Facebook is pulling away from its ambitions to provide peer-to-peer money transfers via Messenger in Europe. Today, the company announced that it would be discontinuing the service — which let individuals send money to each other — in the two countries in the region where it had rolled it out, the UK and France on June 15 of this year. It appears that for now, the service will remain active in the US, where Facebook holds a number of money transmitter licenses.
It’s not shutting down payments altogether in Europe: it will continue to let people make charitable donations through Facebook itself.
“On 15 June 2019, we will discontinue P2P services on Messenger or through Facebook messages for all residents in the UK and France,” the company noted in a short statement on its main help page for the payments service. “While you won’t be able to exchange money with friends and family, you’ll still be able to complete other transactions through Facebook, such as making donations to charitable organisations.”
Facebook has also started sending out notices to those who were using the service in the two countries. It’s never been clear just how many of them there were.
After getting a license at the end of 2016, Facebook made its first foray into P2P payments in Europe for people over the age of 18 in November 2017, taking on the likes of PayPal and others in the remittance world.
The move was long in the making: there had been rumors of Facebook developing social payments, and even acquiring a startup to help make it happen, for years before this as the market for remittances and people using social networks to make financial transactions to each other started to take off.
In particular, in developing markets, where transfer fees for services like Western Union are high and the amount of people holding bank accounts is low, remittances using mobile handsets have become a key way for people to send money to each other, either because they’re supporting family or to pay each other for a service or goods. Mobile — and Facebook’s supremacy in social graphs and messaging with the likes of WhatsApp, Messenger and Instagram all a part of the Facebook stable — made it a natural fit for something like this.
But in the end, the launch of P2P payments in France and the UK was a baby step — you could never transfer money to international recipients, and new countries were never added — that never grew up. The company reported in its last quarterly results in January that payments and other services generated just $274 million in the quarter, compared to $16.64 billion in advertising. Europe accounted for a measly $64 million of that.
Facebook does not explain why it decided to pull back on the strategy, but apart from question marks over just how popular the service actually was, there have other developments at the company and the wider payments space in Europe that could potentially have been factors.
Come September 14 of this year, there will be a new payment directive put in place across Europe called Strong Customer Authentication, requiring extra checks to be made for a user’s identity in any online transaction. It’s not clear how and if Facebook was preparing for this change.
Perhaps more interestingly, the company is reportedly working on a cryptocurrency that would allow for people on its messaging networks to send money to each other. If such a product really does get rolled out, it may be that Facebook would use that to become its primary P2P payment mechanism.
We have contacted Facebook and will update this post as we learn more.