Can Facebook Mobile Payments be Successful?
Despite constant articles appearing online predicting the demise of Facebook, stating that the network is losing users at a rate of millions, the social media site appears to be going from strength to strength.
This is illustrated by the latest news from Facebook that they are to attempt to further monetise mobile by accepting mobile payments for apps. These will be made using existing Facebook login information and credit card details and at the moment, is only intended to test the feature with some of their app partners.
In the second quarter of the financial year for 2013, it emerged that the social network generated $1.6bn in advertising revenue. Of that, mobile ad revenues leapt to 41% totalling $656m, up from pretty much nothing on the previous year. Add to this the fact that the site also saw its monthly mobile users rise 51% over the course of the year, totalling 819m by June this year and reports of its impending demise do seem overblown.
Analysts left embarrassed
All of this has left analysts and news sites with egg on their face when it comes to Facebook, as the site has blown away all predictions that it’s seen its best days with ease in 2013.
This is further illustrated by the jump in share prices that we have seen since the company released its Q2 financial reports. Shares leapt 30% in the wake of the reports as many investors found a new confidence in Mark Zuckerberg’s baby.
Whilst many reports have said that Facebook are to go head to head with PayPal with app payments, this is something that has not been confirmed by the social network. Indeed, the company say that they have an excellent relationship with the payment platform and this is something that’s not expected to change.
“The product is simply to test how we can help our app partners provide a simpler commerce experience. This test does not involve moving the payment processing away from an app’s current provider,” said Facebook’s Tera Randall.
Basically, the feature simply does away with the need for users to fill in credit card details when making a purchase through Facebook, as the details would already be held on file. From the point of view of mobile users, this can only be a good thing as we all know what a pain it can be filling out forms on a mobile keypad.
However, one of the biggest assets to Facebook regarding mobile payments would be the data generated about its users. Having the capability of monitoring who spends cash on what will enable the social network to effectively target its users with personalised offers. For advertisers, this can only be a good thing, which should lead to better ROI. It’s also thought that this will allow other marketers and agencies to think about how planning can be used to encourage mobile first and real time campaigns.
The mobile payments feature is only at the testing stage, so for the moment only ‘selected partners’ are able to be involved in the process. However, it’s safe to say that one area where mobile payments may fall is at security.
According to a Bloomberg Business Week report, only 3 in 10 adults are willing to use a mobile wallet. Add to that the general distrust of social media when it comes to privacy and security and it’s a pretty large hurdle to overcome. This means that Facebook will have to put some extra guards in place and convince users that their credit card details and purchasing history is safeguarded.
However, given Zuckerberg’s assertion last year that Facebook will become a mobile company, it seems likely that security is something that the social network will have already have thought of. Take into account also that so far, the site has silenced its critics when it comes to what it can offer investors and advertisers and it’s likely that mobile payments will take off.
People adore convenience, after all.
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