As banks are scrambling to position themselves in the mobile payments market, a new network is already emerging for payments that banks need to be prepared for: Facebook. Just like the internet and mobile phone networks, social media was never conceived as a payments network, but the day is soon approaching when it will become one, George Warfel, Director of PricewaterhouseCoopers, told bankers assembled at the BAI Retail Delivery conference in Washington, D.C. today. And although many banks are behind some non-bank players like Google and PayPal in the mobile payments area, no one has gotten out ahead of the banks on social media payments - at least not yet.
Facebook had a good deal going with Facebook Credits, a virtual currency users bought to pay for items in Facebook games and apps, Warfel said. Facebook got 30 percent of each transaction. So why would they end Facebook Credits as they did earlier this year? "I think they're getting ready to offer a payments network," Warfel concluded.
That payments network already has 450 million built-in subscribers - the number of daily Facebook users - Warfel added. When customers make an online purchase, they will see the Facebook logo right alongside that of Visa, MasterCard and PayPal, he predicted.
So how can banks ensure that they aren't disintermediated by Facebook? Warfel mentioned that an Australian bank has already partnered with Facebook to offer payments for its customers. The bank's customers will be able to send payments to merchants via their Facebook page, and even send payments to family and friends by clicking on their Facebook profiles, Warfel said. But those payments are routed through the customer's bank to the receiver's bank account.
Warfel argued that Facebook has an interest in partnering with banks to offer payments. Surveys and studies consistently find that customers trust their banks more than they do any tech company to handle their money. When asked why they trust banks more, Warfel said that customers most often answer that it's because banks are regulated. Facebook, obviously, isn't regulated as a financial institution. But it can gain some of that trust that customers reserve for their banks by partnering with those institutions. This gives banks leverage in creating a true partnership with Facebook, Warfel explained.