For ‘big tech’ bundling is the new battle — and a driving factor for Facebook, which is corralling several of its commerce divisions to show its substantial network of users how much they can do without leaving the social network.
Called Facebook Financial, the division includes Facebook Pay, WhatsApp’s payment projects, and the transactional features of Messenger, Marketplace, Instagram, and Novi (a digital wallet with ties to the Libra cryptocurrency project).
David Marcus, the former PayPal president who has led Facebook Messenger and served as the face of Libra — the Facebook-affiliated stablecoin project — will oversee the Facebook Financial team. Stephane Kasriel, another former PayPal exec, will be head of Facebook Pay, a P2P service designed to rival PayPal's Venmo. Facebook Pay is expected to roll out in the U.S. on Instagram, and is being tested in Brazil.
None of these initiatives are new, but they were built and marketed separately. And as Google, Amazon and Apple expand their financial services and payment projects, the pressure is on Facebook to demonstrate diverse commerce options. These firms have huge user bases, which they rely on to optimize add and transaction revenue.
There’s an immense desire for any social media company to keep users in the ecosystem, said Thad Peterson, senior analyst at Aite. “There is no value to Facebook if a user leaves their ecosystem to make a purchase, except for a possible piece of the transaction,” Peterson said.
Since Facebook Credits, the social network’s earlier attempt to build its own currency, failed earlier in the 2010s, Facebook has made considerable progress in adding transactional capabilities.
This lack of financial services acumen was considered part of Credits’ failure, and Facebook spent the rest of the decade adding tools and experts to support services that its now-1.7 billion users can access from login.
“By providing a payments function within their ecosystem, they increase user convenience and eliminate a reason for a user to leave,” Peterson said. “Increased stickiness along with the decreased friction of embedded payments keeps a user in the space and that’s a good thing for Facebook.”
Marcus has been a main driver of this evolution, joining Facebook in 2014 after leaving the top role at PayPal. Facebook put Marcus in charge of Messenger, helping to build Messenger’s profile as a payment enabler through invoicing partnerships with PayPal and bringing payment functions in closer proximity to advertising.
Marcus has since led Facebook’s blockchain work, been a co-founder of the Libra cryptocurrency project, head of Facebook’s Novi digital wallet, and is now the supervisor of Facebook Financial. Other payments talent followed Marcus, such as former PayPal exec Deborah Liu, a vice president at Facebook's Marketplace who has helped add AI technology to make it easier to connect buyers and sellers. More recently, Facebook hired another former PayPal exec, Kasriel, to serve as a payment vice president reporting to Marcus.
Facebook recently acquired Packagd, a small video shopping startup to build a live shopping feature in Marketplace. It has made several improvements to Instagram over the past year, improving buy and donate buttons in an effort to keep people on the site longer. Facebook Pay, which launched late in 2019, serves as a transfer app and a way to consolidate transactions for Messenger, Instagram and WhatsApp, strengthening the ties between Facebook's services.
Facebook would not comment for this story. By bringing together several consumer-facing products, Facebook can pair familiar e-commerce and Venmo-style social P2P with features that are newer and prone to regulatory and political pressure in numerous countries due to concerns over their impact on central bank monetary control or competitive balance. That potentially generates more consumer interest burgeoning payment features from WhatsApp, Facebook’s investment in a new e-commerce venture from Reliance Jio and the pending Libra cryptocurrency.
The integration is additionally a way to keep pace with other large technology companies that are expanding commerce options. Apple in the past year has added a credit card in partnership with Goldman Sachs, enabling Apple to string Apple Pay, Apple Pay Cash, the App Store, streaming content, and credit through a single relationship. Apple more recently agreed to acquire Mobeewave, giving Apple a route to support point of sale transactions in addition to its existing stack.
Google has added a group of banks to support checking accounts, linking Google Pay to traditional banking services and value-added services for both the banks and the technology giant. Amazon has partnered with the combined FIS/Worldpay to enable merchants to reach Amazon's enrolled consumers as the e-commerce giant adds more retail and delivery innovation that links back to its accounts.
“There is the idea of embedded payments, where the payment becomes integrated into the customer journey and the overall commerce experience,” said Peterson. “With payments embedded in the experience, the level of friction goes down and the likelihood of the customer making a purchase goes up.”
