6 Ways Facebook Is Encroaching on Payments

June 17, 2016 2:12 PM

A woman checks the Facebook Inc. site on her smartphone whilst standing against an illuminated wall bearing the Facebook Inc. logo in this arranged photograph in London, U.K., on Wednesday, Dec. 23, 2015. Facebook Inc.s WhatsApp messaging service, with more than 100 million local users, is the most-used app in Brazil, according to an Ibope poll published on Dec. 15. Photographer: Chris Ratcliffe/Bloomberg

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Facebook is poking its fingers into a lot of seemingly unrelated businesses, but commerce is always at the heart of its efforts. Here are some ways Facebook is building a new foundation for payments.

An attendee sits in front of a messenger logo during the Facebook F8 Developers Conference in San Francisco, California, U.S., on Tuesday, April 12, 2016. Facebook Inc. Chief Executive Officer Mark Zuckerberg outlined a 10-year plan to alter the way people interact with each other and the brands that keep advertising dollars rolling at the worlds largest social network. Photographer: Michael Short/Bloomberg

Michael Short/Bloomberg

Texting Takeover

The Facebook Messenger app, which allows users to communicate with their Facebook friends in real time, can now be used as a replacement for an Android phone's built-in texting app. This may give Facebook a leg up on Allo, Google's upcoming messaging app that allows users to order food and make other purchases from the chat screen.

The Uber Technologies Inc. logo is displayed on the window of a vehicle after dropping off a passenger at Ronald Reagan National Airport (DCA) in Washington, D.C., U.S., on Wednesday, Nov. 26, 2014. Uber Technologies Inc. investors are betting the five-year-old car-booking app is more valuable than Twitter Inc. and Hertz Global Holdings Inc. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

Uber and Beyond

Facebook's Messenger is no slouch when it comes to commerce. Already, if users are talking about making plans, the app will link to their Uber app to hail a ride. This is just a taste of the "developer ecosystem" Facebook is planning around its technology.

Mark Zuckerberg, founder and chief executive officer of Facebook Inc., speaks during the Facebook F8 Developers Conference in San Francisco, California, U.S., on Tuesday, April 12, 2016. Zuckerberg outlined a 10-year plan to alter the way people interact with each other and the brands that keep advertising dollars rolling at the world's largest social network. Photographer: Michael Short/Bloomberg *** Local Caption *** Mark Zuckerberg

Michael Short/Bloomberg

Robot Revolution

Facebook is also bringing "bots" to its Messenger app, combining artificial intelligence and big data to predict users' needs and, perhaps, their purchases. I find it pretty ironicnow to order from 1-800-Flowers you never have to call 1-800-Flowers again, Facebook CEO Mark Zuckerberg said of one of the system's first bots.

David Marcus, vice president of messaging products for Facebook Inc., speaks during the Facebook F8 Developers Conference in San Francisco, California, U.S., on Tuesday, April 12, 2016. Facebook Inc. Chief Executive Officer Mark Zuckerberg outlined a 10-year plan to alter the way people interact with each other and the brands that keep advertising dollars rolling at the world's largest social network. Photographer: Michael Short/Bloomberg *** Local Caption *** David Marcus

Michael Short/Bloomberg

Plucked from PayPal

The Messenger business is led by David Marcus, former president of PayPal. Zuckerberg downplayed Marcus' background when he was hired admitting only that there would be "some overlap" between Messenger and payments but it's clear that Marcus' experience is being put to work for the social network.

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Getting Personal

In March of 2015, less than a year after Marcus took the top job in Facebook's Messenger business, the social network launched a nationwide person-to-person payment system within the Messenger app.

Social media apps including WhattsApp, LinkedIn, Twitter, FaceBook, Instagram, SnapChat and Periscope are displayed in a social media folder on the screen of an Apple Inc. iPhone 6 in this arranged photograph taken in London, U.K., on Friday, May, 15, 2015. Facebook Inc. reached a deal with New York Times Co. and eight other media outlets to post stories directly to the social network's mobile news feeds, as publishers strive for new ways to expand their reach. Photographer: Chris Ratcliffe/Bloomberg

Chris Ratcliffe/Bloomberg

Moving into Mobile

Given the prominence of Facebook's desktop website, why are so many of its moves in payments tied to mobile? Nearly 40% of retail purchases took place on a mobile device last year and 60% of omni-channel shoppers say they will make purchases on their smartphones this year, according to Facebook research. Of millennials, 69% are making purchases on a mobile device.