The news was long overdue and is now reality: Facebook has announced that it has obtained permission from the Irish Central Bank to act as a financial intermediary for payment services. As the Irish Sunday Business Post has revealed, the social network will be able to operate as a payment service provider and issuer of electronic money. But it can also be a platform for transfers and money remittance services throughout the European Economic Area (EU plus Norway, Iceland and Liechtenstein). Regulatory approval arrived on 24 October, two years after the request, and was granted to Facebook Payments International Limited (FBPIL). The Irish Central Bank has confirmed to Linkiesta the accuracy of the information. Details of the authorisation can be found on the institution’s website. For the social network it’s not an absolute novelty, because it already has authorizations for payment services in the United States, where for now it has made it possible to buy apps and games, such as Farmville, applying a commission of 30 percent.
A note from the company (taken from Cor.Com) makes it clear that it does not intend to stop at these basic services. “Facebook can use the license to enable future products such as Facebook donations or peer-to-peer payments via Messenger,” he says. However, there are limits: “Fbpil is only allowed to issue donations from Facebook users to charities registered in the European Economic Area and peer-to-peer payments within the European Economic Area”.
What scenarios are opening up from now on and how disruptive will they be for the existing balances? “What is considered to be one of the largest nations in the world beats money and is gradually equipping itself with a bank – answers Angelo Rindone, CEO of Folkfunding, an Italian startup in the fintech sector – What they will do is all to be seen: they will be able to start with micro-payments of apps, and then move on to the transfer of money between users and crowdfunding”. But is it possible to go further? “Once they have opened an account – continues Rindone – it is possible that they will also become a platform for e-commerce. The next step is for them to provide services that are more specific to banks, such as loans. Even with very low commissions, they will be able to generate enormous profits on these volumes of population. The monthly users of the social network are 1.65 billion.
But does the social network have the skills to become a real bank? “I don’t know if it’s in Mark Zuckerberg’s ropes – explains Rindone – but certainly Facebook, managing huge amounts of data, which filters with its algorithms, can make a psychological and social profiling of users and understand the spending power of each. This information allows us to enter into the intimacy of people and will lead to a “credit scoring” (the measure of creditworthiness) much more accurate than the current one”.
Who would be the “victims” of such a field invasion? The first suspects are payment services such as PayPal and those specializing in crowdfunding such as Kickstarter. However, Rindone calls for caution: “In words, it can hurt these people. But you have to see the “road test”. Let’s think of Google Plus, which despite expectations has been a flop: even the big ones can be wrong, when they go away from their sensibilities”. An operator like PayPal does his job well and may not be touched. But what about the banks? “I think that they should be frightened in the first place,” replies Rindone. “Traditional credit institutions are expensive car bodies, full of branches. In the case of Facebook and the other Fintech operators, they will be confronted with operators with infinitely lower costs and with a global range of action. Visit here to find out more: 365credit.com.sg