Facebook is said to be broadening its horizons again. This time Facebook is setting its sights on joining the financial services segment as it is apparently trying to gain approval to facilitate financial services in the form of electronic money and remittances, according to the Financial Times.
The reports claim that, according to sources involved in the process, the social network has applied for regulatory approval in Ireland and is just weeks away from obtaining a licence. Such authorisation would allow it to provide a service that lets users store money on Facebook and use it to pay others, a service known as e-money.
If the go-ahead is given by the Central Bank of Ireland, Facebook could issue e-money that represented a claim against the company and the e-money would also be valid throughout Europe through a process known as 'passporting'. As the Irish Times points out, to obtain an e-money authorisation in Ireland, Facebook would be required to hold capital of €350,000 and segregate funds equivalent to the amount of money it has in issue.
Facebook is also supposedly in talks with three London based money transferring services: TransferWise, Azimo and Moni Technologies regarding potential partnerships to help build international money transfer services online and via smartphones. Fleshing out these murmurings, the FT also underlines that Facebook has offered to pay Azimo $10 million to recruit one of its co-founders as a director of business development. However, when quizzed, a Facebook spokesperson said the company refused to comment on "rumour and speculation".
With Facebook recently passing 100 million users in India, its largest national market outside the US, e-money and remittances would help the firm be more relevant in emerging markets and could build up its motion to push into these markets.
Looking at related industry developments the Chinese internet giants Alibaba and Tencent have both rolled out mobile payment initiatives such as virtual credit cards as they actively boost their mobile payments ecosystem. Google has also reiterated its commitment to expanding its mobile payments and wallet products.
A person familiar with the company's strategy said that Facebook "wants to become a utility in the developing world, and remittances are a gateway drug to financial inclusion." With more and more concerns surrounding the topic of Facebook mining personal data to boost advertising on the site, it will be interesting to see if users will trust the company enough to allow it to handle their money if/when the services become available.