With the recent launch of Facebook Pay, Facebook is the latest company to enter the digital payment space. The tool will let users make direct payments within the Facebook family of apps: Facebook, Messenger, Instagram, and WhatsApp.
For now, Facebook Pay is only available on Messenger and Facebook in the US, where users can make payments for fundraisers, person-to-person payments, buy event tickets, and make some purchases in Facebook Marketplace. Eventually, Facebook Pay is set to roll out to other apps, and will eventually give users the possibility to purchase products directly within them.
Increasing social commerce
Facebook Pay is another step for the company towards increased social commerce. Facebook has been developing features that make the shopping experience more seamless across their entire family of apps. In the last couple of years, they have introduced more and more shopping-focused features, including Facebook Marketplace and Instagram Checkout, which both let users make purchases directly without ever leaving the network.
The introduction of Facebook Pay helps close the loop with these existing features. If a user sets up Facebook Pay, they can make a purchase directly in Marketplace in just a couple of clicks. And once the feature expands to Instagram, users will be able to browse products, add them to their cart, and pay for them without having to leave the app or enter their payment details. It’s a major step in creating a seamless social shopping experience.
This in turn is a great way for Facebook to keep brands on their network. By helping brands increase sales with strong social commerce features, it makes Facebook’s apps attractive and incentivizes brands to advertise there. Letting users pay directly on Facebook also promises to improve ad targeting, since it gives the platform direct access to shopping data. Having this information will help Facebook’s algorithms better understand the products users are interested in, all while improving the measurement of ad efficiency with clear data on which ads lead to purchase.
Digital payment to reduce friction
More broadly, digital payment systems are completely changing the way people shop and make purchases both online and offline. They’re also revolutionizing the way brands are able to reach their customers.
Today there are a multitude of digital payment solutions that facilitate transactions and help eliminate friction for users, particularly when it comes to online shopping. As one example, the Chinese messaging app WeChat, which now has 1 billion monthly active users, launched its own payment system back in 2013. WeChat today acts as a central hub for its users, letting them call and text friends, pay bills, book appointments, and more. WeChat’s integrated payment system helps make it a one stop shop for its users to take care of everyday tasks and purchases. It has also helped make China the world leader when it comes to mobile payment: 35% of the population uses it.
Google also has a digital payment solution with Google Pay, introduced in 2018. Google Pay can be used in brick-and-mortar stores, to send money to friends, and to make purchases on partner sites. Google Pay facilitates online purchases in particular: users can simply enter their Google credentials, eliminating the need to enter card information each time they want to make a purchase.
What changes will Facebook Pay bring?
If there is an increased prevalence of digital payment solutions today, Facebook Pay has the potential to act as a disrupter. It sits in competition with more established services like PayPal, which for now have been the way users make payments through ads and games.
Facebook Pay could also change the way people use Messenger. By adding the ability to make payments through the app, Messenger becomes a more full-featured experience. If Facebook continues to develop new Messenger features, it could become more like WeChat – a full-service app where people go not only to chat with friends, but also to make purchases, book rides, make reservations, and more.
Finally, for brands, Facebook Pay carries a lot of potential to improve the way they are able to reach their customers. It promises to help brands to meet their customers in the way they’re buying, amplify the effectiveness of their ads, and provide an increasingly friction-free shopping experience.
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