Facebook Looking to Flash Electronic Cash: Report
NEW YORK (TheStreet) -- Facebook
The Financial Times reports that Facebook is only weeks away from obtaining regulatory approval in Ireland for a service that would let users store money on the social network. Citing several people involved in the process, the FT reports that this could be used to make payments and exchange money with others.
Regulatory approval in Ireland would allow Facebook to become an 'e-money' institution, according to the report. The e-money valid throughout Europe thanks to a process called 'passporting', which is designed to streamline financial services across the European Economic Area.
The FT reports Facebook has also discussed potential partnership with at least three London-based startups offering international money transfer services via the Internet and smartphones - TransferWise, Moni Technologies and Azimo.
In an email to TheStreet, Facebook said that it "does not comment on rumors and speculation."
Nonethelss, tech research firm Ovum would not be surprised to see the Menlo Park, Calif.-based firm move into e-money. "Ovum predicted Facebook would launch a renewed push into mobile payments this year and its focus on mobile money transfers makes sense," wrote Eden Zoller, m-payments expert at Ovum, in a statement. "These applications are gaining good traction with consumers, particularly in emerging markets where Facebook has ambitions to be the prime platform from which people access, and interact with Internet services."
Zoller noted that Facebook's user base in emerging markets is growing quickly, but warns that the company will have its work cut out in mobile payments and financial services, particularly building consumer trust. The analyst pointed to Ovum's 2013 Consumer Insights report, which found that only 1% of respondents trusted social networks like Facebook to deliver mobile payments, compared to 43% who placed their trust in banks.
"It also remains to be seen how well Facebook will execute m-payments given its poor track record with m-commerce applications," wrote Zoller. "The Facebook Credits virtual currency got nowhere and was wound down last year, while the main m-commerce offering in place today, Facebook Gifts, has so far received a muted response from consumers."
Azimo and TransferWise declined to comment when contacted by TheStreet about this story. Moni Technologies has not yet responded to TheStreet's request for comment.
Facebook shares gained 1.79% to $59.58 in early trading on Monday.
--Written by James Rogers in New York.
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