream inside Messenger using some chatbot, that means the user never left Facebook’s ecosystem … Payments is important because of the attention it coopts, not because of fees.”
Facebook isn’t doing anything brand-new; that’s not the point. The platform is taking cues from mobile users’ habits and absorbing them. Why encourage users to briefly (or for long periods of time) leave its ecosystem to utilize competitive apps? Rather, make all aspects of the Facebook platform so alluringly convenient that users find it more inconvenient to leave the operating system. After all, that’s why Facebook decided to auto-play videos in a user’s feed, create a Twitter-like trending news stream, and constantly update its interface. Higher user engagement translates to more time users spend on the desktop or mobile application, which translates to more data collected on those users, to continue and complete that cycle.