The mobile wallet race officially became the mobile wallet war Wednesday, after Facebook announced plans to support the use of its Facebook Pay system on sites outside of its ecosystem. This first big step into the wider world of payments would have been less remarkable had it not involved Shopify’s 1.7 million merchants as its inaugural external test case. It was a move that gave the Facebook endeavor an immediate degree of credibility and surely caught the eye of wallet-space heavyweights like Apple, Google, PayPal, and more.
Scheduled to go live in August and be followed up with other platform announcements, the Facebook Pay expansion aims to provide merchants with a seamless, secure, and less expensive payment option to facilitate speedy checkouts and higher conversion rates. To use Facebook’s own words, its platform will allow customers to “speed through checkout without having to re-enter their payment information.”
As much as Google, Apple, PayPal and others already offer those features and many more, they also enjoy the benefit of being accepted in millions of online and physical stores and restaurants. And while there are currently no public plans to use Facebook Pay to buy a coffee at Starbucks, for example, it would not be a stretch. Imagine the potential synchronicities of combining a Facebook or Instagram ad, promo or gifting occasion with the ability to also seamlessly pay for it.
In some ways, this new venture is essentially the inverse of Shopify’s announcement in June that it exported its in-house one-click ShopPay system to all Facebook and Google users.
“People are embracing social platforms not only for connection but for commerce,” Carl Rivera, head of Shop at Shopify, said in a blog post earlier this year. “We’ll continue to work with Facebook to bring a number of Shopify services and products to these platforms to make social selling so much better.”
But big journeys start with small steps, and Facebooks’ recent actions are those of a firm that seems to be setting up to go the mobile payments distance. In June, Facebook announced its intention to enable monetary transactions at a deeply discounted rate next to the competition from Apple, Google and PayPal, not just for the time being but for the next two years. And even when the zero-fee period ends, Facebook Pay aims to be the most cost-efficient deal in town for merchants, CEO Mark Zuckerberg confirmed via a post last month that teased its latest announcement.
“To help more creators make a living on our platforms, we’re going to keep paid online events, fan subscriptions, badges, and our upcoming independent news products free for creators until 2023. And when we do introduce a revenue share, it will be less than the 30 percent that Apple and others take.”
The Mounting Wallet Wars Competition
While Facebook is upping the level of its mobile wallet game this week, it is notably not alone, with its news coming the day after Apple announced plans into the world of buy now, pay later (BNPL) with its “Apple Pay Later” that will allow users to pay for purchases over time.
While the new launch bears some resemblance to the Apple Card program, which lets cardholders buy Apple items with zero percent financing if paid for within 24-months, the new program isn’t tied to the Apple card. All a potential user needs to apply is the Apple Wallet app, which will offer users ideas on using the installment option.
And Apple wasn’t the only mobile wallet player with BNPL news. PayPal’s variation — Pay in 4 — which has been live in the U.S. for about a year, announced that it launched in Australia last month, and this week upped the ante by offering no late charge fees and lower minimum purchase thresholds.
And while Google had no BNPL announcement to bring to the party, the search giant did announce that Google Pay users with an NFC-enabled Android smartphone in the U.S. can now request a virtual debit card that allows them to make in-store contactless payments directly from their Google Pay balance.
Before the change, this prevented the money from being used in stores unless one was willing to pay extra to have funds instantly transferred to a bank account or waiting one to three days for the funds to be processed.
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