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Facebook awaits regulatory approval for European payments service

Matthew Finnegan | April 16, 2014
Facebook is ‘weeks away' from obtaining regulatory approval to provide payments and remittance services in Europe.

Facebook is 'weeks away' from obtaining regulatory approval to provide payments and remittance services in Europe.

The social network is awaiting authorisation from Ireland's central bank that would allow its users to store cash as an 'e-money' which could then be exchanged or used to make payments, according to the Financial Times. The e-money would be accepted across Europe via a process known as "passporting".

Facebook is now in discussions for potential partnerships with a number of London start-ups which offer online and remittance services, according to "three people" involved with the matter, including TransferWise, Moni Technologies and Azimo.

The launch of a money transfer service is expected to help Facebook boost its presence in emerging markets, a growing focus for the company.

"Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion," a person familiar with the matter said.

The company already supports transactions through its site, facilitating $2.1 billion (£1.2 billion) worth of transactions last year, and has struck partnerships to support digital payments in the past.

Facebook would not be the first major tech company to be granted the ability to issue electronic money in Europe, with Google already registered in the UK for payments services.

Google currently allows its US customers to make payments through its Google Wallet, and is one of a host of tech companies which are offering an alternative to traditional financial services firms.

Apple CEO Tim Cook said earlier this year that mobile payments could be the next "big thing" for the firm, and a recent report in the Wall Street Journal is indicated the company is working on a service to rival Google Wallet and PayPal.

The launch of a payments service by Facebook is a "logical" step for the company, according to TechMarketView analyst, Peter Roe, with its large international presence allowing it to rival traditional players for certain transactions and services.

"While there are people who would view Facebook with suspicion and would be reluctant to trust them with any financial information, there are many for whom Facebook is a way of life," he told ComputerworldUK.

"Also the remittances market provides a straightforward way to enter the wider financial services business."

He added: "Facebook, probably through its partners, will find a way to circumvent the need for bank accounts and thus make it easy for the young and un-banked to transfer money, so this could be seen by the banks as a significant threat to their long-term position."

 

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