The Financial Times reports Facebook is only a few weeks away from becoming a registered e-money institution in Ireland. When the approval is finalized, the Central Bank of Ireland will authorize the company as an e-money institution.
The authorization would allow Facebook to provide e-payment services in EU member states. According to the report the company would then be permitted to issue units of stored monetary value that would be valid throughout Europe, in a process called “passporting”.
The company has reportedly discussed potential partnerships with three London-based money transfer services: Azimo, Moni Technologies and TransferWise. According to a source familiar with Facebook’s plans, the company intends to move beyond Europe into emerging markets. The source said:
“Facebook wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion.”
In an email Jordan McKee, a commerce strategies analyst at Yankee Group, said:
“Facebook’s interest in e-money is not dissimilar to moves we’ve seen by Google and Amazon in the payments space.”
It is still unclear whether consumers will trust Facebook with their money. A survey conducted by the Yankee Group found that only 10 percent of U.S. customers would choose a mobile payment system from Facebook. McKee said:
“The motivators for an entrance into financial services vary, but given Facebook’s core business, data is certainly a driver.”
This will not be Facebook’s first attempt at the e-money market. The social networking giant was forced to stop its Facebook Credits virtual currency program, a program for in-app purchases, after low adoption rates. Additionally, Facebook Gifts, a service that allows users to send gifts to friends, has yet to be embraced by consumers.
The authorization in Ireland could be a step into the makings of a mobile payment system, but it is still too early to tell what Facebook has up its sleeve. Both Facebook and the Central Bank of Ireland declined to comment on the report.
During Apple’s quarterly earnings call in January, Tim Cook suggested that Apple is interested in stepping into the mobile payments industry. Rumours have pointed to a possible partnership with PayPal, but it is still unclear what Apple has planned. Apple has 575 million registered users with its iTunes store which it would tap into for its mobile payments service, with well over 530 million of these being iPhone and iPad users.