Facebook is close to getting approval to offer e-money services to its subscribers in Ireland. It is trying to rival the Google Wallet. Facebook reckons that by having an e-money service, it will enable people to send presents to family members or friends at the click of a mouse. Apart from the obvious security and big data issues, is it a good move for consumers?
Conceptually, Facebook money is simple, a user can store money in their Facebook account and Facebook will honour transactions upto that amount that users make through their Facebook account. At this moment in time, it is not clear if Facebook will charge users to use the services but it hopes that paying for ads on Facebook, in-game purchases and sending presents to people you love will become easier.
Pros of Facebook Money
The positive aspects of this type of a service are clear
- Business Driver – stores will be able to offer you their products directly from their Facebook pages making it easier for customers to buy without ever having to leave the Facebook app on their bus trip home from work. I can see this being an attractive feature for small businesses – both selling products and services and Facebook App developers alike. You may be (in the near future) be able to pay for your lunch using your Facebook app, walk in the sandwich bar, say Hi to people instead of spending time in a queue and just walk to enjoy the lovely sunshine in the summer months. Facebook Money has the potential to be a disruptive technology. It will be disruptive not in the sense that this kind of thing has not been done before but it will be disruptive because of the pervasive nature of Facebook in our daily lives.
- Family & Friends – Have you ever wanted to send cash to family and friends that live abroad instead of present? If you have, then Facebook Money will make that easy for you. With it huge user base all across the world, Facebook Money has the potential to revolutionalise the way we treat money. Facebook will remind of important birthdays and anniversaries of people you care about and make it easy for you to send presents to them or simply to send them cash. You will never have to be embarrassed about forgetting your god child’s birthday ever again.
- Revolutionising Money – We are already using credit cards, debit cards and store cards to pay for stuff instead of having to carry cash. Now Facebook Money has the potential to make our wallet redundant. With integrated security such as finger print and other biometric scanners built into our mobile phones, it has the potential to be more secure than credit cards ever could be. You can charge up your Facebook Account, leave your credit card at home and make your daily purchases simply through your phone. Facebook Money has the potential to become universal because all the major brands use Facebook, all the small businesses use Facebook and it has over 1Billion users across our lovely planet.
Given the potential to being a disruptive technology in the market place, Facebook Money does carry some risks with it.
Risks Associated with Facebook Money
The risks associated with this type of service are great.
- Security and Trust – Facebook is already seen by some as an evil data mining company that uses your personal information ruthlessly to grow its advertising business. Facebook’s most recent financial results stated that:
- Ease of Payments – A few years ago, a child racked up a credit card debt of £900 on his mothers credit card in Farmville. Facebook Money will make this type of transaction more commonplace. Once parents start storing money in their Facebook Money accounts, kids will find it easy to spend it. This is a generational thing, kids find a way of spending money no matter how hard we try because as children we all want to own the whole world. Facebook Money just makes owning things in our world easier.
- Facebook Bank – The potential for Facebook Money to turn into Facebook Bank is great and is a dangerous proposition. When you open a conventional bank account, you dont share your personality with the bank in the way we do with Facebook. We do check-ins in a pub to tell our friends that we are out having a good time and having a few drinks with our mates. We love sharing our personal milestones with the world on Facebook – Can you imagine a financial institution having access to such deeply personal information about you? I, for one, would not like my bank manager to know that I was out with my friends last night. Or that I review restaurants regularly? The potential for that information to be used against you is beyond my imagination. My bank does not know my social and personal business and nor does it care as long as I pay my bills on time. Facebook Bank will know your spending patterns and your social lives in detail – relating the 2 to tailor make special offers for you is one thing but to be able to correlate the 2 to make financial decisions is a game changer.
Mobile accounted for 59 per cent of the company’s ad revenue on the quarter, up from just 30 per cent of revenues in 2013. Mobile users were estimated at 609 million daily active users and 1.01 billion monthly active users, increases of 43 per cent and 34 per cent, respectively.
With such a huge reliance on mobile advertising for revenue growth and the embedded nature of our personal information on Facebook, the dangers of Facebook Money to provide targeted emotional advertising are great. We can easily be guilted into buying services and products while we commute. A few years ago Minority Report opened our eyes to advertising in the future:
With Facebook Money, you will not need large displays, just a simple check-in in a store will allow store owners to target you most effectively. The visual aids seen in the clip from Minority Report will be a mere enhancement on the data mining in the background.
My Conclusion on Facebook Money
I, personally, think that Facebook Money has the potential to be a disruptive technology of our times. It will greatly help small businesses reach an untapped market by lowering the barriers to entry for them but as Ben Parker said in Spiderman
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