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
close

Email a Friend

Why PayPal and Facebook are pushing messenger-based business payments

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.

paypal fb

 

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.

0 comments on “Why PayPal and Facebook are pushing messenger-based business payments”

Payments

Quick take: Behind Wise and Deel’s new feature for global payroll

  • Wise recently partnered with payroll and HR platform Deel to create a feature that would help the latter’s customers transfer funds for payroll more efficiently.
  • The product announcement may feel like just another drop in the bucket, but it does point to an emerging trend regarding cross-border payments.
Rivka Abramson | December 06, 2022
Payments, Power of Payments Podcast

Power of Payments Ep. 19: Stripe’s Josh Ackerman on the changing nature of online checkout

  • Josh Ackerman, Product Lead at Stripe, joins host Ismail Umar on this week’s podcast.
  • He talks about the existing gaps between consumer expectations from online checkout and what most merchants currently offer, as well as how the checkout experience has evolved over the years.
Ismail Umar | December 02, 2022
Member Exclusive, Payments

Payments Briefing: What we know so far about Twitter’s payments plans

  • This week, we explore Elon Musk’s plans for Twitter’s entry into the payments market.
  • We also take a look at Citi’s new integrated solution for institutional billers.
Ismail Umar | November 18, 2022
Payments, Power of Payments Podcast

Power of Payments Ep. 18: Chase disrupting rent payments, MoneyGram’s crypto expansion, and more

  • This week, we discuss why JPMorgan Chase is launching a digital rent payment solution, and how Americans plan to use more flexible payments this holiday season.
  • We also talk about MoneyGram’s recent crypto expansion, and the potential role of digital currencies in the remittance industry.
Ismail Umar | November 18, 2022
Payments

FedNow’s potential pitfalls for B2B payments

  • In the next six to eight months, the Federal Reserve will start rolling out FedNow, their real-time payments (RTP) service.
  • Tearsheet sat with Balaji Devarasetty, CIO of Paya, to discuss the benefits and potential pitfalls of implementing FedNow's RTP for B2B fintech providers.
Lindi Miti | November 16, 2022
More Articles