
Facebook’s Messenger Enters the Money Transfer Business
By Neha GuptaOct. 27 2017, Updated 10:33 a.m. ET
Messenger expands into P2P payments
Facebook’s (FB) push into the payments space has moved a notch higher. Through a partnership with digital payments processor PayPal (PYPL), Facebook’s Messenger now supports peer-to-peer (P2P) money transfers directly within the app.
Last year, Messenger and PayPal partnered to enable users to pay for online purchases directly within the messaging app. Therefore, the latest development marks an expansion of the collaboration and increases Facebook’s exposure to the potentially lucrative mobile payments market.
More than 1.3 billion people use Messenger
Messenger, one of the several digital media properties owned by Facebook, disclosed in September that it had surpassed 1.3 billion monthly active users. In comparison, Twitter (TWTR) finished 2Q17 with 328.0 million monthly users.
Although the Messenger P2P payment service has only launched in the US (SPY), the revenue opportunity could be enormous. According to market intelligence firm eMarketer, US mobile P2P payments volumes could grow 55% this year to reach $120.4 billion. Its volumes are on pace to double by 2021, as shown in the chart above.
Growth catalysts
The expansion of the mobile P2P payments market in the US is fueled by factors such as consumers’ desire for convenience and on-demand payments. The widespread adoption of smartphones is also driving the uptake of P2P payment services.
However, the P2P payment market is becoming crowded at a rapid pace. Facebook’s expansion into this space could see it battle for market share against Square’s (SQ) Square Cash, Apple’s (AAPL) Apple Cash, and Zelle, which is backed by more than 30 banks including JPMorgan Chase (JPM) and Bank of America (BAC).