Facebucks or Coin? – Social Media Giant Enters Finance Sector
Having dedicated myriad blog entries to the intersection between ecommerce and the largest (and perhaps oldest) social media platform ever, we now pivot to discussing a new development that may solidify its strength as a go-to space for advertising.
Facebook is no longer floating the pretense that its primary goal is social networking. While that’s the carrot on its stick, the California-based company is creeping into every sector it sees as a potential revenue target. After buying up several ancillary companies and applications, it is now set to revolutionize electronic payments through a newfangled offering featuring currency of its own. It’s called Libra.
There are countless factors that apply, from regulatory, to profitability, to projected success. But the clear picture takes a shortcut for ecommerce vendors, and that is one that makes Facebook rise again to the top of the list of advertising venues you should consider.
The Bitcoin-like currency, which may be called Facebucks or Coin, won’t be exactly like crypto. And it won’t be shady and underground, susceptible to nefarious use. Libra will be woven into a payment system designed for the 2 billion worldwide Facebook users to centralize a monetary source within the Facebook platform by purchasing “tokens” to use for purchases outside of Facebook.
The good, and the better
For vendors who peddle online, this is intriguing. It means that in addition to the bevy of payment transfer options now in place, this is accessible through an app they may be using for multiple hours per day.
But payments may be made to any participating vendor, and if you’re smart, you’ll consider getting on board with Libra. Here’s why:
Facebook says it intends to eliminate the conventional transaction fees associated with credit card and debit card use. This will need to be absorbed into Facebook’s revenue structure, and presumably they have confidence that is doable without taking a huge hit.
It’s a windfall for merchants who are already comfy advertising on Facebook, and an enticement for others to hop on board.
Envision a Facebook user perusing their news feed, and coming across your sponsored ad. They see the photo; they click through to your site. Already having accessed you through Facebook, they may, according to Facebook, be in a FB State of Mind, and have no qualms remaining signed in and making a purchase using their Facebook currency.
Yes, there is a catch. Customers may have to initiate these payments from their user profile. And, they must be sent through a Facebook-owned app, such as WhatsApp, Facebook Messenger, Instagram, etc. Likely a mere wrinkle, though, as a one-stop shopping experience will appear seamless and secure.
One fun projection is the company’s plans to offer enticements for users to earn tokens by site use that they may spend either on the site or elsewhere. This will lower their purchase price, and still leave you in the black with a glaring absence of processing fees.
It’s important to note that conventional finance sourcing, banks and private equity funds, have balked at this system for fear of regulatory headaches. PayPal recently announced it will not participate for now. Facebook is confident it can sidestep hurdles, and history shows they usually win.
We think it’s still a novel idea that seems tailor made for the benefit of ecommerce. That’s a good thing.
Read more about the upcoming plans for Facebook currency here.