Zuckerberg plays down Facebook payments ambitions

Zuckerberg plays down Facebook payments ambitions

Facebook chief Mark Zuckerberg has played down the value of payments to the social network, saying that it will partner with card firms and PayPal rather than try to build its own system.

Speculation has mounted in recent months that Facebook could make a concerted effort to break into the payments market. The firm has begun trialling a 'buy' button that enables users to purchase products advertised on the social network and is also tipped to introduce P2P payments within its Messenger app.

However, the company's third quarter earnings results show that payments still makes up just a small slice of revenues - $246 million, a 13% year-on-year increase but dwarfed by the $1.8 billion advertising generated.

In an analyst call on the Q3 results, Zuckenberg dodged a question on Messenger payments plans but made it clear that advertising is his focus.

"You know, we view the ads part of the business as a more efficient part of the business than payments itself. Payment tends to be, you know, fixed-fee, whereas in ads, because of the auction model, there's really good price discrimination built in".

The Facebook boss says that payments is important because it helps advertisers to close sales. "But we've traditionally thought about this as something that we're going to partner with other companies on to enable great solutions, rather than trying to compete and do it as a business ourselves."

The social network is "excited about partnering with credit card companies and partnering with PayPal and all of the different folks in online payments to make their solutions as good as possible, as well".

Comments: (1)

A Finextra member
A Finextra member 30 October, 2014, 17:38Be the first to give this comment the thumbs up 0 likes

I must admit, this is the position I thought Apple had taken with regard to payments,  until they announced their  Apple Pay product.  It is possible that Apple pay revenues will  be found to be trivial when compared to Apples other lines of business. If so this will result in the the trivial revenue outcome that MZ definesas the reason he will stick to Advertising as his mojo. 

It will be interesting to see which model works best,  by partnering,  Facebook does not create the hostile ecosystem Apple seems to have engendered in parts of the US merchant population. Its clear that getting NFC terminals switched off in the USA is not an outcome that Apple Pay, Visa or MasterCard would have predicted, seems the the law of unintended consequences is in play.

Interesting counterpoint to follow.