Reports have surfaced in multiple media outlets this morning that Facebook is seeking regulatory approval from the Irish central bank for providing financial services in the form of remittances and e-money – an approval which they are apparently close to receiving.
According to reports, the popular social network is seeking to allow its users in Ireland to
store money on the site and have the ability to send it to other users or pay for products.
As per the Irish Times: “The authorisation from the Central Bank to become an “e-money” institution would allow Facebook to issue units of stored monetary value that represent a claim against the company. This e-money would be valid throughout Europe via a process known as “passporting”.
Obtaining an e-money authorisation in Ireland would require Facebook to hold capital of €350,000 and segregate funds equivalent to the amount of money it has issued, according to legal experts.”
The idea of “social payments” has certainly been a hot topic in the financial services world over the last couple of years. Social payments can not only refer to money transferred between parties on social media web sites, like Facebook or Twitter, but also crowdfunding services like Kickstarter, and numerous other examples.
As social payments are still in their relative infancy, it’s an area where banks are just dipping their foot into, if at all. But the benefits of getting in early, especially when in conjunction with a social media giant like Facebook, could prove highly beneficial.
In February, it was reported that Canada’s RBC had partnered with Facebook on a P2P money transfer service. The service runs on the Canadian payments network cooperative Interac, which comprises more than 80 member Canadian financial institutions.
Interac allows consumers to send money to anyone with an email address and Canadian bank account, and the new RBC partnership allows consumers to send money only needing to be friends with someone on Facebook for them to receive it.
Clearly, between their partnership with RBC and this most recent announcement, Facebook is taking the idea of social payments seriously. And with a whole generation of consumers who have grown up with social media an extension of themselves, that might be a good idea.