Facebook to launch e-money service

Firm needs approval in European base in Ireland to operate the service throughout Europe.

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Facebook to launch e-money service Facebook is in competition with established technology platforms such as Apple's iTunes and Amazon's online stores, which have millions of customers with credit cards attached to their service. (Getty Images)
By  Helen Gaskell Published  April 16, 2014

Facebook is preparing to launch an e-money transfer service in Europe, online reports say.

The new service would mean that users would be able to store money on Facebook and use it to pay and exchange with others. Facebook already has permission for payments within apps such as games Candy Crush and Farmville. The company is said to be close to gaining approval from the Central Bank of Ireland

The guardian reported that approval in Ireland would allow Facebook to operate the e-money service throughout Europe using "passporting", which allows digital payments to be used across EU member states without having to gain regulatory approval from each one.

Taavet Hinrikus, co-founder of TransferWise said: "The market for money transfer is very, very large."

TransferWise is reportedly one of three payment services in partnership discussions with Facebook, but Hinrikus declined to comment on this.

Facebook is in competition with established technology platforms such as Apple's iTunes and Amazon's online stores, which have millions of customers with credit cards attached to their service.

Brian Blau, a director at the research firm Gartner said: "Payment schemes are the equivalent to credit cards in emerging markets and here is where Facebook can make progress... especially in those places where banking infrastructure is not as mature as it is in Europe or the US".

According to the Guardian, regulatory approval from Ireland would subject Facebook to the same controls as a bank, requiring it to segregate funds equivalent to the amount of e-money it issues.

Payments and e-money services are expanding areas of the financial services and technology market, though Facebook's rivals have been more focused on payment systems than money transfers.

Amazon's chief executive, Jeff Bezos, has reportedly made payment systems a priority focus, saying his company's payments team should "go faster" in its efforts to be successful in the space.

Google has Google Wallet services in the US and is registered as a payments provider in the UK, and PayPal has also been moving towards mobile payments with its apps and one-touch payment services, most recently using the fingerprint scanner in the latest Samsung Galaxy S5 smartphone to authorise payment.

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