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Facebook may be following in the footsteps of a China messaging service in an effort to become a major player in the mobile payment sector.
Matt Navarra, director of social media at The Next Web, last week tweeted a screencap of a “red envelope” peer-to-peer (P2P) payment service that the social media giant later acknowledged it was considering testing in the future.
Red envelopes have strong cultural importance in China, where they’ve traditionally been used to pass cash gifts among friends and family in celebration of the Lunar New Year holiday. China-based messaging platform WeChat has famously used digital red envelopes, or hongbao, to help drive adoption of its digital payment platform, WeChat Pay. This year alone, WeChat users sent 46 billion digital red envelopes during the Lunar New Year holiday period.
WeChat also relied on various promotions, including cash giveaways and other games, to get users in China to start using WeChat Pay’s P2P payment functions. The effort is widely considered a smashing success—the company claimed to have 600 million active WeChat Pay users as of July 2017.
But an implementation of a red envelope service by Facebook remains something of a head-scratcher. The social media giant remains blocked in China, the market where adoption of its not-yet-real digital red envelope service ostensibly makes the most sense.
And many other Western markets remain well behind China in the adoption of P2P payments. eMarketer estimates that 31.0% of US adult smartphone users, or 60.4 million people, will be P2P payment users this year.
Facebook already gives users of its Facebook Messenger chat app the ability to make P2P payments, but that function has not yet been extended to Facebook’s desktop platform or its mobile app.
The service has also been deepening its feature set in other significant ways that make it increasingly resemble WeChat. For example, in October 2016, Facebook launched its Marketplace service, a Craigslist-like consumer-to-consumer (C2C) platform that connects buyers and sellers of used goods.
By adding such services, Facebook increases the “stickiness” of its platform—something that helps increase ad views—while also creating new potential revenue streams derived from transactions instead of advertising.
WeChat already offers its users a broad swath of capabilities that include bill payments, food ordering, ride-hailing and travel booking, just to name a few. The suite of services available on WeChat is so complete that some users report never needing to pay for anything with cash for days at a time.
If Facebook is looking to become the world’s killer app, resembling something closer to a mobile operating system than a social network, it would have a hard time finding a better business model to ape than WeChat’s.
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