Facebook Messenger Eyes Mobile Payments

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If you owe a friend money, Facebook could make it easier to pay that friend back. According to screen shots that surfaced this weekend, Facebook Messenger is equipped to handle person-to-person mobile payments.

Messenger's payment feature lets users add a debit card or use one already on file with the social network, according to Stanford University computer science student Andrew Aude, who discovered the unreleased feature using Cycript, an iOS and Mac OS X hacking tool. Credit cards were not supported.

The process to send a friend money is simple, Aude said. Users start by tapping a button inside Messenger and entering the amount. Then they tap a button to complete the transaction. Facebook keeps payments private; nothing is published to your news feed, he said.

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Behind the scenes, Facebook's payments feature is similar to Square, Aude told TechCrunch, which first reported the story. "The mechanism it uses is to debit one account, and then use some magical means to look up the bank account number of the recipient and ACH [Automated Clearing House] and deposit it, identical to Square Cash," he said.

The version that Aude discovered supported only person-to-person transactions, but notes he found within the code said that Facebook will support multiple payment attachments in the future.

Money transfers would propel Facebook into two very lucrative industries: remittances, in which foreign workers transfer money to people in their home countries, and the mobile payments market.

According to the World Bank, people channeled $404 billion in remittances last year, with transfer fees averaging about 8%. The mobile payments market will top remittances this year, reaching about $507 billion, according to Juniper Research.

Aude did not find any mention in Facebook's code of a fee it would charge users -- an incentive that could encourage people to choose Facebook Messenger over competitors such as Google Wallet (which lets you transfer money via email attachment), traditional banks, money transfer businesses, and services such as PayPal. In June, Facebook pilfered the president of eBay's PayPal division, David Marcus, to expand and monetize messaging.

During Facebook's second-quarter earnings call in July, CEO Mark Zuckerberg acknowledged that there would be "some overlap" between payments and its Messenger service, hinting that it could take "multiple years" to get it right.

"The payments piece will be part of what will help drive the overall success and help people share with each other and interact with businesses," Zuckerberg said. "We have a lot of work to do, and we could take the cheap and easy approach and just try to put ads in or do payments and make some money in the short term, but we're not going to do that."

Nevertheless, Facebook may struggle to gain users' trust. According to the 2013 Consumer Insights Report by the market research company Ovum, only 1% of respondents said they trust social networks to deliver mobile payments. In contrast, 43% of respondents trusted banks, while 13% trusted credit card companies.

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