Payments
Why PayPal and Facebook are pushing messenger-based business payments
- Facebook and PayPal have added to their partnership, now allowing Marketplace sellers to send PayPal invoices in the Messenger app
- Apps are due for a redesign -- in a messenger-based world, using multiple apps to execute a payment is a little cumbersome
PayPal's move to allow Facebook Marketplace sellers to send invoices through its Messenger app puts the social network firmly in the payments ring.
The feature, which went live Tuesday, makes the invoicing -- including price and image -- and payments processes part of the buyer-seller conversation, removing the need to exit Facebook to complete a sale. It's an extension of Facebook's partnership with PayPal, which enabled peer-to-peer payments through Messenger last month for users that link their Facebook and PayPal accounts.
By signing on as the payments partner, PayPal effectively allows Facebook to compete with other mobile payments offerings: Apple Pay, Square Cash -- even PayPal's own Venmo.
Business-to-customer messaging has been on a slow but steady rise. The growth of companies like Venmo and WeChat show how much people like conversational channels and contextual commerce -- and it's no surprise given how much dominant text- and messenger-based interfaces have become.
“The idea several years ago of being to chat with a company — there were chat based customer support systems but they were all just very jenky,” said David Barrett, CEO of expense management startup Expensify. “Over time people moved toward the chat interface -- they text their friends, Slack with their co-workers — text is disrupting the telephone and becoming the primary way to communicate not just socially but also in a business context.”
There will be more partnerships like Facebook and PayPal's, said Rajesh John, a principal in the financial institutions practice of A.T. Kearney, a global strategy and management consulting firm. Citing the Zelle network of banks partnering with Early Warning and the widespread use of WeChat and China and Paytm in India, John said business messenger-based payments experiences will follow, but that it’s definitely early.
“As companies become bigger and more stable and need more accounting function, more tracking function and move beyond just payments — payments are a starting ground, they need to look at the point of sale, the accounting, the HR elements — they need to go up to the next level of software and partnerships,” with companies like Xero and Intuit, he said.
Barrett said the messenger-based interface will continue to prove itself because the nature of application design in general is changing. In the original world order of apps, each of them were purposed to do a small number of things.
“You could have a button to do something for each one of those things and the user could be expected to pick the right button,” Barrett said.
That assumes there is a small number of apps that do a relatively small number of things. It also assumes people know everything an app does and how to find it.
“Over time we’re finding there are a bajillion apps and all of them do a bajillion things,” Barrett said.
As a result, that button style of navigation won’t scale well as applications become more complex, but a text-based interface allows businesses to manage complexity in a more scalable way. Rather than having to associate a single button with a feature, they can build on top of the conversation already taking place.
“Fundamentally, any transaction between two people is a conversation, so it makes sense to use the conversation as a platform on which all other conversational style features are layered,” rather than asking for a payment on one application, using a second application to actually send the payment and a third application to take a picture to send.
That is much more cumbersome and makes much less sense to people so used to messaging their friends, family, co-workers and even retailers and merchants, which is why PayPal and Facebook are integrating each of those actions into a single high bandwidth conversation that includes text, pictures and money.
“It’s a rethinking of how the application experience works in light of the fact that applications just have so much functionality,” Barrett said.
Business-to-customer messaging has been on a slow but steady rise. The growth of companies like Venmo and WeChat show how much people like conversational channels and contextual commerce -- and it's no surprise given how much dominant text- and messenger-based interfaces have become.
“The idea several years ago of being to chat with a company — there were chat based customer support systems but they were all just very jenky,” said David Barrett, CEO of expense management startup Expensify. “Over time people moved toward the chat interface -- they text their friends, Slack with their co-workers — text is disrupting the telephone and becoming the primary way to communicate not just socially but also in a business context.”
There will be more partnerships like Facebook and PayPal's, said Rajesh John, a principal in the financial institutions practice of A.T. Kearney, a global strategy and management consulting firm. Citing the Zelle network of banks partnering with Early Warning and the widespread use of WeChat and China and Paytm in India, John said business messenger-based payments experiences will follow, but that it’s definitely early.
“As companies become bigger and more stable and need more accounting function, more tracking function and move beyond just payments — payments are a starting ground, they need to look at the point of sale, the accounting, the HR elements — they need to go up to the next level of software and partnerships,” with companies like Xero and Intuit, he said.
Barrett said the messenger-based interface will continue to prove itself because the nature of application design in general is changing. In the original world order of apps, each of them were purposed to do a small number of things.
“You could have a button to do something for each one of those things and the user could be expected to pick the right button,” Barrett said.
That assumes there is a small number of apps that do a relatively small number of things. It also assumes people know everything an app does and how to find it.
“Over time we’re finding there are a bajillion apps and all of them do a bajillion things,” Barrett said.
As a result, that button style of navigation won’t scale well as applications become more complex, but a text-based interface allows businesses to manage complexity in a more scalable way. Rather than having to associate a single button with a feature, they can build on top of the conversation already taking place.
“Fundamentally, any transaction between two people is a conversation, so it makes sense to use the conversation as a platform on which all other conversational style features are layered,” rather than asking for a payment on one application, using a second application to actually send the payment and a third application to take a picture to send.
That is much more cumbersome and makes much less sense to people so used to messaging their friends, family, co-workers and even retailers and merchants, which is why PayPal and Facebook are integrating each of those actions into a single high bandwidth conversation that includes text, pictures and money.
“It’s a rethinking of how the application experience works in light of the fact that applications just have so much functionality,” Barrett said.