Facebook has announced the launch of its payment system via WhatsApp, as part of its effort to delve into fintech and ecommerce. The CEO Mark Zuckerberg said on Monday that the launch is starting in Brazil.
“Today we’re starting to launch payments for people using WhatsApp in Brazil,” Zuckerberg said in a statement posted on Facebook. “We’re making sending and receiving money as easy as sharing photos. We’re also enabling small businesses to make sales right within WhatsApp.”
“To do this, we’re building on Facebook Pay, which provides a secure and consistent way to make payments across our apps. I want to thank all our partners for making this possible. We’re working with local banks, including Banco de Brasil, Nunbank, Sicredi as well as Cielo, the leading payments processor for merchants in Brazil,” he added
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Facebook had earlier made known its intention to join online companies like eBay and Amazon, as it hopes that its 2.6 billion users will yield spontaneous growth that will put it in direct competition with the giants in the ecommerce field.
The disruption of ad generated revenue by the coronavirus pandemic has spurred the Silicon Valley giant to begin to explore alternatives for earning. The introduction of WhatsApp Pay is another step aimed at integrating users of different Facebook apps into one commercial community that will have shops and payment systems on the same platform.
In a chat with Financial Times last month, Facebook had revealed some of the steps it intends to take to actualize its dream of becoming a big name in the online buying and selling market.
“Facebook Shops” will allow sellers to create digital storefronts on Facebook or Instagram, the company said, adding that it would benefit by gathering valuable data on what shoppers want.
Users will be able to browse products, message businesses to arrange purchases, and in some cases buy them directly via a recently introduced online checkout feature.
Zuckerberg said that he had accelerated plans for Shops to take advantage of the boom in online shopping during the coronavirus crisis. He added that the social media giant would be able to use the data to improve its advertising service and charge more for it.
“If you browse a shop inside of our app or if you buy something, we will see that and we’ll be able to hopefully use that to show you better recommendations for other things that you’d be interested in the future,” he said.
Facebook Shops will allow sellers to create digital storefronts on Facebook or Instagram Shops will help businesses “complete the conversion and the transaction [of a sale] more frequently with less drop-off”, he added. This will, in turn, translate into higher bids for advertising.
In the US, where Facebook has rolled out a checkout service from Instagram, the company will also collect a small fee to cover credit card processing costs and fraud monitoring.
The Facebook founder said, however, that he was not trying to replicate Amazon’s “end-to-end experience” and instead would work with existing ecommerce services such as Shopify, which helps small businesses create online shops and takes care of analytics and payments. Mr Zuckerberg added that Facebook would also integrate with shipping and logistics services.
Facebook Shops will make use of Facebook’s messaging capabilities: users will be able contact businesses through WhatsApp, Messenger or Instagram Direct to ask questions or track deliveries, for example. It will also have tools for creating and tracking loyalty programmes.
Mr Zuckerberg said Facebook would focus the rollout in developed regions such as the US and western Europe, where the company had the resources to vet sellers properly — as rivals such as Amazon battle against counterfeits.
“In countries that don’t have as much infrastructure, that’s one of the challenges [preventing] the full launch of this,” he said. In the longer term, he said he envisaged a system whereby sellers had reputation scores and star ratings.
Mr Zuckerberg suggested that, in the longer term, it “would be good” to host restaurant and food ordering.
Rich Greenfield, partner at consultancy LightShed Partners, said the move has long been anticipated due to the strains on advertising.
“What took them so long? It appears very obvious that the next step, especially if advertising is under pressure, is how are you going to take advantage of the ecommerce wave which is benefiting the likes of Amazon?”
“People don’t want to go to third-party websites or go to checkout, they want one-click buy. They want it simple, easy,” he added.
The Monday announcement is a cause for worry to many in the fintech industry, especially at the wake of COVID-19 when most of them are struggling to stay in business.
Given the over 2 billion number of WhatsApp users globally, it will be easy for Facebook to exert dominance in the sector and put many fintech startups out of business.